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Nearly at its peak
Management advisor Deloitte expects worldwide turnover of the five TMT (Technology, Media and Telecommunications) appliances will top 550 billion euro in 2014, which is 35 billion euro higher than last year and double of 2007’s results. Further growth is expected for the next few years, albeit considerably slower than the past decade: in 2015 the market should grow another 4 % while 2017 and 2018 should only result in marginal growth.
It believes the peak for this market is at 600 billion euro, with few opportunities for new appliances and the replacement strategy not as dynamic as first expected. In 2007, users wanted to buy a new smartphone every 19 months, but people have been holding onto their smartphone far longer in 2013, with 24 months per smartphone.
Older people are an area of growth for smartphones
Smartphones remain the largest part of the puzzle, worth half of the entire market, with an estimated 2014 turnover of 275 billion euro. Despite the numbers and the revenue surpassing those of 2013, the market is slowing down as the saturation point for most age groups has been reached.
Only the age group with people older than 55 years old has growth potential, as Deloitte expects 45 to 50 % of this age group will have a smartphone by the end of 2014, while only 37 % had one mid-2013. The age group of 18 to 54 already reached 71 % saturation at that point.
Large phones do not perform as well
The so-called phablets, smartphones with a screen size larger than 5 inch, take up a quarter of the market, with 2014 forecasts of 300 million being sold. That is twice what was sold in 2013 and ten times that of 2012, but it also signals the peak of the phablet which is not that useful to stow away.
The situation is quite similar for tablets where the smaller (and therefore cheaper) models will grow the most, with some 285 million tablets for 2014 which will create a 75 billion euro. If the move towards smaller tablets continues, general tablet sales will struggle to reach current levels by 2018.
Pc and television lose ground
Smartphones and tablets are nevertheless still outperforming personal computers, which brought in some 160 billion euro per year for years, but computers seemed to have lost steam in 2013 with a 12 % drop to less than 150 billion euro. That will not be rock-bottom according to analysts, with predictions of another 4 % drop in turnover, mostly because computer prices continue to drop.
The television branch is also shrinking ever since it has peaked in 2011, when it managed an 85 billion euro turnover, but it will drop below 80 billion euro this year. Technological advances, like 3D, have not caught on in such a way that consumers are tempted to replace their old set with a more expensive one. The drop may be reverted into growth by 2018, but Deloitte does not expect the 2011 peak to be reached.
Content delivery however becomes increasingly important with Deloitte expecting more than 50 million families to have two or more pay-tv subscriptions by the end of 2015. Another 10 million will have the option to see specific content through other means, like broadband internet. More and more people watch movies or shows on their smartphone or (even more often) on their tablets and that opens entirely new doors.
Wearable appliances and online school negligible
Deloitte expects the number of online students to grow to 10 million, double the number of 2012, but negligible compared to the entire school population. Nevertheless, Deloitte expects 10 % of all classes in higher education and the corporate world to be offered through online schooling by 2020.
Some 10 million wearable appliances (internet glasses or watches or intelligent fitness bracelets) should be sold this year, worth 2 billion euro, which is a significant amount but still relatively small compared to the entire TMT market. It won’t be until these appliances improve their performance and their range of possibilities that they can penetrate the corporate world.
