Beancounters working for Adobe have worked out that the digital economy is suffering a period of deflation across nearly every category it tracks.
Adobe’s Digital Price Index (DPI) looks at inflation rates across consumer goods categories that the the Bureau of Labour Statistics’ Consumer Price Index (CPI) measures.
However Adobe analyses actual transactions in real time and can account for changes in consumer behaviours, whereas the government relies on surveys to approximate sales of each product category.
Adobe spotted deflation across nearly all categories Adobe tracks including groceries, TVs, toys, electronics, furniture, appliances and flights.
In sporting goods, the DPI shows three times more deflation than the CPI for the last year. In computers, the DPI saw twice as much deflation year on year versus the CPI. The DPI explains the decrease in demand and pricing for sporting goods and PCs that led to the recent bankruptcy announcements and Intel pulling out of the PC market.
Prices for TVs and Tablets dropped the most year on year. TV prices fell 19.7 per cent and tablets fell by 20.9 per cent.
The DPI analyses billions of digital transactions involving 15 billion website visits and 2.2 million products sold online, tracking digital transactions more accurately than any other current source.
Economists, Austan Goolsbee, former chairman of the Council of Economic Advisers for President Obama, and Pete Klenow, professor, department of economics at Stanford University, are the brains behind the DPI.
A report said that for every CPU it sells to Chinese vendor Xiaomi, Intel will give away a tablet CPU too.
The report, in Taiwanese wire Digitimes, quotes sources in the supply chain for the information.
It’s transparently clear what the chip vendor is doing. It still only has a minute share in the tablet market which is dominated by other players, and it hopes that the move will spur Xiaomi to make Intel based tablets.
Xiaomi has made a name for itself in the smartphone market, and Intel has only a weak presence in that market too.
But while the deal might look juicy and attractive, it transpires that the “free” chips are cheap Atom microprocessors.
Xiaomi is a relatively new player in the PC notebook market and is expected to launch products in Europe in the new year.
A market research firm said that 40 million tablets will ship worldwide in this, the fourth quarter of 2015.
ABI Research said last quarter 30.6 million branded tablets shipped, but described this quarter as promising, with units accounting for 29 percent of the total volume in 2015.
Nevertheless, the fourth quarter will be down 19.7 percent compared to the same quarter last year.
Jeff Orr, a research director at ABI, said: “Vendors are hoping to gain back some of their unit and revenue shortfall from earlier in 2015. New tablets from Amazon and others will utilise a low cost approach to achieve this strategy.”
Orr numbers the vendors as Apple, Samsung, Lenovo, Huawei and Asus, in order. But the biggest gains during the quarter were made by Lenovo and Asus.
The biggest vendor losers during the quarter will be Apple and Microsoft – the former fell eight percent during the first nine months of 2015. Microsoft lost over half of its market share in the previous 90 days as it moved from the Surface Pro 3 to the Surface Pro 4.
Yesterday we reported that the outlook is bleak for tablets as smartphones get bigger and bigger.
But in 2016 there will be a segment of the tablet market which is set to grow, according to Digitimes Research (DR).
The Apple iPad market will grow in 2016 because of sales of the iPad Pro and a future iPad Air, said DR.
Sales of Microsoft Surface 2-in-1 machines are also expected to offset the overall decline in tablet sales.
DR believes that the so-called “white box” tablet players will exit the market.
Apple will continue to be the largest vendor next year, followed by Samsung and Lenovo. But the last two will see big declines.
Analysts predict that tablets over 10 inches will grow over 20 percent in 2016 because of sales of the iPad Pro and the Surface 2-in-1, taking a total share of the tablet market of over 20 percent.
A market research company said that vendors fond hopes of the notebook recovering are likely to be dashed.
Trendforce said notebook shipments will fall “significantly” this year. Vendors still have warehouses full of notebook which they haven’t been able to shift.
Trendforce estimates that the total notebook shipments in 2015 will amount to about 164.4 million units.
That’s a fall of 6.4 percent year on year.
But Trendforce analyst Anita Wang said 2016 is likely to be better. “This year has been extraordinarily tough for the notebook market. However shipments will recover in 2016, when more branded vendors will be entering the market, including Xiaomi and Huawei.”
