Slowdown Hits UK Smartphone and Tablet Sales, Tough Competition Looms
Consumers Set to Benefit as 4G Devices Become More Affordable
- Five million fewer devices will be sold in 2014 than in 2013
- Mobile phone sales to drop 11% in 2014
- Tablet sales to slump 14% in 2014
London, 3 July 2014. CCS Insight's latest forecast signals demand for smartphones and tablets in the UK has slowed dramatically. The research company estimates 27 million phones and 12 million tablets will be sold in the UK this year — five million devices fewer than in 2013.
The forecast showed sales of mobile phones dropped 20 percent in the first months of 2014 compared with the same period in 2013. Meanwhile tablet sales, which broke all records in previous quarters, slumped 17 percent. This is the first time such a sharp decline has been recorded in the vibrant UK market outside a recession.
However it's not all doom and gloom for the UK tablet market. With over 25 million tablets already in use in the UK — many of them being used by more than one person in a household — CCS Insight expects the number of tablets in use to double by 2017 as more people and businesses buy the devices.
Marina Koytcheva, director of forecasting at CCS Insight, said, "The slowdown in tablet sales should come as no surprise to the industry. We warned back in December that the spectacular tablet growth we've been seeing in the last two years was unsustainable. With replacement rates for tablets slower than those of smartphones, a temporary lull was inevitable."
But more worryingly, the forecast revealed that replacement sales of mobile phones are slowing, with consumers having little reason to upgrade as regularly as they have in the past. The pace of innovation in smartphones has declined and the growing number of attractive SIM-only deals mean people choose to stick with their current smartphone for longer than the usual two years.
This is happening despite the fact that many network operators have already started to offer 4G at no premium over 3G, less than two years after the first 4G services were launched in the UK by EE.
CCS Insight expects competition to reach unprecedented levels in the second half of 2014. Strong contenders for the consumer's gadget budget will come from the replacement of old PCs, neglected during the tablet boom, and a growing interest in smart wearable devices.
Ben Wood, Chief of Research at CCS Insight, notes "This is a double whammy for device manufacturers. No one anticipated we'd see so much pressure on both tablet and smartphone sales at the same time. In response to slowing sales consumer electronics companies will be tempted to step up their marketing efforts and spoil buyers with a wealth of attractive promotions and bundles. Early signs of this have already emerged, with cheap tablets or wearables being thrown in with a smartphone sale to sweeten the deal".
To address this, UK networks will have to get smarter in the way they offer their services. CCS Insight expects new tariff innovations such as shared data plans for 4G services, early upgrade schemes and keenly priced mobile deals to become part of home broadband or TV packages.
CCS Insight CEO Shaun Collins believes this is great news for consumers in the UK: "They're going to get more-affordable access to 4G services more quickly, cementing the UK's reputation as one of the most exciting mobile markets in the world".
Despite the challenging outlook for the rest of 2014, CCS Insight expects the market will get a lift when Apple unveils the next iPhone. Strong sales of the new device will revive people's interest in mobile gadgets, which could help other manufacturers as well.
Collins concluded, "This might mark the start of a whole new chapter in the UK mobile devices market. The Brits love their gadgets and now they have to spread their money across more devices. It's no longer just about having the latest and greatest smartphone."
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