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TAIPEI – Notebook computer shipments will grow 0.6% year-over-year in 2015 to 174.6 million units, while tablet shipments will decline 3.5% to 185.6 million units, says TrendForce.

Notebook manufacturers largely vied for market share this year by slashing prices, said Caroline Chen, a notebook analyst at TrendForce. Business procurement of notebooks was also stable in 2014, as companies upgraded their laptops.

In 2015, TrendForce expects a more diverse array of notebook products and a new operating system. Facing intense competition from smartphones – phablets, in particular – and low-priced notebooks, tablets could eventually be forced out of the market, unless manufacturers develop a new business model for them, the research firm says.

Tablets performed poorly in 2014, while notebooks did increasingly well, said Chen. Overall, 366 million mobile PCs (notebook computers and tablets) were shipped in 2014, similar to the previous year, according to TrendForce. “This means that some users who had switched over to tablets returned to notebooks,” Chen said. “We expect overall demand to stagnate in the mobile PC market over the next few years, as high competition among brands, operating systems and products forces some manufacturers to exit the market.”

While the 2-in-1 PC is not a new product, prices have come down to reasonable levels, and specifications are improving, which will help shipments grow quickly in 2015, the research firm says. In 2014, 2-in-1 PCs accounted for 4% to 5% of overall notebooks, but that figure is expected to rise to 8% to 10% in 2015.

TrendForce forecasts the penetration for the Clamshell notebook will be only 9% in 2014 and will not increase further in 2015.

Google’s low-cost Chromebook notebook computer performed well this year, benefiting from its cloud storage capacity and strong data security capabilities. But Chromebook sales were affected by Microsoft’s subsidized low-cost Windows notebooks. In 2014, Google sold about 6.5 million Chromebooks, and the device’s market penetration reached 4%. But if Chromebook uses the 2-in-1 PC concept, it will be difficult for Google to keep the device’s price low, Chen said. TrendForce forecasts Chomebook sales will increase slightly to 8 million units in 2015.

This year, Microsoft and Intel both launched subsidy plans for their notebooks and tablets, which had reduced their revenues. “Because they lower manufacturers’ costs, subsidies indirectly benefit consumers, but it will be better if Microsoft and Intel can find more substantial ways to develop the market, such as by utilizing the 2-in-1 concept or cloud computing,” Chen said.

In 2014, major tablet manufacturers like Apple and Samsung saw shipments decline and even stagnate. That shows that incentives are low for customers to purchase new tablets, Chen said. She cautioned against using low prices as a way to refocus consumers’ attention on tablets.

“In the short run, low prices can boost sales, but the ultimate result may be negative,” she said. “In the case of a price war, smaller brands may be forced to exit the market and product differentiation vanishes.” Still, low-priced tablets have the potential to be used in some niche markets, such as early childhood education or the food and beverage industry, she said. In this type of scenario, content service will be the key for tablets to remain relevant in the future.

Lastly, as the red-hot 2-in-1 PC market grows, it will take market share away from tablets.  It will be imperative for tablet manufacturers to find a way out of that conundrum, she said.

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