IC Insights believes strong sales of large-screen smartphones will continue in the next three years while the tablet market struggles with low single-digit percentage growth through 2018. The revised forecast shows large-screen smartphone shipments climbing by a compound annual growth rate (CAGR) of 40% between 2014 and 2018, while tablet unit shipments are expected to rise by a CAGR of just 3% in this four-year period. Large-screen smartphones are having the biggest impact on mini tablets, which saw a rise in popularity in the past few years. Mini tablets have 7- to 8.9-inch displays and typically run the same software as smartphones.

The phablet segment is expected to account for 17% of total smartphone shipments in 2015, which are forecast to be about 1.5 billion handsets. The Update report shows phablets representing 21% of the 1.7 billion smartphones that are forecast to be shipped in 2016. Phablet sales are projected to reach 30% of the nearly 2 billion total smartphones shipped in 2018, according to the Update of the 2015 IC Market Drivers report.

Tablet unit sales have nearly stalled out because incremental improvements in new models have not been enough to convince owners of existing systems to buy replacements. More consumers are opting to buy new large-screen phablets instead using both a smartphone and tablet. Large smartphones have gained traction because more handsets are being used for video applications (including streaming of TV programs and movies) in addition to Internet web browsing, video gaming, GPS navigation, and looking at digital photos.

The market for large-screen smartphones received a boost from Apple’s highly successful iPhone 6 Plus handset, which started shipping in September 2014 and continued to gain momentum in the first half of 2015. Apple joined the phablet movement somewhat belatedly, but its 5.5-inch display iPhone 6 Plus smartphone played a major role in the company shipping 61.2 million iPhone handsets in 1Q15, which was a 40% increase over the same quarter in 2014.

IC Insights