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Good News for Apple and Samsung: Tablets Will Overtake PCs This Year


The global market for connected devices is booming, and it's being primarily driven by tablets and smartphones -- and especially the cheap ones.

According to data published yesterday by the research firm IDC, tablet shipments will reach 84.1 million units in the fourth quarter of 2013. For the same period, PC shipments are estimated to come in at 83.1 million, making it the first time that tablets will overtake PCs in sales. IDC has projected that PC sales will decline by 10% in 2013.

However, the global market for Internet-connected devices -- which includes smartphones, tablets, laptops, and yes, desktops -- will increase by a solid 28% to $622.4 billion in 2013. By 2015, that figure is expected to hit $735.1 billion. The explosive growth of smartphones and tablets is partly responsible for the decline in PC sales, but it also makes the blow of declining PC sales negligible for some brands, but not for others.

Mainstays of the PC business like Hewlett-Packard (NYSE:HPQ), Microsoft (NASDAQ:MSFT), and Intel (NASDAQ:INTC) have seen sales slump with the worldwide decrease in demand for PCs. On the other hand, Apple (NASDAQ:AAPL) with its iPads, Google (NASDAQ:GOOG) with its Nexus line of tablets, and Samsung (OTCMKTS:SSNLF) with its Galaxy Tab line are all profiting from the latest shift in tech consumption.

A finer detail worth noting from the IDC report is that lower-priced tablets and smartphones are becoming more popular at a quicker rate than their higher-end competitors. According to the data released yesterday, tablets and smartphones that retail for less than $350 will account for a full 68% of shipments of not just tablets and smartphones, but all devices that connect to the Internet. Last year, the average selling price for connected devices was $462. By 2017, the IDC predicts that that number will slide to $323.

The growing popularity of lower-cost devices speaks to the great success of Google's Android operating system and devices, many of which are cheaper than products from the United States' sales leader in smartphones and tablets, Apple. Trying to reach a wider market, Apple just unveiled its cheaper iPhone, the colorful 5C -- though, with a starting price of $549 for an unlocked device, it is certainly not the "budget" iPhone that everyone was expecting.

The new data from IDC reflects the strong market positions of Apple, Google, and Samsung, and makes it clear that the old PC mainstays must catch up. Of course, Microsoft is already making some (if relatively small) strides with its Surface tablets and Windows Phones, which are predominantly made by Nokia (NYSE:NOK). Though modest compared to Android and iOS, Windows Phone's market share has increased significantly: According to IDC data from August, Windows Phone became the third most used mobile OS, with 3.7% of global market share in the second quarter of 2013, besting the former industry leader BlackBerry's (NASDAQ:BBRY) 2.9% for the same quarter. By comparison, during Q2, Android commanded 79.3% of global market share while iOS took 13.2%.

With the IDC's prediction that the connected device market will hit $735.1 billion in 2017, there's room for growth across the board, even at those companies that have recently fallen behind.

See also:

Apple Is the Least Worst, and That's Why It's the Best

What Is Net Neutrality, and Why the War of Words?

Apple Inc.'s New iPhones Have Arrived, Now What? 4 Investing Experts Respond

Follow me on Twitter: @JoshWolonick and @Minyanville

Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.
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