Tablet Market Faces Slowdown on Back of Softer Demand

The updated IDC forecast represents a 6.5 percent year-over-year growth rate, well below the 12.1 percent growth rate previously forecast.

tablets and IDC

Following a second consecutive quarter of softer-than-expected demand, IT research firm IDC lowered its worldwide tablet plus 2-in-1 forecast for 2014 to 233.1 million units.

The updated forecast represents a 6.5 percent year-over-year growth rate, well below the 12.1 percent growth rate previously forecast.

While medium- to large-sized devices in North America and Western Europe will still produce significant revenues, the rest of the world is expected to account for the majority of shipments in the years to come, which will be dominated by smaller-size tablets.

Shipments of tablets featuring a built-in option of voice calling over cellular networks in the Asia/Pacific (excluding Japan) (APeJ) region reached 25 percent this quarter, representing annual growth of 60 percent.

The report noted trend suggests that end users in this region are looking for a single device that can meet their needs in terms of voice communication and media consumption, and for some that single device is a tablet and not a smartphone.

The company anticipates that price pressure on tablets with smaller screen sizes (less than 8 inches) and evolving tablet usage in emerging markets will fuel that unit growth.

While average selling prices (ASPs) are expected to stabilize at $373 in mature markets in 2014 due to the shift to larger screens and cellular-enabled tablets, ASPs in the rest of the world will decrease to $302, representing an annual decline of 10 percent.

Big box retailers in the United States are also working to drive down tablet prices, while simultaneously offering more advanced productivity options.

At Walmart stores, T-Mobile is now selling a 4G-enabled tablet (with another to come) that addresses part of the reason consumers have historically stuck with WiFi-only units: the cost of 4G-enabled devices.

The Apollo Brands' Trio AX Quad Core tablet, now at Walmart, can access T-Mobile's 4G network, runs Android and features a 7.85-inch HD display, 16GB of on-device storage, two-camera vision, a quad-core, 1.2GHz processor, 1GB of memory, a microSD slot and a price of $179.

Despite the growing popularity and stronger levels of consumer awareness, emerging technologies like smart devices—most specifically smart watches, are not likely to pose a serious competitive threat to tablets.

Samsung recently unveiled the Gear S, a smart watch that also has the ability to make and receive calls. However, Ramon Llamas, IDC’s research manager for mobile phones and smartphones, told eWEEK tablet makers shouldn’t sweat smart devices for now.

"Smart watches are, currently, an accessory and not a replacement to tablets and smartphones. Most of them rely on the cellular or WiFi connection in order to function properly," Llamas said. "Plus, the real estate on wearables is rather limited and you can only do so much. Given that setup, I’d reach for the smartphone and tablet before the smart watch."