El Segundo, Calif., January 6, 2011—The year 2012 will be the period when the media tablet revolution begins to have a transformative impact, imposing wrenching changes on the global electronics supply chain. This year will see a host of developments spurred by the rise of tablets, as the computing, semiconductor, storage, display, wireless and contract manufacturing segments scramble to react to the iPad and competing devices. These developments include the advent of ultrabooks, the increasing prominence of cloud computing—and the resulting impacts of these events on the technology supply chain. IHS (NYSE: IHS) examines 10 major transformations in the technology supply chain expected in 2012 related to the rise of media tablets below.
No. 1: Enter the Ultrabook
With the media tablet having decimated the netbook market and also putting the brakes on notebook sales growth, the PC supply chain is embracing the ultrabook as its potential savior.
“The arrival of Intel Corp.’s standard means the ultrabook will proliferate beyond Apple Inc.’s MacBook Air and start to move into the mainstream,” said Dale Ford, head of electronics & semiconductor research at IHS. “This is the start of a long-term trend that will have major repercussions on the technology value chain for years to come.”
Ultrabooks are designed to compete with media tablets with features including thin and light form factors, instant-on activation, always-connected wireless links, solid state drives and long battery lives.
IHS predicts global ultrabook shipments will soar to 29 million units in 2012, up from less than 1 million in 2011. By 2015, shipments will rise to 136 million.
No. 2: The 2012 forecast is mostly cloudy
In parallel with the rise of mobile devices like ultrabooks and tablets will be the increasing prominence of cloud computing as a competitive differentiator. This year will see innovations and refinements in how mobile devices interact with the cloud. Companies that effectively promote and market these new cloud services will achieve an advantage in the marketplace, according to Ford. Expect to see a multitude of cloud-service-related announcements throughout 2012.
No. 3: The tablet generation gap
The schism between younger and older generations in terms of computer usage will become apparent in 2012 with the rise of tablet PCs. Younger users increasingly are turning to tablets and smartphones as their primary means of computing and accessing the Internet—rebuffing PCs in the process, according to Rhoda Alexander, senior manager for tablet and monitor research at IHS. This year will reveal to a large degree whether the PC can remain relevant to younger users, who will determine the shape of the computer market in the future.
No. 4: Intel battles ARM insurgency
In parallel with the rise of the media-tablet-inspired ultrabooks will be the increasing use of ARM processors by PC OEMs. With their limited power consumption, low cost and highly integrated designs, ARM processors are perfectly suited for use in small-form-factor products, including smartphones and tablets With the arrival of Microsoft Corp.’s new ARM-enabled Windows 8 operating system in 2012, ultrabook makers will be able to employ ARM processors.
This represents a major challenge for Intel, whose X86 microprocessors have dominated the PC market for 20 years. IHS expects an influx of competition for Intel among makers of ARM processors now serving the tablet and smartphone markets in 2012. Propelled by this year’s introduction, ARM-based systems will account for 22.9 percent of global notebook PC unit shipments in 2015, up from 3 percent in 2012.
No. 5: Small displays start to become a big deal
The flat-panel television replacement wave over the past few years has been the dominant driving force in the display business. However, the rise of tablets and ultrabooks—and the continued strength in the smartphone segment—means that the focus of the display market will shift to the small- and medium-sized screens used on these platforms.
Illustrating this trend, the portion of display driver chips used in large screens will decrease, and then will grow in small and medium screens in 2012. An estimated 44 percent of all display drivers will be used in small/medium displays in 2012, up from only 39 percent in 2010, according to Randy Lawson, principal analyst, display and consumer electronics at IHS.
No. 6: Hard drives shrink in order to grow
To cash in on the fast-growing sales of the ultrathin ultrabooks, hard disk drive (HDD) makers will have to shrink the form factors of their products. HDDs in 2012 will begin to reduce their standard thickness to 7 millimeters, down from 9.5 millimeters in 2011, and will attempt to shrink down to a desirable 5-millimeter size, according to Fang Zhang, storage analyst at IHS.
No. 7: Ultrabooks make a dash for cache
In parallel with the demand for thin HDDs, ultrabooks will generate booming sales of cache solid-state drives (SSDs). Part of Intel Corp.’s ultrabook specification, cache SSDs are storage solutions that boost responsiveness and performance by adding a small amount of high-performance NAND flash memory that can store frequently used data and code. Global shipments of cache SSDs in Ultrabooks will rise to 22.5 million in 2012, up from half a million in 2011, according to Ryan Chien, research associate for memory & storage at IHS.
No. 8: LTE for everybody
Demand for faster mobile data rates and latencies—driven by rising sales of smartphones, tablets and now ultrabooks—will generate massive growth in subscribers for the next-generation 4G wireless standard known as Long Term Evolution (LTE). Global LTE subscribers will surge to 63 million in 2012, up more than fivefold from 12 million in 2011, according to Francis Sideco, senior principal analyst for wireless communications at IHS.
No. 9: Contract manufacturers head for the cloud and Ultrabooks
Suffering from low margins and weak growth in their existing notebook PC business, original design manufacturers (ODMs) in 2012 are entering the market for servers used in cloud applications, which could generate higher profits for these contract manufacturers, according to Jeffrey Wu, senior analyst for OEM at IHS. Notebooks represent a core business for ODMs, with the companies accounting for a majority of the global production of these devices. With notebooks sales growth slowing due to the incursion of tablets, ODMs are turning their attention to ultrabooks to revitalize sales. In 2012, ODMs will be watching the ultrabook market very closely to determine the success of these efforts.
No. 10: Wireless goes ubiquitous
The year 2012 may be the time when we start to see ubiquitous wireless technologies spur exciting new business models in technology. Given the rise of smartphones, mobile PCs and now tablets, Wi-Fi now has reached a state of omnipresence. This will create fantastic business models that didn’t exist one year ago, according to Steve Mather, principal analyst for wireless communications at IHS.
About IHS (www.ihs.com)