Wireless Mobility Assembly Product Markets to Experience High Growth

During 2012, the total worldwide total cost of goods sold (COGS) market for all wireless products (notebooks/ultrabooks, tablets, smartphones, traditional cell phones, and e-readers) is estimated to reach $348 billion in assembly value, or almost one-third the assembly value of all electronics products manufactured worldwide.  Due to the ever increasing demand for these products and the staggering overall total unit shipments (over 2 billion), manufacturers have a powerful incentive to develop new technological innovations and product iterations on a regular basis. This is starting to flood the market with so much product choice that it is blurring the distinctions between device segments so that tablets are now competitive with notebooks and e-readers are competitive with smartphones. All products segments are starting to become competitive with each other.

This trend will drive down the average assembly value of each product by an estimated 1.2 percent CAGR over the next five years with smartphones suffering the highest decline and notebooks experiencing positive growth due to the introduction of ultrabooks.  It is projected that by 2017, the total assembly value of all wireless mobility products worldwide will achieve $559 billion, or a 9.9 percent CAGR.

End user applications for notebooks are expected to follow the trend toward verticalization, where business and professional needs will be customized accordingly.  Vertical markets include entertainment, healthcare, scientific research, legal services and government.   Tablets in particular will follow this trend as buyers migrate away from games and music and embrace entertainment (video), shopping, and traditional email/communications and web browsing.  This pattern will be similar in smartphones since these products will become pocket-size versions of tablets over the next several years.  E-readers hold the greatest potential for evolution of end-user applications when the education (textbook) market is realized, but are expected to open up over the forecast period for other reasons, i.e. when published content (magazines, catalogs, etc.) becomes digitally available. The e-reader is thus likely to evolve into a low-cost smartphone with limited capabilities.

The wireless mobility product assembly market will be led by many interesting OEM suppliers.  First among them is Apple, which is probably experiencing its peak in terms of brand recognition and revenue in 2012.  Samsung will represent the biggest threat as the company flexes its design and distribution muscles to make an equal or superior smartphone, tablet and possibly e-reader product.  Another important player will be Google, which will be launching its own hardware products (formerly Motorola) to capitalize on the search and advertising business.  A less than obvious powerhouse will be Amazon, which is attempting to seed the market with low-cost e-readers that can eventually be upgraded to be computational and interactive.  Suppliers that will face the most brutal competition include Acer, Dell, Huawei, Lenovo, Nokia, RIM and ZTE.  There may be some life for innovators like Barnes&Noble, HTC, LG, and Sony but the field is already too crowded.  While some suppliers may exit the market, one thing is for sure—demand for wireless mobility markets will be very strong over the next several years.