Phablets, which are smartphones with larger screens, will start to cannibalise into the market share of tablets over the next 12-18 months, research firm IDC said.
Generally, phablets are smartphones with screen size that ranges from 5-8 inches and are designed to combine the functions of a phone and tablet.
"A new round of device cannibalisation is also expected to kick in, but this time with large-screen (5-plus inch) smartphones beginning to impact the smaller (7-8 inch) tablet market," IDC said.
IDC added it expects lower-cost devices will drive global interest and aid in increasing uptake among first-time buyers in commercial sectors like education.
"The device world has seen several iterations of cannibalisation impacting different categories, with the last few years focused on tablets cannibalising PC sales.
"Over the next 12-18 months, however, we believe the larger smartphones, commonly called phablets, will start to eat into the smaller-size tablet market, contributing to a slower growth rate for tablets," IDC Programme Vice President (Clients and Displays) Bob O'Donnell said.
However, IDC said it expects tablet shipments will surpass total PC shipments (desktop plus portable PCs) in the fourth quarter of 2013 (Q4 2013).
Globally, smart connected devices -- PCs, tablets and smartphones -- will continue to surge with overall shipments surpassing 2 billion units by the end of 2015 with a market value of USD 735.1 billion.
Shipments of desktop PCs are expected to touch 134.4 million units by 2013 and 123.11 million by 2017, while, that of portable PCs are expected at 180.9 million units by 2013 and 196.6 million by 2017.
In the case of tablets, shipments are projected to touch 227.3 million units by 2013 and 406.8 million by 2017.
Shartphone shipments are expected to touch 1,013.2 million units by 2013 and 1,733.9 million by 2017.
In terms of device mix, total PC shipments accounted for 28.7 % of the smart connected device market in 2012 while tablets accounted for 11.8 % and smartphones for 59.5 %.
By 2017, total PCs are expected to drop to 13 %, while tablets and smartphones will contribute 16.5 % and 70.5 %, respectively to the overall market.
The shift in demand from the more expensive PC category to more reasonably priced smartphones and tablets will drive the average selling price (ASP) for the collective market from USD 462 in 2012 to USD 323 in 2017.