IDC Top 10 Predictions on China Smart Connected Device (SCD) Market: By End 2017, Total Consumer SCD Install Base to Reach 1.2 Billion; Total Install Base to Reach 1.4 Billion
29 Jan 2014
Beijing, January 29, 2014 – The Chinese Smart Connected Device (SCD) market is expected to grow 45% in 2013, according to IDC’s Smart Connected Device Tracker, third quarter 2013. The growth rate of smartphones is 64%, those of tablet and PC are 77% and -12% respectively.
According to the study, the year 2013 witnessed fast growth for China’s SCD market.
"2013 was a game changing year. The consumer SCD install base reached 780 million at the end of 2013, tripling the number of two years ago,” says Kitty Fok, Managing Director of IDC China.
“In the future, the China SCD market is going to move from an explosive growth phase into a more matured development phase. But the changes on product, market, application and technology will not slow down.”
IDC predicts that by the end of 2017, the total consumer SCD install base will reach 1.2 billion while that of all SCD will reach 1.4 billion.
During a webinar on January 17, 2014, Antonio Wang, Associate Director of IDC China, described each prediction then asked the participants to rate the credibility of each prediction through an online poll.
The Chinese SCD Top 10 Predictions and poll results are as follows:
Prediction 1: The Chinese SCD market will grow by 17% and the PC market will start to recover with the annual growth rate of -1.4% during 2014. (online poll support: 92%)
With the smartphone install base reaching 500 million, the growth rate of the Chinese SCD market will slow down. After experiencing a difficult year in 2013, the PC market will find its new customer groups and development goals. Despite that, IDC expects the growth rate to be a negative 1.4%.
Prediction 2: A total of 130 million 4G smartphones will be shipped out to the market in 2014. (online poll support: 61%)
China Mobile has announced that it will sell 100 million 4G smart phones in 2014. The other two telecom service operators have also obtained the TD-LTE licenses and will soon launch their 4G smart phones to the market. In view of that, IDC predicts that the second half of 2014 will witness a peak for 4G smartphone shipment.
Prediction 3: The ecosystem of domestic IT vendors will continue to improve. (online poll support: 89%)
According to the statistics for the first three quarters in 2013, Lenovo, Huawei, ZTE and Coolpad jumped into the global top ten club in the SCD market. However, in comparing with Samsung and Apple, the Chinese personal IT device manufacturers still have a long way to go. IDC predicts that the gap on integrated strength between the Chinese brands and the world’s top two brands will be narrowed in 2014, in areas such as social networking, peripheral devices, terminal, multi-screen interaction and operating system, marking 2014 the year of the rise of the Chinese personal IT device manufacturers.
Prediction 4: The Chinese rural market will see the penetrated deployment of smart connected devices in 2014. (online poll support: 85%)
In 2013, the smart connected device penetration in the Chinese urban areas was high, with PC and smart phone market in the cities getting saturated. According to China's sixth census in 2010, China's rural residents account for 50% of the total population. IDC predicts that by the end of 2014, the Chinese smart connected device install base will exceed 1.1 billion with nearly 1 billion smart connected devices coming from the consumer market. With improving broadband internet access, declining smart connected device prices, further customer segmentation and diversified marketing and promotion, the market will continue to expand into the rural areas in 2014.
Prediction 5: Device screens will increase in size as a whole. (online poll support: 94%)
With the dropping prices of display screens globally and increasing options available to the consumers, the size of the devices will experience some changes in 2014. The mainstream big-screen products will include 5~6(inch) smartphones, 10~12(inch) new type tablet products, 15(inch) PCs and 23+ (inch) monitors. IDC expects these devices to experience a fast development.
Prediction 6: The percentage of tablets with call function will account for 35% of the total tablet shipment. (online poll support: 67%)
With the massive popularity of the 5~6(inch) smartphones, the customers will have new requirements on their 7-8(inch) tablets. Tablets with call function will become another choice for consumers and corporate users.
Prediction 7: The percentage of smartphones embedded with near-field communication (NFC) technology will account for 15% of the total shipment. (online poll support: 77%)
The last-mile competition in the wireless connection is becoming increasingly heated. Although the 2D barcode recognition apps have seized the high ground, IDC thinks that NFC will have its position in the industry with advantages of steadiness, fast speed and connectivity to peripheral devices. In 2014, there will be more smartphones embedded with NFC function.
Prediction 8: The battle to seize the living room device market will get started. (online poll support: 89%)
In 2014, the customers will have more options on the smart connected devices in their living rooms, be it PC, tablet, smartphone or smart TV, Set Top Box or game console. There will be a new battle in the living room market.
Prediction 9: The tier 1-3 markets will experience growing consumption and tier 4-6 markets will see dropping prices. (online poll support: 96%)
Although the average unit price of the smart connected devices will continue to drop, the price sensitivity of the consumers or business users in tier 1-3 cities are decreasing, meaning the customers are not purely pursuit of cheap products but focusing on products that suit them. However, in the tier 4-6 markets, price is still one of the main factors that affect the ultimate purchasing decision and thus the price battle will be inevitable.
Prediction 10: Channel inventory will be reduced to a reasonable level during the third and fourth quarters of 2014; the percentage of online channel and telecom operator's package bundle will continue to increase. (online poll support: 95%)
As for channels, the online and offline evolution will unfold. It is expected that more traditional channels will launch their own online selling platforms and thus the online and offline channels will be integrated. The telecom operators are now increasing their sales targets on bundling sales, increasing their influence. After seeing fast growth of the smart connected devices and aggressive sales targets set by the manufacturers, channel inventory in 2013 became a headache. The inventories of PC, smartphone and tablet have reached unreasonable levels. It will take around two to three quarters in 2014 before pressure is discharged from the smart connected device channels.
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