The Decline of Tablets?

Are tablets becoming out of touch with the needs of the marketplace? Market analysts have begun to read the tea leaves of Q4 sales of tablets, and the slowed growth has many seeing device saturation in consumer sectors. At the same time, Pew forecasted in May 2013 that tablet shipments would eclipse total PC shipments by 2015. Although both interpretations could be true, there’s a climate of uncertainty about whether the tablet market is looking optimistic or pessimistic.

There are a number of factors affecting tablet demand worldwide:

• Smartphones have vastly improved their screen resolution and video software since the advent of the tablet. This means that tablets no longer have nearly the edge they did on streaming services such as Netflix, making them less exclusively desirable as a device consumers curl up or commute with.
• At the same time, the “phablet,” such as the Samsung Galaxy are themselves predicted to ship more units than notebooks and desktop PCs combined, and expected to overtake tablet sales by 2017. These super-sized phones are finding a new sweet spot right below the size of popular smaller tablets like the Nexus 7 or iPad Mini, making the purchase of a large screen phone and a miniature tablet feel redundant to many consumers. Even Apple is rumored to be planning a phablet-sized phone. If the iPad pioneers are building a larger integrated device, it may be an indication that they’re switching strategies.
• Tablet prices are dropping (though at the same time as some Smartphone prices). The IDC forecasts that the average selling price for tablets will fall 10.8% to about $381 per device. The bad news? The average selling price for phablets has already fallen to $317, and that doesn’t account for promotional pricing from service providers.
• Tablets remain a good device for senior citizens; a larger screen helps with visibility over a phablet or regular smartphone, and the touchscreen display is easier to manipulate for people with arthritis. For the developing world, where the population is aging, the tablet might remain relevant as a device for seniors to stay connected.
• At the same time, tablet use in business is expected to be near market saturation, although it doesn’t look like iPad Airs will be at the forefront of fieldwork. Ruggedized Windows or Android tablets are being developed for work in industrial or commercial services sectors to reduce paper waste. Enterprise adoption of tablets is likely to be the most lucrative growth segment, but there will need to be a clear advantage to buy a tablet in addition to a PC.

Taken as a whole, it looks like tablet sales growth will be driven not by broad consumer trends, but by localized demand where the device’s potential is maximized. Traditionally, consumers have been comfortable with two types of devices: a PC laptop or desktop and a pocket-sized Smartphone. Additionally, it appears that the compression of tablets to be smaller won’t make up for the demand for phones to become larger. We’re not fans of the word “phablet,” but for the moment, it appears to be the device of choice for consumers in the future.