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Development Trends of the Worldwide

PC System Industry Market Intelligence & Consulting Institute (MIC)

Institute for Information Industry

1

Coverage of PC Systems

Desktop Notebook Tablet

Convertible NB Detachable Tablet

2

Contents

Global Market Trends

Product Development Trends

Highlighted Topics

Conclusion

3

2014 2015(e) 2016(f) 2017(f) 2018(f) 2019(f)

Tablet Vol 242,140 214,258 190,138 180,631 175,212 176,964

DT Vol 131,976 120,110 119,450 118,772 117,530 115,374

NB Vol 172,130 167,482 166,310 165,645 165,976 166,806

NB GR(%) -0.3% -2.7% -0.7% -0.4% 0.2% 0.5%

DT GR(%) 4.0% -9.0% -0.5% -0.6% -1.0% -1.8%

Tablet GR(%) 1.3% -11.5% -11.3% -5.0% -3.0% 1.0%

-20%

0%

20%

40%

60%

80%

100%

0

100,000

200,000

300,000

400,000

500,000

600,000

Global PC System Market Volume, 2014-2019

Thousand Units Growth

The recently ended replacement demand for commercial models, Microsoft’s unclear subsidy policy for Windows notebook PCs, and the deferred launch of Intel’s new platform all have contributed to a huge slump in global PC demand; the global tablet market has been shrinking as well, due largely in part to cannibalization of large screened smartphones, also known as phablets

Source: MIC, July 2015

Note 1: GR is Year-on-Year Growth Rate

Note 2: AIO PCs were consolidated into DT PC market volume

4

Industry Concentration Further Intensified

Due to Changing Growth Drivers

With second-tier notebook PCs fading out and the continued low-priced trend of notebook PCs, market

share of first-tier notebook PCs continues on the rise; the industry concentration of desktop PCs is expected

to be further intensified owing to the increasing share of commercial desktop PCs and first-tier brands’

continued attention into emerging market developments

Source: MIC, July 2015

0%

4%

8%

12%

16%

20%

2012 2013 2014 2015(e)

HP Lenovo Dell AcerASUS Apple Toshiba Samsung

Notebook PC Market Volume Share by

Branded Vendors, 2012-2015

0%

5%

10%

15%

20%

2012 2013 2014 2015(e)

HP Acer Dell Lenovo Apple

Desktop PC Market Volume Share by

Branded Vendors, 2012-2015

5

Windows PC Share Falls Below 90%

2012 2013 2014 2015(e)

Others 30.1% 30.9% 29.4% 28.2%

Mac 5.8% 5.7% 6.5% 7.0%

Chrome 0.1% 0.9% 2.1% 3.2%

Android 0.0% 0.2% 0.7% 0.9%

Windows 64.0% 62.2% 61.3% 60.7%

0%

20%

40%

60%

80%

100%

Global PC Shipment Volume Share by Operating

System, 2012-2015

Source: MIC, July 2015

Note: Tablets were excluded here

Windows64.0%

Android2.1%

Chrome0.10%

Mac4.0%

Others29.8%

Global Desktop PC Shipment Share by Operating

System, 2015

Windows, 58.2%

Android, 0.0%

Chrome, 5.5%

Mac, 9.3%

Others, 26.9%

Global Notebook PC Shipment Share by Operating

System, 2015

Owing to increasing sales of Chromebooks and Macbooks, the room of Windows OS has been

significantly squeezed; the launch of Microsoft Windows 10 however is expected to only have a limited

contribution to PC market share, given the fact that the latest commercial replacement just ended and

Microsoft would offer free upgrades to Windows 10

6

Mobile Computing Market Starts to Witness

Year-on-Year Decline in 2015

2012 2013 2014 2015(e) 2016(f) 2017(f) 2018(f) 2019(f)

Mobile Computing Device 333,240 411,532 414,270 381,740 356,448 346,276 341,188 343,770

Tablet Vol 140,884 238,930 242,140 214,258 190,138 180,631 175,212 176,964

NB Vol 192,356 172,602 172,130 167,482 166,310 165,645 165,976 166,806

Mobile Computing Device GR 92.0% 23.7% -0.3% -2.7% -0.7% -0.4% 0.2% 0.5%

NB GR 24.0% -10.3% 1.3% -11.5% -11.3% -5.0% -3.0% 1.0%

Tablet GR -1.6% 69.6% 0.7% -7.9% -6.6% -2.9% -1.5% 0.8%

Tablet/Mobile Computing Device 42.3% 58.1% 58.4% 56.1% 53.3% 52.2% 51.4% 51.5%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

