Prices of Tablets Cheaper by 31 percent in the Philippines

Sales of media tables in the Philippines nearly doubled in the first quarter of 2014, as prices dropped by 31 percent from a year ago, according to the retail audit report of media research firm gFk.

 

Filipino consumers bought 130,000 more media tablets in the January-March period, compared to the same period last year.

 

Sales of media tablets posted a 95-percent growth in the first quarter of 2014 compared with the same period last year.   Tech savvy consumers in the country spent around US$65.8 million on  270,000 units of media tablets in the first three month of 2014, up from only US$49 million a year ago.

 

“The fact that three-quarters of the population fall below 40 years of age is a strong driver for the development of technical products as younger consumers are much more open to the adoption of new technology,” said Benny Villanueva, Managing Director for GfK in the Philippines.

 

He said another growth driver of the buoyant media tablet sector is the wide array of product brands and models that are available to consumers. 

 

This year, 22 new local and international players jumped onto the bandwagon to introduce 150 models into the market, offering media tablets ranging from $42 to US$1,012.

 

“Competition in the media tablet market got even more exciting with the entry of relatively big global names such as Sony, LG, Lenovo, Skyworth and Cloudfone,“ said Villanueva. 

 

“While major international brands have consistently played in the higher price brackets, local and Chinese brands have successfully developed the low price segment which brought down the average cost and made the device even more affordable.”

 

GfK said the average price of media tablets fell 31 percent from last year’s US$356 to US$246 in the first quarter of 2014. In spite of the lower prices, total market value for media tablets still managed to rise by 35 percent attributed to the strong sales volume of the product. 

 

“Its greater portability, on top of  similar basic functionalities with netbooks and laptops make media tablets a very much sought-after option for buyers seeking  portable computing devices,” said Villanueva.

 

Meanwhile, basic Wi-Fi only models represent the best selling segment in the country as they are more affordable, averaging at around US$42. 

 

Its popularity is also attributed to the fact that majority of commercial establishments are now providing free Wi-Fi connectivity to their customers, thereby making those that are equipped with the more costly 3G feature less of a necessity.

 

“These days, it is common to see young children using media tablets as a form of entertainment-on-the-go, proving that the product is now spanning a wider market to reach those even below 10 years old,” said Villanueva. 

 

“With its broad ranging target market, we are anticipating the media tablet business in the Philippines to continually enjoy double digit growth for the next three years,” said Villanueva

 

The lack of cooperation among telecom companies has been keeping the cost of Internet services in the Philippines elevated.  The National Telecommunication Commission (NTC) said Internet Protocol or IP peering should be put in place among telecom providers or carriers to improve Internet services.

Globe Telecom, the second most dominant telco in the Philippines, supports the proposal of the NTC.  Globe lawyer Froilan Castelo said there should not be any access charge to IP peering to maintain or lower Internet costs.  

 

IP peering refers to an agreement among companies to reciprocally provide access to each others' customers.  IP peering allows one ISP to connect with another, giving both entities a direct route for fast exchange of information. 

 

“A mandatory IP peering among major Internet service providers in the country would greatly improve internet speeds. The absence of an effective and applicable IP peering agreement among major telecommunications providers in the Philippines has been huge deterrent in further advancing internet development in the country. It is high time that the NTC addresses this issue squarely amid mounting calls of Filipino consumers for faster internet speeds,” Mr. Castelo said.

 

The NTC, in a recent joint hearing of the Senate committees on trade and public services, cited the lack of IP peering among local ISPs as one of factors that contribute to slower Internet speeds in the country. 

 

The NTC cited the case of Singapore and South Korean, both of which generate most of their Internet content locally, and as a result of IP peering, enhance Internet speeds.

 

Globe said 15 percent to 23 percent of all Internet traffic in the Philippines is domestic, which means domestic traffic originates and terminates in the country. However, up to 70 percent of this local traffic is being routed externally, such as in Hong Kong and the US, before returning to the Philippines. 

 

This means that instead of getting routed directly between origin and destination, data is routed outwards through large ISPs that sell transit before the data is routed back to its target destination, thus causing delay in data transmission and effectively slowing Internet connectivity.

 

Philippine Long Distance Telephone Co., the top telco in the country, however, said IP peering “cannot really address the objective of improving the speed of Internet services given that 80 percent to 90 percent of traffic goes overseas.”

 

"When IP peering was proposed in the past, we also raised concerns that this could compromise the quality and security of Internet traffic in the country," PLDT vice president Ramon Isberto was quoted as saying.

 

He said mandatory IP peering also lead to a situation where some parties "free ride" on the networks of others.