Surging phablets to shoot past stalled tablet market in 2015

Large-screen smartphones, with displays of 5 inches or greater and often called “phablets” (for phone/tablet hybrids), are on track to surpass worldwide shipments of tablet computers this year, according to IC Insights’ new Update to the 2015 IC Market Drivers report.  The Update’s forecast shows the popularity of extra-large smartphones continuing to gain momentum in the first half of 2015 with unit shipments now expected to reach 252 million this year, which is a 66 percent increase from 152 million sold in 2014 (Figure 1).  Strong growth in large smartphones is having a major impact on tablet unit sales, which are forecast to increase just 2 percent in 2015 to 238 million units.

Figure 1

Figure 1

IC Insights believes strong sales of large-screen smartphones will continue in the next three years while the tablet market struggles with low single-digit percentage growth through 2018.  The revised forecast shows large-screen smartphone shipments climbing by a compound annual growth rate (CAGR) of 40 percent between 2014 and 2018, while tablet unit shipments are expected to rise by a CAGR of just 3 percent in this four-year period.  Large-screen smartphones are having the biggest impact on mini tablets, which saw a rise in popularity in the past few years.  Mini tablets have 7- to 8.9-inch displays and typically run the same software as smartphones.

The phablet segment is expected to account for 17 percent of total smartphone shipments in 2015, which are forecast to be about 1.5 billion handsets.  The Update report shows phablets representing 21 percent of the 1.7 billion smartphones that are forecast to be shipped in 2016.  Phablet sales are projected to reach 30 percent of the nearly 2 billion total smartphones shipped in 2018, according to the Update of the 2015 IC Market Drivers report.

Tablet unit sales have nearly stalled out because incremental improvements in new models have not been enough to convince owners of existing systems to buy replacements.  More consumers are opting to buy new large-screen phablets instead using both a smartphone and tablet.  Large smartphones have gained traction because more handsets are being used for video applications (including streaming of TV programs and movies) in addition to Internet web browsing, video gaming, GPS navigation, and looking at digital photos.

The market for large-screen smartphones received a boost from Apple’s highly successful iPhone 6 Plus handset, which started shipping in September 2014 and continued to gain momentum in the first half of 2015.  Apple joined the phablet movement somewhat belatedly, but its 5.5-inch display iPhone 6 Plus smartphone played a major role in the company shipping 61.2 million iPhone handsets in 1Q15, which was a 40 percent increase over the same quarter in 2014.

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