There were an estimated 78.45 million tablets shipped globally in the fourth quarter of 2013, increasing 25% on quarter and by 29.8% on year, according to Digitimes Research.iPads accounted for 29.7% of shipments, brand models launched by vendors other than Apple for 36.6%, and models launched by white-box vendors for 33.8%, Digitimes Research indicated. Android-based models took up 51.2% of the shipments, iOS-based 44.9% and Windows-based 3.9%. 7-inch models accounted for 31% of the shipments, followed by 9-inch models with 25.4%, 7.9-inch models with 19.7%, 10-inch models with 15.8% and 8-inch models with 7.6%. In terms of touch solutions, GF2 accounted for 41.5% of shipments, GFF for 38.6%, OGS for 9.8% and GG for 9.5%.Among vendors, Apple had the largest global market share at 29.7%, followed by Samsung Electronics with 17.4%, Amazon 5.4%, Lenovo 4.2%, Asustek Computer 2.8%, Google 1.4%, Acer 1%, Dell 0.8% and Hewlett-Packard 0.5%.Taiwan-based ODMs/OEMs shipped 32.8 million tablets in the fourth quarter, with Foxconn Electronics accounting for 52.7%, Pegatron 24.4%, Compal Electronics 12%, Quanta Computer 6.6% and Wistron 4.2%.

Taiwan panel makers' large-size (9-inch and above) shipments in the fourth quarter of 2013 reached 64.3 million, down 0.4% on quarter, according to Digitimes Research.Additionally, Digitimes Research said that global large-size panel shipments reached over 176 million in the fourth quarter, up 0.7% on quarter while shipments for the year reached over 689 million, down 8.2% on year.Shipments for TV applications were up 0.7% on year while those for monitor, notebook and tablet applications were down 7.7%, 18.9% and 7.5% on year.In 2013, Taiwan panel makers were responsible for over 253 million large-size panel shipments, down 5.9% on year, added Digitimes Research.

Shipments of tablet-use application processors in China grew 8.3% on quarter and 19.5% on year in the fourth quarter of 2013, driven by the launch of new chips for tablet vendors to roll out new models during the year-end holiday season, according to Digitimes Research.China-based Rockchip Electronics ranked as the number one tablet CPU supplier in the fourth quarter, buoyed by its comprehensive product portfolio which attracted orders from brand as well as white-box makers, said Digitimes Research.Fellow company Allwinner Technology has expanded its product offerings, but not fast enough, causing stagnation in its shipment growth. Additionally, some of Allwinner's dual-core CPU shipments were delayed due to a shortage of wafer capacity.Although MediaTek has been trying to duplicate the business model of its turnkey smartphone solutions in the tablet chip market, shipments of its tablet-use APs lagged behind Rockchip and Allwinner in the fourth quarter because MediaTek has paid too much emphasis on the voice communication functionality of its tablet chips, which are not competitive for entry-level tablets.The top-three vendors – Rockchip, Allwinner and MediaTek – accounted for 75.7% of the tablet AP market in China in the fourth quarter, a decrease of 1.4pp from the previous quarter.Most other chip vendors, including HiSilicon Technologies, Nvidia and Intel, saw their shipments nearly double in the fourth quarter, but their shipment volumes were far behind the top-three suppliers due to low shipment bases, Digitimes Research concluded.

China-based Xiaomi has announced that the company plans to ship 40 million smartphones in 2014. But Digitimes Research believes the vendor is unlikely to achieve the goal as many of its competitors have started establishing online shopping operations to sell their own-brand products with impressive hardware specifications at low prices - a business model similar to Xiaomi's.Xiaomi is a brand vendor that has been promoting its smartphones by highlighting their high-end features yet entry-level pricing, and the company is mainly selling smartphones through its online store. The company is known for its hunger marketing, limiting supply at product launch to create an impression of strong demand for the device.In August 2013, the China-based vendor released its CNY799 Hongmi smartphone, extending its product protfolio to lower-tier market segments. The competitive pricing resulted in impressive sales.Xiaomi's marketing strategy managed to shoot up its shipments beyond the 18 million mark in 2013 and earn the brand a lot of attention.By selling products through their online shops, smartphone vendors can avoid sharing their profits with retailers and telecom carriers, and therefore can offer lower prices for their devices.As a result, many China-based smartphone players are adopting the Xiaomi model and have established sub-brand products and online operations to enhance their competition. These include major players such as: Huawei's Honor; Gionee's Iuni; and CoolPad's Great God. These players are either offering competitive pricing or trying to create new brand images, in hopes to expand their share in China's competitive smartphone market.Huawei is a major player with abundant R&D and marketing resources, as well as strong support from its supply chain. Huawei released its Honor 3C smartphone in December 2013 priced at CNY798. Its pricing and features were similar to those of Hongmi. In response to Huawei's challenge, Xiaomi reduced its Hongmi price by CNY100 in January 2014. The price reduction is expected to significantly impact Xiaomi's profitability, and the challenges from Huawei, and other players, are likely to hinder Xiaomi's plan of having entry-level products drive up overall shipment volumes.With more China-based smartphone vendors expected to create sub-brand products and run online stores in 2014, Xiaomi will face fiercer competition from its peers in 2014. Although China's online shopping continues to see surging sales, it only accounts for less than 20% of the country's total retail sales and Xiaomi's share of online smartphone sales is expected to be heavily dented by the competitors in 2014.Xiaomi is still weak in terms of sales in the conventional market and through telecom channels, and it will lose its pricing advantages if it has to share its profits with retailers. Digitimes Research believes the China-based vendor will not be able to gain much profit through conventional channels.With China's smartphone market gradually approaching saturation, shipments to overseas markets will become a key driver for growth in 2014. However, Xiaomi has only just started to explore the overseas markets, which are unlikely to make much contribution to the company in the near future.

