The global laptop market is in trouble.
Ultra-portable devices like tablets, smartphones and phablets are slowly chipping away at the market share of traditional laptops. These devices can do everything a laptop can—from accessing enterprise applications, to providing access to fast Internet, gaming, and other important features—all in a very convenient, mobile package.
Coupled with the fact that the laptop market has reached saturation, this spells a pretty grim outlook for laptops.
According to Technavio, the market was valued at $115.2 billion in 2014 and is expected to decline to $107.9 billion by 2019, declining at a CAGR of -1%.
Falling ASP and Shift in Demand
The falling average selling price of laptops has become a big challenge for vendors trying to maintain a bottom line. Firms are facing tight profit margins and increased competition, and consumer preferences are swaying more towards mobile devices, rather than traditional laptops.
The saving grace for laptops will be innovative products like Chromebooks and netbooks, which are expected to give the market a good boost over the next year,
But despite the current trendiness of Chromebooks, these cheap alternatives don’t really contribute much to the market in terms of revenue, and likely won’t be enough to sustain any long term growth.
For instance, in the US market, Chromebooks/netbooks accounted for 35% of the total US commercial laptop sales in 2014 with an increase in unit shipments of more than 250% compared to the previous year. However, the large number of unit shipments is not enough to turn around the negative market growth rate.
Another big problem is with Chromebooks themselves—there’s a lot of discussion from both supporters and detractors of these computers, which run on the Chrome OS and function exclusively through the cloud.
According to Larry Seltzer, buying a laptop that is essentially a browser isn’t the most cost-effective approach.
“As I see it, there’s nothing you can do with a Chromebook that you can’t do with a Windows laptop running Chrome. I just shopped a bit on Amazon and it looks like the prices aren’t all that different. So what’s the point of buying a Chromebook?”
The main pros of the system seem to be the automatic updates, lack of viruses and overall simplicity. These are the big reasons that Chromebooks have become so popular in the education sector, since the computers require very little IT support.
However, one of the issues is that these organizations aren’t likely to replace or upgrade their technology on a very regular basis, so they aren’t a stable source of revenue for vendors.
So it would seem that despite the small boost the market will get from Chromebooks in 2015, it won’t be enough to save the sinking ship that is the global laptop market.
Vendors are more than aware of this, and are casting wide nets to try and reel in more customers: Many vendors are now manufacturing tablets and hybrid laptops to help bridge the gap.
It will certainly be an interesting few years as we see who will sink, and who will swim as the global laptop market continues its slow decline.