100,000

200,000

300,000

400,000

500,000

600,000

Source: MIC, July 2015

Strong sales of 7” low priced models led to significant tablet market growth over the past 2 years; the

tablet market has been losing steam since 2014, affected mainly by phablets and low-priced notebook

PCs

Thousand Units

Global Mobile Computing Market Volume, 2012 - 2019

Growth

7

White-box Tablet Begins to Lose Momentum

Almost two-thirds of tablets embrace Android OS and the widespread use of reference designs have led to

a high level of homogeneity and limited differentiation among tablets; the tablet market thus has

inevitably fallen into a vicious cycle of price competition

Growing popularity of phablets has significantly eaten into the market of 7” tablets and slowed growth

momentum of white-box vendors, thereby reshuffling their market positions

Source: MIC, July 2015

Tablet Market Share by Branded Vendors,

2012-2015

0%

10%

20%

30%

40%

50%

60%

70%

80%

2012 2013 2014 2015(e)

Windows Android Chrome

iOS Others

Tablet Market Share by Operating System,

2012-2015

0%

10%

20%

30%

40%

50%

2012 2013 2014 2015(e)

Apple Samsung Amazon

Google ASUS Acer

White Box

8

Contents

Global Market Trends

Product Development Trends

Highlighted Topics

Conclusion

9

New Product Line to Bring Added-value to

Notebook PCs

With the notebook PC market declining, to prevent from falling into the price competition that erodes profits,

notebook PC vendors have started to increase new products lines featuring slim and lightweight form factor,

HD, cloud-based applications; for instance, Chrome OS leverages cloud computing to cut down hardware

costs while maintaining product efficiency

Source: MIC, July 2015

NB Product Line Pricing Distribution

Efficiency

Price

Slim

Gaming/

Workstation

2-in-1/

Convertible

New

Macbook Macbook Air

Ultrabook

Chromebook

Netbook

Slim,

Retina

Detachable/C

onvertible

Slim

Slim

Chrome OS

• Hinge Up

• Battery

• Mac OS & Core

• Hinge Up

• Slim Panel

• Hinge Design

• Marketing

• Thermal Design

10

Gaming NB Brands Face Fierce Competition

To ensure the sustainability of gaming PC business, HP and Acer both launched sub-

brand for PC gaming for the sake of marketing

Established gaming brands MSI and Gigabyte have capitalized on their product

specialization to go high-end and mainstream

Mainstream

Gaming NB

High End

New

Competitors

Expansion of

Gaming NB

Brands

Mainstream

11

Branded Vendors Have Different Deployment

Strategies for Gaming PC

In the desktop PC market segment, gaming PC is the area still enjoying positive growth; SFF PC, Media Center PC and AIO PC are hitting growth ceilings

Vendors have different deployment strategies for gaming PCs: Dell focuses on comprehensive deployment, HP on highlighted deployment; Acer on concentrated deployment; L on both entry-level and high-end deployment

Starting Price

(US$)

Form Factor Console Desktop Tower

$499.99

$849.99

$1,599.99

$4,499.99

$699.99

$1,499.99

$599.99

Acer

Dell

Lenovo

HP

Note: HP embraces only one model but consumers are allowed to select technical specs required online

Source: Respective companies, compiled by MIC, July 2015

12

Small Form Factor Desktop PCs Looks to Catch

Coming Wave of IoT

In 2014, Intel launched NUC (Next Unit of Computing) platform, thereby driving the development of small form factor desktop PCs with weight less than 1kg; the enhanced efficiency of mobile key components and improved heat dissipation technology also help minimize the volume of gaming PCs

Acre Revo One A world of entertainment in a

mini PC.

Asrock Beebox The world’s first Intel

NUC Mini PC with a

USB Type-C Port.

