10 Implications of Tablet Sales Slowdown

by Don Reisinger

IDC’s study, which includes real data from the first three quarters of the year and forecasts through the end of 2014, said that Apple will report the first year-over-year decline in total iPad shipments. The company indicated that iPad sales are set to fall 12.7 percent year-over-year in 2014, making it the first time Apple has experienced a decline in iPad shipments since it released the first-generation iPad in April 2010.

While the focus of IDC’s study may be on tablets, it followed another report from research firm IHS that showed that the notebook PC market was up 10 percent year-over-year in the third quarter, and the market will show additional growth in the fourth quarter. In addition, the top five PC brands saw shipments grow 23 percent—a stark contrast to the iPad’s 12.7 percent decline and the broader tablet space’s 7.2 percent year-over-year growth, according to IDC.

Android and iOS might control the marketplace between now and 2018, but Windows is expected to come on strong. At the end of this year, Windows will own just 4.6 percent of the tablet space worldwide, but by the end of 2018, that number will jump to 11.4 percent, thanks to the anticipated strong demand for Windows 10. Tablet makers will ship a total of 32.6 million Windows-based models in 2018, IDC predicts. If Windows 10 positively impacts tablet shipments, then there’s a good chance it’ll also help boost notebook sales considerably in the next few years.

Unless a company is planning to deliver tablets running Android, iOS or Windows between now and 2018, it might as well not even try to compete in the marketplace. At the end of this year, devices running other operating systems will account for just 0.2 percent of the market, down 70.6 percent compared with 2013. By 2018, their markets shares will hover close to zero.

Windows 8 is still putting the brakes on sales of a variety of PCs and mobile devices because of “consumer hesitancy” about the operating system, according to IDC. However, once Windows 10 launches and two-in-one devices that can be notebooks or tablets gain in numbers, Windows should come on strong IDC said.

The name of the game in tablets is emerging markets. For the first time in 2014, more tablets will ship to emerging markets than in mature markets, according to IDC. By the end of 2018, 149 million tablets will ship to emerging markets, compared with 137 million in mature markets. In other words, the company that wins in emerging markets could win in the tablet space.

As IDC noted, the tablet market is “decelerating.” While there are myriad reasons for that, with tablet shipment growth reaching just 7.2 percent, one of the key factors is replacement cycles, the research firm said. Its latest study found that while smartphone buyers will get new devices every couple of years, tablet owners are holding on to their products for more than three years, and in some cases, more than four years. That’s bad news for companies like Apple and Samsung that rely on consumers getting new devices every couple of years.

Smartphones are a real problem when it comes to tablets and adoption. IDC discovered that consumers are increasingly viewing their large-sized smartphones, like the iPhone 6 Plus or Galaxy Note 4, as suitable substitutes for tablets. So, in many cases, customers are either holding on to tablets longer or not buying slates at all because their big-screened smartphones are doing the trick. IDC said that smartphones are being used now “for a variety of computing tasks.”

Look for tablets to get bigger and more powerful and for smaller slates to be sidelined in pursuit of higher profits, IDC said. Significant “price pressure” in the marketplace is causing companies to rethink their strategies, the research firm said. There are better margins on devices that have larger screens and connections to cellular towers, so companies are looking to increase their focus in those areas. Does that mean the iPad Pro with the 12.9-inch display we’ve been hearing about really is coming to store shelves?

IDC ended its evaluation of the tablet market by admitting that it had more questions about the future than real answers. While it can certainly predict what should happen, the company acknowledged that it doesn’t know how Apple’s rumored iPad Pro could impact the market. IDC also questioned how Chrome OS could play a role in Google’s plans in the next several years. The research firm even wondered if replacement cycles could be further extended in the coming years. In other words, the future is uncertain and not even market handicappers know with full confidence what it holds.