Tablet Sales Sag

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Big-screened smartphones continue to put the hurt on tablet sales. Shipments of tablet computers around the globe retracted during the first three months of the year, according to new data from NPD DisplaySearch, marking the first retreat since the iPad debuted in 2010. The drop in shipments could spell trouble for makers of tablets and other gear.

Tablet manufacturers shipped about 56 million units during the first quarter, down from approximately 59 million during the same period a year ago. The drop isn't enormous, but it is cause for concern. Tablet shipments have gone nowhere but up, up, up during the four years following the Apple iPad's arrival. The iPad is generally held responsible for the modern resurgence in tablet computing.

NPD DisplaySearch suggests increasing sales of large-screened phones are partly responsible for the decline in tablet shipments. Oversized smartphones such as the Samsung Galaxy Note 3, HTC One Max, and Nokia Lumia 1520 are more appealing than small tablets to many consumers.

[Samsung's smartphone sales sag. See Samsung Smartphone Juggernaut Shows Signs Of Weakness.]

"Tablet PC demand in 2014 is being impacted by falling demand for seven-inch-class sizes in emerging regions and in China, where many local white-box brands have experienced lower-than-expected shipment growth," said Hisakazu Torii, VP, smart application research at NPD DisplaySearch. Sales of tablets with screens ranging from seven to eight inches represented 58% of the entire tablet market in 2013.

NPD's research corroborates recent findings from Accenture, which suggested sales of large-screen phones are primed to take off at the expense of smaller tablets. Last month, Accenture conducted an online survey of 23,000 consumers across 23 countries. Of those polled, a significant percentage indicated they'd rather buy a big phone than what is now defined as a conventional smartphone, or a device with a screen measuring between four and five inches. Emerging markets posted the strongest interest in big phones. Further, Accenture's data suggests tablet buyers also maximize when it comes to screen size. The survey discovered 72% of potential tablet buyers would prefer a full-sized tablet, while only 20% would prefer a smaller tablet.

Samsung also revealed data suggesting sales of small-screened tablets are cooling. This week the company warned of lower profits thanks to sluggish sales of tablets -- particularly those with smaller screens.

Replacement cycles are another factor. Both NPD and Samsung say instead of replacing tablets every year, consumers are following a cycle similar to laptops. "There is a risk that the replacement cycle for tablet PCs will lengthen beyond the one- to two-year range unless brands can develop more attractive usage scenarios," noted NPD DisplaySearch's Torii.

Apple stills sells more tablets than any other hardware maker, but Samsung places second. The companies rank 33% and 22% of the global market, respectively. Despite flooding the market with new models, consumers aren't buying in the same numbers they were in 2013. NPD says gear makers are already changing their orders for the rest of the year. The research firm now expects tablet shipments to grow just 14% this year, reaching 285 million units. That's down from the 315 million units NPD previously forecast. NPD believes growth in the tablet market will drop to single digits as soon as 2017.

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