But it’s a glimmer of hope only, because Wang said total notebook shipments will only be up by one point compared to this year.
Tablet shipments are in an even more parlous state, she said. Demand “has become soft” and there are no new features while smartphones are increasingly replacing tablets.
Trendforce estimates that 16.4 million units, a decline of 14.9 percent compared to last year.
There appear to be no glimmers of light at the end of the tablet tunnel, she said. She thinks next year will show a continued decline in tablet shipments.
Taiwanese wire Digitimes has published details of the processors Intel will make for the tablet market.
Generally speaking, the tablet market is in decline with people not particularly interested in upgrading until their machine is broken.
Larger size screens on smartphones are also biting into tablet sales.
The roadmap shows that Intel will introduce four microprocessors in 2016 – the Atom X3 in the first quarter, and using a 28 nanometre fabrication process; followed by the Atom X5 and the Atom X7, aimed at the mainstream and high end market, in the second quarter of 2016; and lastly the Core m5/m7, built on a 14 nanometre process, released in the fourth quarter of next year and also built on a 14 nanometre process.
Intel was rather late in getting into the market and has a pretty small share. You can find the Digitimes story here.
Import tariffs on large displays is discouraging people from buying big TFT LCD displays. Currency fluctuations have also had an effect on the figures.
IHS Technology said in a report that shipments will fall by about five percent for the whole of 2015.
However, the decline in shipments will be offset by the manufacturers by growth in the amount of panels that can be built – that will grow by five percent in 2015.
IHS said that year on year shipments of displays for tablets, notebook PCs, and PC monitors will fall by 12 percent in 2015.
Yoonsung Chung, a senior analyst at IHS, said that maintaining TV panel production is the most important to use the full capacity of the fabrication plants that build the panels.
He said: “To consume this added capacity, TV panel makers must produce more panels, whch means the industry could end up adding excess panels to inventory, leading to sharp TV panel price erosion in the second half of this year.”
He said prices are also likely to fall in 2016, meaning the cost of 55-inch and bigger TVs will fall – and that may stimulate demand.
Chinese computer giant Lenovo said it had made a loss of $714 million but its revenues for its second quarter grew by 16 percent to $12.2 billion.
Lenovo has seen the PC market continue to decline – it is the world’s biggest PC vendor right now. But it’s also seen a fall in sales of smartphones and tablets.
The second quarter included charges of neatly a billion as it laid off employees and emptied warehouses of smartphones.
Lenovo said earlier this year that it would make 3,200 people redundant to save costs.
In a statement, Lenovo said that global markets and currency fluctuations had made the period “challenging”.
Most people don’t plan to buy a new tablet in the next 12 months because there’s no real reason to do so.
That’s according to a survey from Gartner, which concluded that only 17 percent plan to buy a tablet in the next 12 months. Gartner surveyed 19,000 people in the US, the UK, France, China, Brazil and India.
Meike Escherich, a principal analyst at Gartner, said applications rather than hardware sell tablets. “Most applications work pretty well first and second generation tablet hardware, and because the operating system can be upgraded for free, the user not compelled to change the device,” said Escherich.
Further, people aren’t particularly interested in the hardware and devices can access the cloud.
She said that “the churn of the mature installed base will continue to fall”. Many tablet users may never upgrade because so called “phablets” and 2-in-1 PCs include the benefit of a tablet.
The survey showed that 48 percent of people didn’t want to replace a hardware unless it was absolutely essential to do so.
Even though growth in the market fell during the third quarter, shipments rose by 6.8 percent from the second calendar quarter.
Taiwanese market research company Trendforce said the drop in demand is because the market is saturated.
Total shipments of tablets in 2015 are expected to amount to 163.4 million units, down 14.9 percent compared with 2014.
But there appears to be some light at the end of the tablet tunnel.
Trendforce believes Amazon will see “a dramatic increase” in shipments as the year ends and that’s largely due to the introduction of the seven inch Fire tablet released at the end of last month. It only costs $50 and will push Amazon shipments up steeply in this, the fourth quarter.
Meanwhile, Microsoft saw 2-in-1 growth in the third quarter, with sales of Surface 3 doing particularly well.