Market Intelligence – In recent months there has been good news on increasing PC sales (notably notebooks) and slowing tablet sales, leading many to believe that the consumer love affair with tablets is over, a sentiment that Tim Cook, CEO of Apple did not share in a recent interview. Cook believes that the tablet market is just getting ready to shift into second gear and really take off.
Whether you are a ‘glass half full’ or ‘glass half empty’ person, the market is the market and sales are being counted at the end of the year and not before. We technology analysts make a living by talking about future results and what may or may not happen in the market. (Let us call this ‘educated speculation’.) The basis of this speculation is often reports from the supply chain that certain products are either in an over- or under-supply situation.
Digitimes is a Taiwanese supplier of supply chain news related to what is happening in the manufacturing world today, as well as speculation on future market developments. To be more accurate, it shows what manufacturers are planning to sell, but not necessarily what consumers will buy.
This week was especially active in this area with several developments that will all influence the PC market including smartphones. Here they are:
- Notebook touch panel makers expect limited shipment growth in 2H14
- Commercial replacement demand upholding global PC shipments in 2014, says MIC
- LTPS panel technology currently sees oversupply in the market
- Notebook demand undermined by new Apple devices
Let us take a look at all of those announcements but keep in mind that they are tainted by a Taiwanese supply chain perspective.
Touch panel makers expect lower orders in the second half of 2014, as many notebook PC makers are releasing lower priced models to better compete in the market. This tells us that PC makers are not happy with the small increase in sales this summer. It also says that Windows 8 PCs are not high on the list of future sales plans.
The commercial market is certainly an important driver in the notebook and PC market, and if we can believe MIC, it is even driving a general uptick in notebook demand. Just compare that with the paragraph above. The Market Intelligence & Consulting Institute (MIC) has an Asian perspective as they admit, but when we address global markets the various companies should at least agree on the overall trend. I am not so sure that they do in this case.
The LTPS oversupply is driven by Japanese, Korean and Chinese vendors that have increased LTPS capacity leading to this oversupply situation. Since Taiwan has mainly invested in a-Si manufacturing they look at this oversupply situation in a very weird way. Most of us would expect that LTPS oversupply would create price pressure on the manufacturers and more competition with the a-Si folks, but the Taiwanese companies expect this oversupply situation to just exist in the foreseeable future, as a-Si will improve and always be cheaper. A very dangerous perspective, especially as they note that the new iPhone is using LTPS panels. On the other hand, what can they do now other than hope that they are right?
The last statement makes no sense at all at a first glance. Why would the iPhone 6 impede on notebook sales. However, this is in my opinion actually the most interesting report. They quote industry sources as saying that the iPhone will bind consumer dollars that then will not be spent on other IT devices. We all know from our own experience that we all have a pre-set budget allocated for electronic devices. No matter what the budget is, it is limited for the vast majority of consumers. With a still somewhat lacklustre economy, these budgets are being cut rather than expanded. If a new device like the iPhone 6 enters the market, this does absorb some of this electronic device budget, an effect that can be also used to explain the slowdown in the TV market after the take off of the tablet devices.
In addition, the generational shift of buying power from the Baby Boomers to the Millenials does make a smartphone purchase more important than a new UltraHD TV set.
Maybe we are seeing the beginning of a new age of CE buying behavior. While many of us still remember the effects of the crystal cycle on TV pricing, we may in the future refer to the ‘iPhone release cycle’ as the driver of over- and under-supply in the display industry. Who knows. – Norbert Hildebrand
