Will Apple’s market arrival kickstart a future fuelled by phablets?

Worldwide phablet shipments, smartphones with screen sizes from 5.5 to less than 7 inches, will reach 175 million units worldwide in 2014, passing the 170 million portable PCs expected to ship during the same period.

Next year, IDC believes total phablet volumes will top 318 million units, surpassing the 233 million tablets forecast to ship in 2015.

While phablets are a relatively new category of device, first picking up volume in 2012, the pressure that the category has placed on the tablet market has already been clearly observed as the growth of smaller, 7 inch tablets has begun to slow.

IDC expects more consumers to shift back toward larger-sized tablets with their next purchase. However, that trend hasn’t made up for the decreased shipments of smaller sizes, which has resulted in lower overall expectations for the tablet market in 2014 and beyond.

“With Apple expected to join the space in the coming weeks, we anticipate even more attention on phablets as larger screen smartphones become the new norm,” says Melissa Chau, Senior Research Manager with IDC’s Worldwide Quarterly Mobile Phone Tracker.

As a result, IDC expects phablets to grow from 14.0% of the worldwide smartphone market in 2014 to 32.2% in 2018.

As the Smart Connected Device market matures, and emerging markets drive more of the growth, the percentage of the market made up of phablets plus regular smartphones is expected to increase. In 2014 IDC expects smartphones to represent about 70% of the total market. By 2018 that will grow to 75.6%.

While consumers in places like the United States and Western Europe are likely to own a combination of PCs, tablets, and smartphones, in many places the smartphone — regardless of size — will be the one connected device of choice. Dropping average selling prices (ASPs) for phablets and smartphones will help drive this trend.

In 2013, a phablet cost an average of US$568 versus a regular smartphone at US$320, while IDC forecasts that in 2014, those prices will drop to US$397 and US$291, respectively.

“Clearly, mobile computing is a space where consumers are still trying to figure out what mix of devices and screen sizes will suit them best,” adds Tom Mainelli, Program Vice President with IDC’s Devices and Displays.

“What works well today could very well shift tomorrow as phones gain larger screens, tablets become more powerful replacements for PCs, and even smart watch screens join the fray.”

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