Smartphone and tablet factory revenue are expected to exceed the entire consumer electronics market this year for the first time as mobile demand continues to outpace more traditional technology.
Global original equipment manufacturer (OEM) factory revenue for those mobile devices will amount to $354.3 billion in 2013, 3% higher than the much wider consumer electronics market that includes televisions, headphones, cameras, video game consoles and appliances, according to a new report from IHS (NYSE:IHS).
"Consumer demand for smartphones and tablets has been flourishing in the past few years while sales growth for CE products has languished in the doldrums,” said Randy Lawson, senior principal analyst for semiconductors at IHS.
The massive consumer electronics market historically has dwarfed the tablet and smartphone segment. It was 30% larger just last year. However, the all-in-one function of phones and tablets are displacing third-party devices.
Revenues of tablets and phones, on a rip since 2007 when Apple (NASDAQ:AAPL) unveiled its first-generation iPhone, are experiencing exponential growth as new market entrants, including Google (NASDAQ:GOOG), Samsung and Microsoft (NASDAQ:MSFT), intensify competition and improve product quality.
Consumers are adapting more mobile lifestyles, conducting everything from watching television to banking on the go as advanced app development allows them to move more of their lives online.
“Consumers simply are finding more value in the versatility and usefulness of smartphones and tablets, which now serve as the go-to devices for everything from phone calls, to photography, to navigation, to media playback, to fitness tracking,” Lawson said.
Revenue for the smartphone and tablet market is expected to rise by 31% in 2013, with OEM factory revenue expanding nearly nine-fold from just $41.2 billion in 2007.
In contrast, consumer electronics OEM factory revenue has been virtually flat during that same six-year period, and IHS says 14 of the 20 consumer electronics products it tracks are expected to suffer a decline in compound annual growth rates.
Even the success stories, like LCD TVs, which are expected to end the six-year period with a compound annual growth rate of nearly 10%, have slowed drastically from their heyday.
And the gap is only expected to widen over the next few years.
IHS predicts demand for those TVs to start declining in 2014, further crippling the broader consumer electronics market that is on pace to fall by 5% to $327 billion by the end of 2017.