This week, VDC published the results of its quarterly device tracker, which follows both quarter-on-quarter and year-on-year figures for major OEMs both globally and by region.

Notebooks on the rebound

After six consecutive quarters of contraction, the rugged notebook market is showing signs of life, growing nearly 10% year-on-year in Q2 2014, rising to over 100,000 units shipped for the quarter. This comes after a particularly difficult year, in which the continued effects of GD-Itronix’s exit from the market and budget restrictions in the wake of the government shutdown struck a market grappling with the trend of tablets being increasingly deployed in line of business applications as a notebook replacement. With a few notable exceptions, all major vendors tracked by VDC saw growth in Q2, with some companies recording growth in the double-digits over Q2 2013. This return to growth is not limited to rugged devices, as major consumer-grade manufacturers are also reporting strong YoY performance. One of the key catalysts in this return to positive figures is the replacement of legacy devices running on now-retired XP. This factor, in addition to US military contracts and state-level conditions driving enterprise opportunities, has primarily fueled notebook growth, which could continue its trend with the release of newly-announced Windows 10 in late 2014/early 2015.

Tablet growth is strong but slowing

Tablets remain one of the best-performing form factors among rugged mobile devices – the market for rugged tablets grew 16% in Q2 2014 over the previous year, with EMEA showing an uptick of 37% year-on-year. Despite a solid global performance, the blistering pace of acquisition has begun to cool to less heated rates, down from rates of nearly 40% in H2 2013 (where certain vendors recorded triple-digit YoY growth) to more sustainable levels as the market begins to mature. While organizations are finding the limits of using tablets as a notebook replacement, the benefits of the form factor remain tangible and strong. Although rugged tablets run primarily on a more traditional WinTel platform, the barriers that have prevented a more widespread adoption of Android devices, including a lack of viable applications and limited product portfolio, are being overcome and could gain momentum in H2 2014, moving into 2015.

Handheld devices remain in flux

The rugged handheld market remained weak through Q2 2014, which saw a lessening contraction of 7.9% year on year vs. -8.8% for Q1 2014. The headwinds from investment/upgrade delays, limited access to capital and competition from lower-cost smartphones continue to persist, although several notable Tier-1 deals provided some lift in Q2 and are expected to have a greater impact in the second half of the year. Much of the hesitation revolves around OS uncertainty, which has continued well into 2014 as the number of devices featuring Windows Embedded 8.1 remains low among rugged vendors, and many are hesitant to embrace Android as an alternative OS for line-of-business applications. An embedded version of Windows 10 could alleviate the situation, but the question remains as to how quickly a new embedded Windows OS could be rolled out before extended refresh cycles need to be considered.

Sluggish performance for vehicle-mounted devices

Despite modest quarter-on-quarter growth, the vehicle-mounted market contracted year-on-year for the second consecutive quarter by 1.6%. There has been considerable encroachment from tablets, particularly in areas like public safety. With the growing functionality and display size of tablet devices, many organizations are looking to tablets as a lower-cost alternative to specialized vehicle-mounted devices. As a result, vendors are increasingly looking to consolidate their reach and focus more on niche markets where they are able to have greater control; frequently, these markets are “heavy duty” applications that include mining, construction, logistics, and warehousing. Although the market is almost exclusively the domain of Window, the question remains as to which version of the OS (embedded versus full professional) will gain sway, as IT departments are increasingly looking to these devices to function more as a PC than as a mobile device or terminal emulator as the ability to multitask and improvements in connectivity continue to grow.