Taiwan-based ODMs/OEMs will ship 34.623 million notebooks for a global market share of 85% during the first quarter of 2014, with shipments decreasing 11.2% on quarter and 4.3% on year, according to Digitimes Research.In terms of screen size, below 12-inch will account for 9.4% of shipments, 12-inch for 2.7%, 13-inch for 13%, 14-inch for 26.9%, 15-inch for 43% and 16-inch and above for 5%, Digitimes Research indicated.Quanta Computer will be the largest ODM/OEM taking up 30.27% of shipments, followed by Compal Electronics with 26.28%, Wistron with 14.30%, Inventec with 9.10% and Foxconn with 3.70%.Hewlett-Packard (HP) will be the largest client accounting for 20.2% of shipments, Lenovo will account for 14.2%, Dell 13.9%, Asustek Computer 11.1%, Acer 10.7%, Apple 9.0%, Toshiba 7.9%, Sony 2.9%, NEC 1.0% and Fujitsu 0.5%. However, Lenovo will have the largest global market share at 19.4%, followed by HP with 17.2%, Dell with 11.8%, Asustek with 9.4% and Acer with 9.1%.

Asustek Computer unveiled three ZenFone-series smartphones at CES 2014 and will initially launch the models in the Taiwan, China and Southeast Asia markets in March with prices comparable to low-cost models offered by China-based Xiaomi Technology and Huawai. But the price-performance ratios of the ZenFones will be still lower than rival models from China-based vendors due to the use of different marketing channels, according to Digitimes Research.China-based vendors such as Huawei and Coolpad have been duplicating the business model initiated by Xiaomi by introducing entry-level models with higher hardware specifications and marketing the gadgets mainly through the Internet.Leveraging subsidies offered by telecom operators, Asustek has been able to lower prices for its ZenFone models to levels comparable to those offered by Xiaomi, Huawei and Coolpad, but the price-performance ratios are lower than of the Hongmi smartphone from Xiaomi, the Honor 3C from Huawei and the Great God F1 from Coolpad, due to markup costs added by channel operators in China selling the ZenFones.Due to the lower price-performance ratios, Asustek's goal of shipping over five million smartphones in 2014 through a low-pricing model remains hard to achieve, commented Digitimes Research.

China white-box players have not been able to lower their Wi-Fi-based tablets' prices since the third quarter of 2013 because there is no room for further reductions in their BOM costs.The average BOM cost for a white-box tablet - most of which adopted a dual-core processors - stood at about US$25 as of the fourth quarter of 2013. Dual-core processor pricing could not drop any furrther, as their average prices came to about US$4, only less than US$1 higher than that of a single-core one.Memory and 7-inch TN LCD panels are the two key components that account for major shares of white-box tablet BOM costs. However, most panel suppliers have been only willing to upgrade specifications instead of dropping their quotes, and therefore, white-box players have been left with upgrading their devices with better panels without an option of reducing the panel cost.While cost reduction is no longer a feasible way to attract consumers, many white-box players have turned to push tablets with phone functions to increase their devices' functionalities and value. The devices also provide higher gross margins for vendors.Digitimes Research estimates that currently, 80% of white-box tablets are available in countries other than China, because white-box tablets with phone functions have seen rising demand in Russia and other markets in Eastern Europe and Southeast Asia since the second half of 2013.China white-box players' partnerships with regional brand vendors in emerging markets have also helped raise local consumers' demand for tablets with phone functions.In the first half of 2013, most white-box tablets with phone functions adopted China-based Allwinner Technology's solution which combined an entry-level single-core processor with a discrete baseband module. However, many white-box device makers have turned to MediaTek solutions for their tablets since thesecond half of 2013 after the Taiwan-based chipmaker also integrated a baseband chip into its tablet processor solution.MediaTek's solution is more expensive, but its support for product development and hardware design has given it an upper hand over competitions. Meanwhile, independent design houses (IDHs), which provide white-box players with product design services, also started to design tablets using MediaTek's smartphone processors in the second half of 2013, which prompted white-box players to adopt MediaTek's solutions.Digitimes Research estimates that tablets with phone functions will account for 40% of 7-inch white-box tablet shipments in 2014, up from 20% in 2013.

