Tablet Sales Face Growing Threat From Smartwatches, Phablets - InformationWeek

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Tablet Sales Face Growing Threat From Smartwatches, Phablets

Tablets have eaten into the PC market, but will soon face their own competition from smartwatches and phablets, IDC predicts.

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Tablet shipments will be slightly smaller than expected this year, according to the newest findings from research firm IDC. The revised prediction stems largely from a slower-than-anticipated second quarter, although IDC noted that tablets are starting to face competition from other types of mobile computers, such as wearable devices and phablets.

IDC now expects manufacturers to ship 227.4 million tablets, a slight reduction from the 229.3 million units the firm had previously projected. Despite the downward revision, the new estimate represents a 57.7% increase relative to last year.

In a statement, IDC research director Tom Mainelli said shipments have slowed in recent months as consumers wait for new models, such as the refreshed iPads expected this fall. Mainelli made similar remarks when IDC released related research earlier this month.

The new data is not simply a retread of the earlier report, however, as IDC observed that several larger market shifts are in their early stages. The firm predicted that tablet adoption will continue to accelerate, with shipments reaching more than 400 million units by 2017 -- an increase of more than 75% compared to the 227.4 million expected this year. Even so, IDC expects growth to slow in mature markets such as North America, Western Europe and Japan.

[ The iPad's market share is sinking quickly. What does it mean? See Apple's Tablet Market Share Truth. ]

Developed markets currently account for more than 60% of tablet shipments. IDC expects that number to drop to less than 50% over the next three to four years, as tablet adoption increases throughout China, Africa and other developing markets. Mainelli noted that tablet prices will continue to fall as more manufacturers take advantage of the growing supply of low-cost components.

Although tablets will continue to be popular in the United States and other developed regions, IDC expects the devices to face more competition. Just as PC sales have declined due to tablets, tablet momentum could take a hit as more users embrace smartphones with tablet-like dimensions, and as wearable devices such as smartwatches and Google Glass improve.

Phone manufacturers such as Samsung and Nokia are already embracing phablets. Samsung will also debut a Galaxy-branded smartwatch in early September, and rumors suggest similar products from Apple and Microsoft could follow in 2014.

Although tablets might lose some ground to new device categories and sizes, IDC nonetheless observed a number of growth opportunities. Commercial tablet sales already make up 10% of the market, for example, with education and mobile retail deployments leading the way. IDC expects commercial shipments will account for 20% of the market by 2017, as more businesses find ways to not only accommodate tablets in BYOD programs, but also incorporate the devices into standard workflows.

IDC's new figures didn't address how market changes will affect individual tablet platforms, but with consumers evidently waiting for new models, a number of contenders are lining up. Apple will obviously be a juggernaut; it is reportedly readying an iPad Mini with Retina display as well as a slimmer version of the full-size model. Both will run iOS 7, the much-hyped new version of Apple's mobile OS.

Android, meanwhile, already has momentum thanks to Google's well-received Nexus 7, and the platform is poised to continue growing with new offerings such as LG's G Pad 8.3. Windows OEMs, meanwhile, will be releasing a slew of new hybrid devices, although their sales will rely largely on whether Windows 8.1 is better received than its predecessor. Microsoft is also rumored to be developing new Surface models, while Nokia reportedly is attempting to resurrect Windows RT by jumping in with a tablet of its own.

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Michael Endler
Michael Endler,
User Rank: Author
8/29/2013 | 7:35:26 PM
re: Tablet Sales Face Growing Threat From Smartwatches, Phablets
Agreed. To some extent, I can see phablets cutting into the sales of proper tablets, but I still haven't seen a wearable device with mass market appeal that's actually ready for prime time.

Like IDC, Forrester is also a big believer in wearable technology, but several of their analysts emphasize that companies are still figuring out new interaction models for these new devices. That makes sense; you can't just dump Android or iOS on a tiny screen, strap that screen to a watch, and call it a day. But it's one thing to think about new interaction models; it's another to actually produce one. Is someone gonna get it right in the next year? Maybe, now that big companies are involved-- but as David points out, it's anyone's guess until some of the devices are actually revealed.

On a related note, I'm sure that Apple, Microsoft et al hope to increase tablet sales with their wearable devices. Smartwatches and similar products are necessarily going to have some standalone appeal, and due to personal finances, some people might have to choose between a new smartwatch or a new tablet. So in that sense, sure, wearable tech will take away some tablet sales. But I suspect the devices will also tie into other products. An Apple smartwatch will probably act as a companion in some ways with iPhones and iPads, and if the unified experience is strong enough, I could see it boosting more tablet sales than it takes away.
David F. Carr
David F. Carr,
User Rank: Author
8/29/2013 | 7:02:41 PM
re: Tablet Sales Face Growing Threat From Smartwatches, Phablets
The "growing threat" seems very speculative still
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