ASUS ROG G20 The World’s most powerful

compact desktop

13

2-in-1 Form Factor to Jump-start Consumer

Demand for Tablets

2013 2014 2015(e)

WW Tablet 238,930 242,140 214,258

2-in-1 1,725 8,027 13,045

2-in-1/Tablet 0.7% 3.3% 6.1%

0%

2%

4%

6%

8%

0

5,000

10,000

15,000

To avoid stiff price competition, several branded vendors have actively developed 2-in-1 tablets in 2015; among them, Microsoft and ASUS are the most outstanding players; MIC estimates the 2-in-1 tablet market will grow 62.5% in 2015 compared to 2014

2-in-1 Tablet Shipment Volume,

2013-2015

Source: MIC, July 2015

Note: 2-in-1 tablets were consolidated into total tablet

market volume

Thousand Units

26.6%

24.3%7.1%

6.7%

35.2%

ASUS Microsoft Acer HP Others

2-in-1 Tablet Market Share by Branded

Vendors, 2015

14

Contents

Global Market Trends

Product Development Trends

Highlighted Topics

Conclusion

15

Windows 10 Comes in 6 Editions to Cater

More Consumer Needs

During the development of Windows 10, Microsoft obtained user feedbacks from its Insider Program to ensure that it caters more to user needs with improved UI and application designs in the consumer market; additionally, Microsoft has been increasing the levels of safety and installation convenience for its Windows 10 users in the commercial market

Other than the availability of Windows 10 Education, Microsoft has also cut down licensing fees to help its partners reduce hardware prices such that their products are price competitive compared to other Chromebook-like products

Different UI

Continuum Cortana

Universal Apps

Windows Hello

In-Place

Upgrade

Source: MIC, July 2015

Windows Home

Windows Pro

Windows Enterprise

Windows Education

Low End • Size

• CPU

• Memory

• Storage

• Market

Mainstream

High End

Licen

sing

fee

Windows 10

Desktop Edition

Windows 10 and Licensing Types

16

Chrome OS Applications Aim for Market Expansion

2012 2013 2014 2015

Volume 420 2,760 6,330 9,230

NB Ratio 0.2% 1.6% 3.7% 5.5%

0%

1%

2%

3%

4%

5%

6%

0

2,000

4,000

6,000

8,000

10,000

Europe and the United States have been introducing notebook PCs for the purpose of K-12 education, thereby benefiting Chromebooks that are often priced lower and are able to provide cloud-based applications

To exploit opportunities in the commercial market, Google has actively cooperating with hardware makers and channel distributors in the hope of capitalizing its cloud-based applications to capture more traction in this area

Source: MIC, July 2015

Chromebook Shipment Volume, 2012-2015

Hardware

Virtual Platform

Applications

Channels/ Markets

Chrome OS Partners

Thousand Units

17

Processor Battlefield Shifting to Chrome OS Products

Hig

h E

nd

M

idd

le En

d

Lo

w E

nd

Source: respective companies, compiled by MIC, July 2015

Affected by the declining tablet market demand, Chrome OS products have become a new

battlefield for ARM processors

Tablet Notebook Desktop

18

Tablet Detachable Convertible Ultra-slim Clamshell

Celeron/Pentium Core M Core i3/i5/i7 Atom

Braswell Broadwell Y Broadwell U Cherry Trail Broadwell H

Low-power Core M Processors Getting

Slimmer and Lighter

Intel launched a series of Core M processors, codenamed Broadwell, which is designed to continue Y-series processors’ low power consumption advantage and to better 2-in-1 NB/tablet market positioning and marketing strategies

With the improved efficiency provided by Intel’s built-in processors, Intel is able to boost low-powered BroadwellＹprocessor to provide basic efficiencies

Source: MIC, July 2015

Type Ultra-slim with Core M

Brand

Model

Apple

New Macbook

Lenovo

Yoga 3 11

Asus

Zenbook UX305

CPU Core M-5Y31 Core M 5Y10c Core M 5Y10

Display 12.0” Retina 11.6” FHD 13.3” FHD/QHD+

Thickness 13.1mm 15.7mm 12.3mm

Weight 920g 1.2kg 1.18kg

Price US$1,299 US$699 US$700~1,000

HD 4400 HD 5500

Iris 6000

HD 6000

GFLOPS

Efficiency Comparison of Intel’s Processors

19

Valve Continues on Gaming Ecosystem Expansion

Developer Tools ＆OS

Source Engine 2

App Store & UGC Platforms

Steam Gaming Steam Workshop

Entertainment Devices

SteamOS

Steam Machine Steam Controller

Steam Link SteamVR

Source: Valve, compiled by MIC, July 2015

Brand Alienware Gigabyte Asus

Snap-

shot

Model Steam Machine BRIX Pro ROG GR8S

CPU Core i3~

Core i7 Core i7-4770R Core i5/i7

GPU GTX 2GB Iris Pro graphics

5200 GeFroce 9 series

Storage

Device

500GB~2TB

Mechanical

Type

1 x 6Gbps

SATA3

500GB/1TB

Mechanical

Type

128GB ~

512GB SSD

Price USD 479.99~ USD 599.99 USD 699.99~

With built-in Steam OS, Steam Machine is able

to help Valve become more independent from

Microsoft’s Windows and provide more flexible

hardware specs

20

Taiwanese PC System Industry’s Global Share

Source: MIC, July 2015

The increasing in-house manufacturing ratio of Chinese makers has continued to narrow the room