Shipments of application processors for smartphone applications to China grew 2.4% sequentially and 20.8% on year in the fourth quarter of 2013, according to data compiled by Digitimes Research.MediaTek saw its AP shipments decline 3.9% sequentially in the fourth quarter due to inventory checks at clients and a high growth recorded in the previous quarter.However, it was a 20% sequential shipment decline suffered by Qualcomm the fourth quarter that weakened the growth momentum of the application processor sector, said Digitimes Research.Meanwhile, MediaTek has been shifting its focus to the high-margin segment, instead of seeking high shipment growth. China-based Spreadtrum Communications was hit with high inventory of TD-SCDMA chips and slow sales of its dual- and quad-core solutions, Digitimes Research indicated.Qualcomm also saw its performance weaken in the fourth quarter as its QRD (Qualcomm reference design) chips were less competitive than those offered by rivals in terms of product features.

Because of Intel's low-price processor solutions and increased demand from both the consumer and enterprise markets, Global notebook shipments in the fourth quarter of 2013 rose 4.1% sequentially, but dropped 5.9% on year, better than Digitimes Research's original forecast.However, worldwide notebook shipments in 2013 dropped 10.6% on year, Digitimes Research's figures showedSince demand for notebooks is recovering, it slowed Lenovo's pace in raising its in-house production rate by about 10pp in the fourth quarter, allowing Taiwan ODMs to maintain a share of 85% in global notebook shipments.Lenovo was the largest notebook brand vendor in the fourth quarter of 2013, while Acer and Asustek Computer also had performances better than the market average thanks to their entry-level notebook models. Hewlett-Packard (HP) was one of the few vendors that suffered a sequential shipment decline in the quarter because its orders from the education market started turning weak.Lenovo was also the largest vendor for the whole year, surpassing HP. Dell replaced Acer and become the third-largest due to stable orders from the enterprise market. Apple ranked sixth, edging out Toshiba and Samsung Electronics, thanks to its MacBook Pro with Retina shipments.Among notebook ODMs, Compal Electronics and Pegatron Technology achieved performance better than the rest in the fourth quarter of 2013. Quanta Computer also had shipment growth in the quarter, helping the top-two ODMs' share of Taiwan's shipments rise to 57%.Compal, Inventec, Elitegroup Computer Systems (ECS) and Shuttle achieved on-year growths in 2013, while Quanta, Wistron and Foxconn Electronics (Hon Hai Precision Industry) suffered shipment drops of 10, 7 and 5 million units on year, respectively.

Thanks to falling prices and satisfactory functionalities, entry-level tablets from brand vendors has been undermining demand for mid-range and high-end models, and they formed a main driver of the tablet market during the year-end shopping season in 2013. Observing Amazon's tablet promotions and related shipments from the supply chain, Digitimes Research found that the US-based vendor's entry-level Kindle Fire HD is enjoying better sales than its high-end Kindle Fire HDX.Amazon announced in early December 2013 that its Kindle series, which includes both tablets and e-book readers, has achieved a sales record during the Thanksgiving holidays, which some market watchers believe were mainly contributed by the high-end Kindle Fire HDX models. However, Amazon actually devoted most of its marketing resources to promoting the Kindle Fire HDX, a tell-tale sign that the high-end products were not selling as well as thought.During the year-end shopping season of 2012, Amazon offered no price cuts for its Kindle Fire HD, which was then its high-end model. But for the same periord in 2013, the company not only offered price cuts for its high-end Kindle Fire HDX, the reductions were also higher than those for the entry-level Kindle Fire HD. Amazon's new interest-free installment service is also available only for the HDX models.The above moves show that Amazon's promotions for high-end models were far stronger than those for the entry-level models during 2013 year-end marketing campaigns. Since Amazon also reportedly has been reducing orders for high-end models from its supply chain, Digitimes Research believes Amazon had to make moves to shore up the Kindle Fire HDX's weaker-than-expected sales.The entry-level Kindle Fire HD's friendly pricing and performances in terms of multimedia content playback and app operation are already able to satisfy most Amazon users' demand, making it the mainstream model among Amazon's devices in 2013. With the Kindle Fire HDX devices having weaker-than-expected shipments and the entry-level Kindle Fire HD enjoying shipment growths and rising demand, Digitimes Research estimates Amazon's fourth-quarter 2013 tablet shipments at 4.22 million units, down 100,000 units from its original forecast.