What's Causing The Slump In The Tablet PC Market?

by Sohini Bagchi    Oct 30, 2015

decline

Once upon a time, tablets were impressive devices - refreshing and sophisticated - and were said to transform the computing landscape. While tablets enjoyed their hay days for a short period of time, intense market competition and better alternatives have changed all that now. There’s simply no denying that the tablet market is losing its momentum and leading vendors are feeling the squeeze. 

A recent IDC report shows global sales of tablet computers fell for a fourth consecutive quarter, as buyers put off replacement or looked to alternative devices. According to IDC, tablet sales witnessed a 12.6 percent year-over-year decline in the July-September quarter, with 48.7 million devices shipped, and Apple’s iPad leading the retreat.

No upgrades, no buy

IDC analysts believe tablet owners are not replacing the devices as frequently as in the past. As Ryan Reith, Program Director with IDC’s Worldwide Quarterly Mobile Phone Tracker says, “We continue to get feedback that tablet users are holding onto devices upwards of four years.”

Reith notes that part of the problem with tablet sales is that unlike smartphones, there doesn’t seem to be a two-year upgrade cycle. In fact, according to , the average tablet owner holds on to his slate for more than four years. Overall, IDC says that there are 581.9 million tablets in the world.

It’s becoming increasingly clear that markets such as the U.S. are reaching high levels of consumer saturation,” the IDC’s Tom Mainelli said in another recent report. “And while emerging markets continue to show strong growth this has not been enough to sustain the dramatic worldwide growth rates of years past.” 

Phablets to Blame?

Today, consumers are shifting to large-sized smartphones, or “phablets,” or to lightweight PCs, some of which have detachable keyboards. In the last 2 years, reports have shown the increasing popularity of phablets, phones with screens larger than 5.3 inches, could eat up a chunk of the then speedy tablet market share. Consumers, therefore, would be less likely to purchase a 7-inch tablet because there isn’t much of a difference in screen size, going forward.

“We believe the traditional slate tablet has a place in the personal computing world. However, as the smartphone installed base continues to grow and the devices get bigger and more capable, the need for smaller form factor slate tablets becomes less clear. With shipment volumes slowing over four consecutive quarters, the market appears to be in transition,” says IDC.

Still a ‘third device

Experts believe executives would prefer to move around with their smartphone or/and a laptop - one easily fits in the pocket and makes everything handy.The other one has the added advantage of a full-fledged keyboard for fast typing. A tablet sits between the smartphone and laptop and it can’t replace any one of them.

This reasons why tablets make more sense than a tablet if you really want to keep a third device. With tablets you don’t do anything you already do with your smartphone, explains IT analyst Veer Chowdhary.

“Tablets feel like giant-sized version of smartphones. The large screen might be marginally better for surfing the Internet, or reading an ebook, or even watching a movie, but it doesn’t really justify the extra bulk of a tablet,” he says. 

Read more: Are Tablet PCs Failing To Impress Business Users?

What’s Apple’s take? And Others?

Apple, which effectively created the market with its iPad in 2010, has seen shipments of its iPad decline 19.7 percent over the last year. Apple’s iPad sales have been hurt by “self-cannibalization” as more customers buy the company’s big-screen iPhones instead, said IDC. Apple also is facing more competition from low-cost tablet vendors and PC companies with two-in-one devices that can act as notebooks and tablets.

Apple CFO Luca Maestri said the company shipped 9.9 million iPads during its fiscal fourth quarter, down from the 12.3 million it shipped during the same quarter last year. The Apple executive told investors, sell-through for the three months was actually 10.4 million since the company reduced inventory levels by 500,000. Apple owned 20.3 percent of the global tablet market during the quarter.

However, Apple isn’t the only big name in the industry suffering right now. Samsung saw shipments of its slates decline by 17.1 percent year-over-year, in the calendar third quarter. In third place for the period was Lenovo, whose tablet shipments actually rose 0.9 percent. Fourth place Acer had its tablets shunned by the marketplace, as deliveries declined 43.4 percent. Lastly, in fifth place with a huge 147.9 percent increase in shipments, was Huawei. The latter sold a large number of tablets to those who live in areas with poor internet service. It turns out that 75 percent of the tablets it shipped have cellular connectivity.

 Future tense(d)

The tablet sales are expected to further slump in 2016. This is based on another report from DigiTimes, citing sources from integrated chip suppliers. According to the report, it claims that due to the rise of the phablet, tablet sales have taken a hit and are expected to decline anywhere between 10-20 percent in 2016. 

In such a scenario, it’s unclear exactly what types of devices we’ll see in the future. But one thing is for sure, as smartphone screen sizes continue to grow beyond the 5-inch range, tablet makers will have to make some compelling arguments to keep consumers hooked. 

Read more: Will Tablet PCs Become Redundant Soon?

As Senior Practice Director Jeff Orr stated in a ABI’s report that “The tablet market lacks a truly competitive playing field needing a strong third even fourth vendor to drive the market out of stagnation.” Good news is, Orr notes that the slowdown doesn’t necessarily mean the end of the tablet market. Tablets are still popular among consumer households and even have a practical purpose for many businesses and the education sector.

If lessons were to be learnt, Apple is reportedly seeking to carve out a new niche in the tablet market with the iPad Pro, which has a detachable keyboard and is expected to go on sale next month, while Samsung has a similar device called the Tab S2. This sure gives tablet vendors a reason to shake up the market, get innovative and create a truly competitive landscape.