Global notebook shipments for 2016 is estimated to decline by 4% compared with the prior year to around 157.9 million units, reports global research firm TrendForce. Notebook sales this year have been constrained by rising prices and supply shortages in the component markets. Global notebook shipments for 2017 are projected to total 150.7 million units, representing an annual decline of 4.5%. Notebook shipments will continue to fall next year as the LCD panel market experiences a structural supply shortage.
“Global notebook shipments have been on a slide for two consecutive years starting in 2015,” said TrendForce notebook analyst Anita Wang. “The structural supply shortage in the LCD panel market will contribute to further decline in notebook shipments during 2017.” Wang pointed out that shipments of HD resolution (1366 x 768), Twisted Nematic (TN) panels for mainstream-size notebook displays will decrease by 10% between 2016 and 2017.
“Branded notebook vendors will release more new models featuring FHD resolution (1920 x 1080) display,” Wang added. “However, selling more FHD models to offset the lack of supply for HD models may not be a viable strategy. First, FHD LCD panels cost much higher than HD counterparts. Moreover, notebooks that are equipped with 8GB of RAM and a FHD display belong to the high-end premium category, according to Microsoft’s current formula for Windows license fee. Higher hardware specifications will lead to a significant rise in that notebook’s OS license fee, so branded vendors will have difficulty in promoting notebooks with FHD displays.”
TrendForce estimates that 28% of the notebooks shipped this year worldwide will have FHD or better displays. This is a significant increase in shipment share compared with 2015. However, high prices for FHD panels will limit the penetration of FHD notebook displays. Using 15.6-inch LCD panel as an example, prices of FHD TN panels are 15~20% higher than prices of HD counterparts. Prices of 15.6-inch FHD, In-Plane Switching (IPS) panels are at least 50%, or even 100% higher in some cases, compared with prices of HD TN panels of the same size. Branded notebook vendors therefore will be hard pressed in using FHD models as replacement products for the low-end segment of the market.
If branded vendors decide to expand and promote their mid-range and high-end offerings, there is also the problem of increases in Windows license fee. Half of the branded notebooks currently available on the market carry 8GB of RAM. Based on Microsoft’s formula, a FHD display plus 8GB of RAM will lead to a large hike in Windows license fee. “Unless prices of FHD panels drop sharply or Microsoft change its license fee formula, the share of FHD models in next year’s global notebook shipments will reach just 34~35%, translating to a small increase of just 6~7 percentage points compared with the prior year,” Wang noted.
Looking at the notebook OS market, Wang also pointed out that Chrome OS will continue to grow in market share during 2017. “Google does not charge a license fee for Chrome OS,” said Wang. “And its integration with Android apps will help generate interests and demand for Chromebook devices.” Mac OS is expected to hold 8% of the notebook OS market next year as it benefits from shipments of the latest MacBook Pro devices. Furthermore, Apple will unlikely experience notebook panel shortage in the future because the brand is a major client of panel makers. The market share of Microsoft Windows, by contrast, will keep contracting in 2017 as other branded notebook vendors face tight panel supply.