How the rise of the tablet sucked $40bn out of global IT spend

How the rise of the tablet sucked $40bn out of global IT spend

Summary: Strong growth in tablets means there is less overall spending on PCs as people opt for the more portable, lighter, solution.

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They've already been blamed for killing off the netbook, but now it seems the popularity of cheap tablets has taken billions out of the global device market.

Google Nexus 7
Tablets such as the Nexus 7 have bitten in to PC sales. Image: CNET

Analyst firm Gartner had predicted that the global IT device market would be worth $706bn in 2013 when it released its quarterly forecast figures last October. But it now forecasts the IT global device market for 2013 will be worth $40bn less, at $666bn. 

The reason for this lower valuation is because an increasing number of people are choosing to buy budget tablet devices over expensive PCs. 

"The big change in the forecast this quarter is that we've reduced the overall devices forecast growth rate quite a bit because of the impact of tablets on the market," Gartner VP Richard Gordon told ZDNet. "It makes the overall market, from a device perspective, less lucrative." 

While a laptop can cost upwards of £1,000, the vast majority of tablets can be purchased for considerably less. For example, the iPad range starts at £269 and Google's Nexus tablets start at £159.

Gartner figures suggest Apple devices are expected to continue to dominate the tablet market this year, with 54.8 percent of tablets worldwide running iOS. Meanwhile, Android is forecast to hold 41.4 percent of the tablet market and Windows is expected to hold three percent. 

"If you look at the long-term growth rate of the traditional PC market, it is starting to decline in 2013 and we're expecting it to be flat at best for the rest of the forecast," said Gordon. In contrast, Gordon said he expects the tablet market to continue with its high growth over the next five to 10 years.

"There is a real transition going on between the traditional PC and the tablet so there are more and more tablets being bought in both mature and emerging economies and because they're lower cost they take money out of the market," said Gordon. 

IT spend going up?

Meanwhile, Gartner predicted that total worldwide IT spend in 2012 will rise by 4.2 percent to $3.7tn. Gordon claimed 2013 will see more money spent on IT than in 2012 for a number of reasons.

"There is a real transition going on between the traditional PC and the tablet" — Richard Gordon, Gartner

"The uncertainties that we've seen over the past year, in terms of the US political and economic situation, the Eurozone crisis and so on, are still there," he said.

"But we're more optimistic that we're seeing a bit more resolution to some of those and a bit more clarity, which is what businesses need for investment confidence and what consumers need for consumer spending."

However analyst group Tech Market View disagreed with Gartner's predictions. Richard Holway, chairman of Tech Market View, argued in an article published on the company's website on Friday that global IT spend is likely to be closer to one percent for 2013. 

"We believe that IT is deflationary. All the trends from off-shoring, cloud, BYOT, commoditisation etc actually deflate IT spend," he said. 

Topics: Tablets, Android, Apple, Microsoft, Tech Industry

Sam Shead

About Sam Shead

Sam is generally at his happiest with a new piece of technology in his hands or nailing down an exclusive story. In the past he's written for The Engineer and the Daily Mail. These days, Sam is particularly interested in emerging technology, datacentres, cloud, storage and web start-ups.

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19 comments
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  • and this is only the beginning

    More & more people will recognize that spending $1000 on a PC/Laptop is pretty much a huge waste of money if all you wanna do is surfing, email, fb and twitter.
    Even Office work will soon be available in decent quality with Google docs. At least good enough for most "light-weight" users.
    Consumer IT industry better dresses warmly to be prepared for 2 digit % declines in sales. Even worse PC/Laptop average prices have to come down to make them attractive to still unsettled buyers.

    Let's see if Apples strategy works well by not giving the iPad multi user capabilities making each member in a household buying his/her own device.
    EnticingHavoc
    • Wow

      Love my job, since I've been bringing in $5600… I sit at home, music playing while I work in front of my new iMac that I got now that I'm making it online(Click on menu Home)
      ........http://goo.gl/5cOa4

      Happy New Year!
      JesseTyler
    • Or, as usually goes with things like this

      there is only enough budget for one or the other, so the $500 - $600 tablet is this years, purchase, with the $500 - $600 PC purchase waiting for next year.
      William Farrel
      • Or, as is the case

        with my parents, the ipad arrives, the prospect of updating the PC that lives in the bedroom declines.
        A lot of people are buying tablets and finding they don't need the PC. If you embrace the cloud, then USB and disks etc are not needed. I would estimate that over 75% of home users don't use office at all, other than maybe word which can be replaced by many other competing products.
        A certain % of people will simply not replace their ageing PC.
        Little Old Man
    • Based on Nexus 7 usage data...

      Google's idea of making a tablet a complex beast like a PC with multiple logins etc is not working out well.

      The draw of the tablet really is simplicity. As you said, "surfing, email, fb and twitter."
      Bruizer
    • You don't have to spend that much on a laptop, though.

      When we bought my wife her laptop to use for work (she's a college professor, & has to pay for it out of pocket), we spent under $600 for a very nice laptop that had a nice widescreen display, dual-core processor, and full keyboard with number keypad.

      Is it as nice as the custom PC I built a year ago for under $1,000? No, of course not, but it's still better than the old desktop PC that we replaced last year.