of development for Taiwanese companies; on the rise of emerging market demands, Chinese

companies have increased the production share of local suppliers or EMS, thereby constraining the

development of Taiwanese players

Global Share of Operating Systems Adopted

by Taiwanese PC Systems, 2012-2015

Taiwanese PC System Industry’s Global Share,

2012-2015

21

While PC System Market Share Sliding,

Revenue Share on the Rise

When it comes to revenue share of individual products, PC products’ share of established brands

and ODM makers is decreasing and they have been turning to network communications, consumer

electronics and IoT applications instead

Source: MIC, July 2015

0%

20%

40%

60%

80%

100%

2012 2013 2014

Intel

Acer

Lenovo

Microsoft

Asus

TW ODM

HP

Apple

PC Products’ Revenue Share of Established PC Vendors

and ODM Makers Network

Comm.

Product

Consumer

Electronic

Product

IoT Product

Others

(eg Solar）

22

Wearables Remain the Most Popular IoT

Applications in the Short Run Global Smart Wearable Market Volume, 2013-2019

12.7

31.5

74.9

114.2

154.5

192.9

231.9

0%

40%

80%

120%

160%

0

50

100

150

200

250

2013 2014 2015 (e) 2016 (f) 2017 (f) 2018(f) 2019(f)

Volume Growth Rate

2013~2019 CAGR 62.4%

Despite the proliferation of smart wearables, without clear product and market positioning, the development

of wearables is still at the infancy stage; due to low entry barriers and price tags, smart wristbands and

watches are expected to continue claiming the largest share of IoT applications in the short run

Source: MIC, July 2015

Million Units

Smart Watch Smart

Wristband

Smart Watch/Wristband Types

Standalone

Accessory

Detachable

Integrated

RTOS

23

IoT Applications Put Vendors’ Manufacturing

Flexibility to the Test

-

2,000

4,000

6,000

8,000

Fitbit Garmin Xiaomi Nike Sony Samsung Others

Smart Wristband Shipment Volume by

Branded Vendors, 2014

-

2,000

4,000

Samsung Garmin Pebble Sony Casio Others

Smart Watch Shipment Volume

by Branded Vendors, 2014

Source: MIC, July 2015

Note: Figures included in the bracket indicates the number of models currently available

IoT has become the future of the ICT industry; however as hardware specs remain one of critical success

factors for companies developing IoT, the establishment of a new business model should be highlighted as it

is expected to add value to the ICT industry

Taiwanese ICT vendors have been long dedicated to contract manufacturing services; however, affected by

the availability of new technology, vendors focus more on strengthening their system integration and

flexible manufacturing capabilities instead

Thousand Units

(4)

(2)

(1) (1) (2) (1)

(4) (4) (4)

(2) (2)

Thousand Units

24

Contents

Global Market Trends

Product Development Trends

Highlighted Topics

Conclusion

25

Conclusion

Following the recently ended replacement of commercial models, global PC market is expected to witness another setback; coupled with a higher baseline in 2014, notebook PCs and desktop PCs have both witnessed significant declines in 2015

Affected by the increasing number of homogeneous products and prevalence of phablets, the global tablet market has started to witness decline in 2015; with various home appliances brands aggressively stepping into the development of large-sized 2-in-1 tablets, MIC predicts that 2-in-1 tablets will grow considerably in 2015 compared to 2014

To take Chrome OS seriously, Microsoft has set a different pricing strategy for its Windows OS; with the tablet market declining, ARM has been gearing up its adoption in products running Chrome OS; in the gaming sector, Steam Machine allows gaming PC development to be more flexible

Taiwanese contract manufacturers, though dominating the PC industry for years, need to strengthen their system integration and flexible manufacturing capabilities to produce more specialty products in small volume in the IoT era

Thank you!

27

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