10 events and trends that shaped the tech industry in 2013

The tech sector has always been hyper-competitive, and never has this been truer than in 2013.

 

For the likes of Twitter, Samsung and Google, the harvest of 2013 was bountiful.

 

However, from the perspective of Nokia, Microsoft, BlackBerry or the PC industry, it was a year to forget.

 

Here’s a look back at 10 of the big events and trends that shaped the tech sector in 2013.

 

1. One billion smartphones sold this year – and counting

 

The most important tech story of 2013 didn’t take place with a major product announcement or a Steve Jobs-style keynote speech.

 

Instead, it took place without fanfare at an ordinary mobile phone retailer somewhere deep in suburbia.

 

It was there that a consumer decided to purchase the one billionth smartphone to be sold during 2013.

 

To put that number in perspective, it is projected that 227.3 million tablets shipped worldwide during 2013, 158 million television sets, 180.9 million portable PCs and 134.4 million desktop PCs.

 

Meanwhile, figures from market analysts IDC show smartphones also outsold featurephones worldwide for the first time in history during the first quarter of 2013.

 

What this means is that while smartphones now account for more than half of the 418.6 million mobile phones shipped worldwide each quarter, there are still millions of old-fashioned featurephones being sold each year.

 

Especially in the low-end of the market and in emerging economies, that means there’s plenty of extra room for growth in the future – especially at the low-end of the market.

 

Make no mistake about it. The smartphone industry is big – far bigger than the PC or TV business. And it’s only going to get bigger in 2014.

 

2. Google Android and Samsung: The juggernaut rolls on

The biggest winners from the spectacular, ongoing growth of the smartphone market have been Samsung and Google.

 

Last year, smartphones running Google Android outsold Apple. In 2013, that trend morphed into total industry domination.

 

For example, of the 261.1 million smartphones shipped worldwide during the third quarter of 2013, 211.6 million or over 80% ran Google’s Android operating system.

 

That compares to just 33.8 million iPhones, representing around 12.9% of the market, and a measly 3.6% for Windows Phone.

 

Samsung managed to ship 72.4 million smartphones during the second quarter of 2013 alone, representing around 30.4% of the market – more than double Apple’s sales during the same period.

 

Those device sales also mean increased component orders flowing through the various divisions of the South Korean tech conglomerate, which manufactures everything from semiconductors to batteries and smartphone displays.

 

The growing strength of the South Korean electronics behemoth is demonstrated by its advertising and marketing budget, which has been estimated at around $US14 billion worldwide.

 

To put that figure into perspective, as of 2011, North Korea’s entire national economy was estimated to stand at $US12.385 billion.

 

3. The PC industry bloodbath

 

While Google and Samsung have had a stellar year in 2013, the same certainly can’t be said for the PC industry.

 

The September quarter was the sixth consecutive quarter of falls, according to Gartner, with shipments falling to 80.2 million units for the quarter from 87.8 million a year earlier.

 

Figures released by IDC forecast PC shipments for the full year to fall 9.7% in 2013.

 

More alarmingly, it appears the emerging middle class in China, India and Brazil aren’t keen on buying computers, with total PC shipments in emerging markets expected to drop from 205.2 million to 185 million this year.

 

Australia and New Zealand led the trend, with a massive 21% year-on-year fall in shipments for first quarter in Australia, along with a more astounding 27% fall in New Zealand.

 

The implosion of the PC market was disastrous for a number of PC makers, including Dell, HP and Acer.

 

In August, HP announced a major shake-up of its senior management team after announcing a large 15% year-on-year drop in net earnings and a 22% drop in revenue from consumer devices during its quarterly results.

 

That same month, Dell reported a massive 72% year-on-year collapse in quarterly earnings, while a consortium including founder Michael Dell, Silver Lake Capital and Microsoft successfully fought off high-profile investor Carl Icahn’s bid for control of the company.

 

And at Acer, founder Stan Shih made a surprise return as interim chairman and president, following the resignation of former chief executive JT Wang and president Jim Wong after the company recorded a record third-quarter loss.

 

The resignations came after Acer announced its consolidated revenues for the third-quarter of 2013 fell 11.8% year-on-year to $US3.11 billion, resulting in an operating loss of $US86.6 million.

 

4. Surface falls flat

 

On top of falling PC sales and 3.6% Windows Phone market share, the news was dire for Microsoft on another front in 2013.

 

Late last year, Microsoft launched its Surface series of tablets as a first step towards making devices, with the company believed to have manufactured around six million units.

 

The release of the Surface instantly made Microsoft a direct competitor to many of its already struggling PC partners, straining relations in the process.

 

Fast forward to July of this year when Microsoft announced a massive $US900 million writedown on its inventory of unsold tablets. The writedown came less than a week after Microsoft announced a large price cut of $US150 for the struggling product line.

 

Adding insult to injury, Microsoft also revealed it has spent $US898 million advertising the tablets, while only generating $US853 million in sales.

 

According to many leading analysts, the company was believed to have sold just 1.7 million of the six million tablets it had built.

 

To put those numbers in perspective, Apple sells around 14.6 million iPads each quarter, while Samsung sells around 8.8 million.

 

5. Steve Ballmer resigns

 

During the 1990s, Microsoft was undeniably the 800-pound gorilla of the tech industry.

 

Then, in January 2000, founder Bill Gates stood aside as chief executive, in favour of Steve Ballmer, in order to focus on his philanthropic efforts.

 

Since then, the company has lost much of its former dynamism, and has failed to become the dominant player in a range of new technologies that have emerged since then, including search, tablets, smartphones or social media.

 

In August last year, Vanity Fair magazine journalist Kurt Eichenwald ran a feature exploring why Microsoft fell behind its rivals. A management technique called stack ranking was almost universally blamed.

 

“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” a former software developer told Eichenwald. “It leads to employees focusing on competing with each other rather than competing with other companies.”

 

Add the low market share for Windows Phone, poor sales of the Surface and the PC industry bloodbath, and it became clear something had to give at Microsoft.

 

In July, the company announced a major management restructure, with the company’s strategy shifting to focus on “devices and services”.

 

Then, just one month later, Ballmer resigned as chief executive, with stack ranking dumped as a management technique soon after.

 

The Redmond, Washington-based tech giant is currently searching for his replacement.

 

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