      Could a tablet (Apple or non-Apple) have replaced it? *No*. She needed a device that not only came with a USB port for the SMART Slate she ordered, but it also needed to have a monitor output to hook up to the overhead projectors in the classrooms that didn't already have SMART boards, as well as being able to install the necessary software. And, as a nice bonus, the HDMI-out port means we can hook it up to the living room TV & watch Hulu.

      So, for the price of the top-end Wi-Fi-only iPad, she bought a device with a superior processor, superior RAM, superior storage space, and superior performance, in addition to the peripheral options she needed.

      Now, maybe for someone who *only* wants a more mobile option for accessing their email, or who is going to do quick Internet searches (i.e. finding local restaurants, looking up movie times, quick Wikipedia searches, checking news stories, etc.), a tablet/Wi-Fi MP3 player, or smartphone would be a cheaper way to go....at least for the initial purchase. But the cost & difficulty (if not impossibility) in physically upgrading a tablet or smartphone means that, unlike with desktop or even laptop PCs (which at least provide minimal options for upgrading), you are physically replacing the unit every time you "upgrade" to the next model. So, in the 3-4 year time that someone "upgrades" their tablet to the latest & greatest version, they've spent *more* money than I would (including any upgrades along the way). In other words...if all you're using the tablet for is reading email, social networking, & quick Internet searches, you don't need to buy the "latest" version of your tablet every time one comes out, because there's no need for the "increased performance"...most of which is eaten up by the bloated features of the new OS.
      spdragoo
      • Blame the projector.

        Not the tablet.

        Projectors are notorious for having old interfaces.

        And your anecdotal evidence isn't truly representative.

        I hardly know anyone outside of the boardroom (or teaching profession) who needs to use a projector.
        Bozzer
  • It misses the point

    In the early PC era, I had a dedicated computer room in my house with a PC that the family shared. Later laptops and wireless connections brought portability to computing. I still have a PC. Between my wife and I, we also have an iPad, a kindle fire, two laptops, two smartphones, and a Wii that we use for netflix. With the monthly charges for phones, cable, and Internet, plus multiple devices, I am spending more than ever on gadgets. The difference is that it is spread out among multiple devices and multiple data plans. If the definition of IT were broadened to include anything connected to the Internet I suspect the numbers would look very different.
    krossbow
  • How the rise of the tablet sucked $40bn out of global IT spend

    I can't agree with that. Tablet spending is just the fad for the next 2 years just like it was with the netbooks. I see less and less tablets in the wild. People are realizing these are not PC replacements. Sure they buy them and use them for a few months, after that it just sits on the shelf collecting dust.
    Loverock-Davidson
    • Disagree

      Are we still having this debate??? This whole idea that tablets have to be PC replacements is something only IT people care about. Normal people get it. They have both, and they use the appropriate device for the task at hand - much like normal people own a corkscrew rather than insist on using a Swiss Army knife.

      If I look around the homes I know with tablets, I see the opposite of what you're saying - it is the laptop that is gathering dust - relegated from the living room to the study, and really only used when typing is required.

      Does that have any relevance to the enterprise?? Not really, work needs are different (in some jobs tablets are superior, in many negative) - but the same is true of all equipment - a small domestic car can't do what an articulated lorry can.
      JulesLt
    • Well I wish you'd tell Microsoft this.

      Because being such a great supporter, care to explain the abomination that is Windows 8.
      Bozzer
    • You would have to get out in public to see if there are any tablets

      and we all know trolls don't go out in public.
      non-biased
    • @Loverock_Davidson...

      Didn't you say the same rubbish a year ago?

      And if I'm not much mistaken, you've been crowing about the demise of the tablet for as long as I've been reading here. Something about the form factor being poorly thought out.

      Guess all those people out there just aren't listening to you. You need to shout louder...
      Jackie-Smith
  • Well he's probably right about one thing

    One the PC and Table hybrid is set properly - say a macbook air and ipad or MS's 1st pass at Surface catches up...the tablet by itself is done. I can get a PC and tablet in one... and right now ONLY MS can apply their OS properly. I think they are early but have the pockets to weather it and in the end maybe the winner. But OS X and iOS are doing the same thing...MS is the 1st one out of the gate. Time will tell.
    ScanBack
    • Windows 8!

      It's a mess....
      Bozzer
  • Open Source Is Deflationary

    Note that it is Linux and other open-source packages that are driving this drop in IT spending. Proprietary companies like Oracle and Microsoft continue to hike prices to shore up their sagging profit margins, relying on their vendor lock-in death grip to keep the customers from defecting, but that strategy is proving less and less effective.

    Proprietary software is in a death-spiral. The only question is whether you're smart and recognize it now, or stubborn and cling on until you hit the ground.
    ldo17
    • Hike up prices?

      Microsoft is selling Windows 8 far cheaper than any other operating system they have ever made.
      Bozzer
  • RE: Will always need big screens but

    If you just surf, email etc and are dexterous all you need is a tablet. You need a big screen and maybe keyboard for traditional work for reasons discussed endless times. If you are a klutz have weak or unsteady hands tablets (and all mobile) are bad, same if you are far sighted. But you don't need a traditional PC for a big screen, just a tablet that seamlessly docks and redisplays with a big monitor. Technology is already here
    edkollin
  • Ironic really

    Wintel seemed to conspire to destroy the netbook because there wasn't enough profit in those little devices. Now they find users escaping from their clutches altogether. My little tablet fills the niche for an always on basic needs machine and my trusty old XP laptop is fine to do everything else.
    huwj