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Launches of flagship smartphone devices over 2013 highlighted a shift toward larger screen sizes. Google’s Nexus 5 released in October 2013 has a display touching 5 inches, matching other flagship Android devices released in the past year such as the Samsung Galaxy S4 and the HTC One. And consumers seem taken with this trend; our research shows that 1 in 4 smartphones in Western Europe has a display size of at least 4.5 inches, up from 1 in 10 in 2012. So what are the implications of this growth in device size?
The best of both worlds?
From a physical point of view, the market is seeing size convergence between smartphones and smaller-sized tablets, the latter of which tend to have displays of around 7-8 inches. As such, a new sub-category has emerged to describe smartphones with screen displays over 5 inches: phone-tablet hybrids or ‘phablets’. So what is driving this growth in screen size?
Smartphone owners are increasingly using their handsets for high-demand content, such as watching films or streaming their favorite TV shows, as any busy bus or train commute would attest to. Such usage is only likely to increase as 4G connectively becomes more widespread. Research conducted in April 2013 by UK telecommunications regulator Ofcom stated that 3 in 10 UK smartphone users intended to upgrade to 4G at their end of their existing contract, and quicker download and streaming speeds are important drivers.
Larger devices such as phablets offer a canvas on which users can view a variety of content on a screen which is large enough to provide an enjoyable user experience. The key differential between phablets and other portable devices (such as laptops) is that phablets retain the core features of mobile devices, such as voice calls and messaging while on the move. This differential seems to appeal to consumers; in September 2013 we predicted that the emergence of phablets will be a key trend in 2014 and our sales data shows this to be an accurate prediction. In particular, South Korea shows extreme development of this trend, with phablet sales outpacing laptop and tablet sales. The presence and brand strength of Samsung will no doubt have helped here, with its smartphone and tablet portfolios covering a range of sizes and price points.
In contrast to Samsung, Apple is absent from the phablet market. No iPhone released to date has a display of more than 4 inches. Technology analyst Tim Bajarin suggests this is largely because Apple has taken heed of user feedback and concluded that people prefer to be able to use their phone in one hand - something that is harder to do with larger devices. The relatively small-screen sizes of Apple’s iPhones means there are clear size-differentials between its iPhone and iPad tablet device ranges. The smallest iPad, the Mini, is 7.9 inches, meaning there is a significant 3.9-inch difference in display size between the iPhone 5S/5C and the Mini. That, however, may change as rumours mount that the next iPhone (suspected to launch in 2014) will be closer to 5 inches. It is also rumoured that Apple may enter the phablet market, developing a phone around the same size as the Samsung Galaxy Note 3. If true, it would be further testimony to the growing importance of larger smartphones*.
Phablets versus tablets
While the phablet market grows, the tablet market is increasingly diversifying. High-end tablet devices now push beyond the 10-inch barrier, while a plethora of smaller and cheaper tablets occupy the 7-8-inch territory. Our sales data strongly suggests tablets have negatively impacted laptop sales, at the very least by delaying replacement purchases. This begs the question whether phablets can become sufficiently mainstream to do the same to tablets?
There are already signs of demand being impacted. A recent survey we conducted in Western Europe shows that 10% of existing tablet owners are considering converging their tablet and smartphone to a single large-screen mobile handset. In Asia-Pacific our sales data shows weakening tablet trends in markets where phablet sales have risen rapidly in recent months.
Serving a purpose
For the time being smartphones and tablets sit alongside each other in accounting for an ever greater share of global spending on consumer technology. We forecast that unit sales of both form factors will show strong double-digit growth over 2014, while sales of laptops and desktop PCs will continue to contract.
As tablet sales continue to grow and they move closer to becoming a mainstay form factor, user behaviour may ultimately dictate the extent to which they remain distinct from phablets. Use of tablets may eventually replicate the way household PCs and laptops are currently used - that is, nominally owned or bought by an individual or couple (i.e. parents) but widely used by other family members, co-habitants, and even friends. For phablets, the ability to make calls on these devices may act as a barrier to such communal use.
However, it remains to be seen whether phablets will be used solely as personal devices or whether larger displays will encourage shared use. Manufacturers will no doubt continue to monitor consumer preferences around device size, as phablets become an increasingly important bridging point between the smartphone devices that have appeared to date, to tablets and beyond.
*We forecast that 15% of all smartphones sold to end users in 2014 will be large-screen smartphones (that is, with screen sizes of at least 5 inches).
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