Personal computers benefit connectors

The connector industry has benefited greatly from the rise of personal computer volumes. In recent years, those rewards came from double-digit growth in notebook PCs, including Apple’s version, the MacBook series.

These mobile PCs contain 20 to 30 or more connectors and cable assemblies. Some are standard products like USB, VGA, SATA, and RJ45.

Inside, the system relies on mostly application-specific/de facto standard interconnect products. All must fit into ever thinner and lighter envelopes.

With increasing dynamics of mobile system designs, such as ultrathin laptops, tablets, e-readers and smartphones, the whole nature of how people use computers is changing.

Desktops have been negatively affected - although they may come back with a vengeance.

The dynamics affecting increased mobile system use include:

• Rise of broadband and wireless internet capable of streaming live video over Wi-Fi on 4G/LTE networks;
• Huge increase in mobile applications that allow people to access content;
• Improvements in battery technology that we assume will be ongoing;
• Emergence of ultralight tablets with high-resolution screens and notebook-like performance;
• A downward cost curve, resulting in PC-capable devices selling for under $500;
• Growth in emerging markets where space is limited;
• Apple’s iPhone and iPad devices;
• Amazon.com’s Kindle e-reader and Apple’s iTunes online music, publishing and movie libraries;
• Semiconductor advances in VLSI, SiP, high-resolution image sensors, accelerometers, etc;
• Device packaging with strong, lightweight aluminium and carbon composite cases;
• LCD display advances, which will continue marching towards HD OLED technology.

Notebook PC unit shipments in the second quarter of 2012 will reach 55 million units - a run rate of 236 million for the year, surpassing desktops. 2Q12 will be +18% vs 1Q12 and +9% year-over-year.

Led by Apple and Samsung, the tablet market grew from 22.6 million units in 2010 to a forecast of 83.5 million units in 2012. Digitimes Research projects tablet sales will hit 375 million units by 2016, an astounding six-year CAGR of +60% per year.

We have a slightly more conservative number going forward. Including e-readers, which will morph into iPad-like devices or be consumed by them, our total for tablets is 117 million units in 2012 and 208 million units in 2016.

The tablet market has more than 10 entrants already, but the lion’s share goes to Apple, with fast-closing Samsung and a credible showing by Kindle Fire.

Google’s Android OS for tablets will be akin to Windows OS for PCs, making tablet design relatively easy for new entrants and for software developers.

Despite continuing patent litigation, Apple and Samsung are expected to remain in leadership positions.

Some say the iPad has had a significant impact on notebooks. That is probably true in the consumer segment, but much less so in B2B applications.

We think this will change quickly, with tablets being used in new applications for mobile workers, from sales personnel to educators and physicians, rather than takeaway sales of PCs. There will be fewer clamshell devices being carried around by workers - unless they are convertible notebooks.

Many believe PCs will overcome the early consumer-driven love affair with tablets and that both will grow into the future - PCs in single digits, notebooks in the 8-10% range and tablets at well over 20%. There are several reasons for this optimism:

1. Notebooks are downsizing into MacBook Airs or ultrabooks, with all-day battery power and the latest generation CPUs, such as Intel’s Ivy Bridge processors.
2. Desktops are morphing into more compact and attractive all-in-one systems with 24-27″ HD-LCD displays.
3. PCs = computing power, tablets = content viewing. This may change with new tablet applications and voice input.
4. The PC and its peripherals are ingrained in everyday life and PC use will not change quickly.
5. We expect to see evolutionary developments in future PCs.

There will be several impacts on connectors. First, IO counts will go down because a) there is less room inside thin cases and b) newer IO standards such as USB 3.0 and HDMI will cause legacy ports to be eliminated, as Apple has already done.

Notebooks will have two to four USB ports; typically one USB 3.0 and two or three USB 2.0. They’ll also have one VGA or DisplayPort/Thunderbolt, HDMI, RJ45, audio port and card reader.

Ultrabooks will have two USB ports with one 3.0, a DisplayPort, micro-HDMI and RJ45. Internal connector counts will drop, due to higher levels of integration and direct attach of CPUs and memory (few if any sockets).

Whether HDD or SSD, the drive IO will be SATA. Notebooks will retain an optical drive, while most ultrabooks will not. Thin flex cables are used and motherboards will continue to shrink in size.

Typically each subsystem will be connected with a flat cable or be board-to-board connectorised.

We are not yet ready to predict what will happen between VGA and Thunderbolt. That will be an interesting dynamic in the future PC market.

The average connector count will be about 25 for notebooks and 15-20 for ultrabooks. With an average of 22-23 per system overall. The 2012 notebook connector market should approximate 5.5 billion units.

The tablet market for connectors will be a different story, with fewer units per system, including few IO ports but rapidly rising volumes.

Apple has two IO ports, its proprietary USB combo port and an audio jack. The iPad depends more on Wi-Fi or cellular communications.

Other tablets are more liberal with IO ports, including card slots and micro-HDMI. Internally, there are few connectors; mostly board-to-board and cable-to-board; on average eight to 10 per system.

We believe this number will increase as more IO ports are added. On the other hand, there will continue to be downward pressure to reduce costs, due to high levels of integration.

Thus the tablet/e-reader connector market should be around 900 million units and around 2 billion units in 2016. With notebooks and tablets, ancillary cable, docking connections, external displays, printers and other external peripherals will add to the total.

Bluetooth will continue to cut into external cabling. But don’t forget, you really need to have a PC or Mac to dock your tablet.

Virtually all mobile devices will be assembled in Asia, mostly in China by subcontract manufacturers based in Taiwan and China.

Currently, it is said that China’s restrictions on exporting rare earth materials is one reason why it dominates mobile platform devices. This is because their displays and batteries contain materials mined in China.

With some exceptions, the component parts assembled into these systems are also made in China, often in adjacent sites.

Continuing friction with China on several levels may be resolved because of mutual interests - or the mid-term future could see insourcing to the Americas, particularly if there is some untoward event or a major manufacturer bites the bullet and repatriates manufacturing to its own territory.

For now, the world is about 99% dependent on China manufacturing for computer motherboards, notebooks, ultrabooks, iPads and mobile  phones.

The future looks bright for mobile computer and tablet systems. Despite predictions of doom for the PC, it will continue to grow because of a world market, its unique capabilities and the desire of its movers and shakers to innovate new products and applications.

Market saturation is not likely because of constant new product innovation and replacement cycles.

The new ultrabook design is compelling, but its initial cost may dampen growth until prices come down closer to conventional notebook systems. Ultrabooks will become a staple for upscale consumers and professionals.

Entry-level users may be eschewing notebooks and desktops for tablets, but it won’t be pricing that drives them there; rather, it will be ease of use, content applications and buzz.

There is the start of an explosion in tablet-related productivity tools for business and institutional use. Longer term, tablets will gain computing functionality, and it will be interesting to see how that plays out against conventional PC systems.

The connector market for these devices will grow because of sheer computer volumes and will remain somewhat challenging due to small size and density, coupled with high performance and the need to manufacture close to the ODM/EMS assembler, typically in China.

Robin Pearce, Bishop & Associates
rpearce@bishopinc.com