Cannibalization is a natural phenomenon related to the advancement of technology in a particular segment, market, or industry. It refers to the shifting sales from one product and in favor of another “newer” product from the same producer. The continuous decline in sales of the traditional PCs and the continuous increase in the sales of latest touch devices, including tablets and smartphones is the newest trend that has been witnessed in the last few years, is referred as the “Cannibalization of PCs by tablets and smartphones”.
Cannibalization of personal computers or PCs refers to the shifting market share in terms of sales from traditional PCs to tablets and smartphones. The shifting preference towards smart connected devices market, including tablets and smartphones from PCs, is primarily due to cost advantage and ease and comfort in “carrying” provided to the consumers in the former category. The rapid enhancements in the smart connected devices market such as related to wearable technology is also one of the main reasons for shifting preferences. The launch of Apple iPhone and iPad, as well affordable smartphones and tablets/tab phones by various companies, including Samsung, Lenovo, Asus, LG, and other global manufacturers, paved the way for shifting preference among the consumers from expensive PC market.
According to the Worldwide Quarterly PC Tracker of the International Data Corporation (IDC), worldwide PC shipments showed an annual decline of over 10% to stand at 71.9 million units during the fourth quarter of 2015. The year witnessed annual sales in the PCs segment fall below 300 million units first time since 2008. Even though the decline in sales was in line with the general consensus, the year also witnessed the largest ever decline in PC sales in the history, greater than the decline of 9.8% witnessed in 2013.
However, the market for smart connected devices is expected to show signs of continuous growth with overall shipments in 2015 estimated to be over 2 billion units, in terms of volume, and almost US$735 billion, in terms of value. The smartphones market accounted for almost 69% of the overall smart connected devices market with shipments of 1.4 billion units in 2015, and is further expected to grow exponentially to reach over 1.7 billion units by 2017. How the market shares are expected to change for Smartphones, Tablets, Portable and Desktop PCs from 2013 to 2017 is given in the figure below.
The cannibalization process is expected to continue in the future in line with rapid advancement in the touch screen devices’ technologies such as Apple iPad mini, and availability of these devices at reasonably cheaper and affordable prices than PCs. Also, the companies such as Apple and IBM are continuously engaging in developing task-specific business apps for tablets and other touch screen devices to further expand the market.
According to some industry experts, smart connected devices cannot be thought as the perfect substitutes for PCs because PCs are still more efficient and essential to carry out cumbersome tasks. However, smart connected devices have changed the structure of the market by reducing the reliance on PCs and extended their life-cycle. They also believe that the PC market has bottomed out and will start to stabilize now, and the market for smart connected devices will continue to show positive signs of growth.
However, in the meanwhile, an even newer trend has started to emerge in the last couple of years in the tablets market which could be referred as the “Cannibalization of tablets”, with large-screen smartphones also known as phablets showing signs of cannibalization in the small screen tablets market, which could adversely impact the sales in the global tablets market in the future. Follow this thread to know more about the advances in cannibalization of tablets through phablets.