Smartphones and tablets will not lead the connected devices market in growth this year, although both are expected to enjoy healthy increases in production rates. Tablet production will rise 25% this year, according to the researchers at IHS iSuppli, while mobile phone production will increase just 7%. Game consoles are forecast to enjoy the largest growth among all segments, up 45% thanks to the PlayStation 4 from Sony and the Xbox One from Microsoft.
Overall, IHS iSuppli is projecting that 6.18 billion connected devices will be produced this year, up 6% from last year. “The improved growth this year of the connected devices industry marks the return of higher production as manufacturers deliver all sorts of connectivity equipment to users,” said Jagdish Rebello, Ph.D., senior director for information technology at IHS, who cited social media as a key driver of the demand for connected devices.
IHS is predicting that this year’s 6% growth in the production of connected devices will not be repeated for several years. The firms sees growth rates below 6% for each of the next four years. The firm defines a connected device as one which can access the Internet through built-in connectivity enabled by an embedded chip.
Connected devices that are being replaced by the smartphone will see drops in production again this year. These include digital still cameras (down 13%), camcorders (down 27%) and MP3 players (down 27%).
Smartphones have clearly replaced cameras and music players for many consumers, but their growth rates are slowing somewhat as major markets approach saturation. Even China is now expected to see slowing smartphone growth rates. With the replacement market becoming more important, the need for smartphone capabilities and features becomes key, but these can be few and far between. IHS analyst Andrew Rassweiler, who manages the firm’s teardown unit, sees smartphone component makers cutting prices, and expects to see manufacturers passing these costs on to consumers as a way to compete in the absence of game-changing new feature sets.
