NEW YORK — Suppliers and wireless carriers are launching tablets like it’s 2010, but 2014 sales are running below 2012 levels, and growth will remain muted in 2015, analysts said.
“Tablet sales and pricing will continue to decline during holiday sales,” said Stephen Baker, industry analysis VP at NPD. “Tablets will struggle from high penetration, competition from larger smartphones, competition from cheaper PCs, and a difficult market position,” he said. “The use case for consumer tablets has been squeezed as phones got bigger and, frankly, as PCs have gotten more flexible in form and function,” he explained.
Although “tablets are still a very high-volume platform,” he told TWICE, they “have likely reached the peak of their volume. Holiday will see some very aggressive pricing on Black Friday and throughout the season, but those are likely to just keep the market whole from last year.”
Into this declining market in recent days:
• Apple’s iPad Air 2 and iPad Mini 3 hit the market, with LTE versions arriving from T-Mobile and Sprint and with AT&T and Verizon still to announce availability dates at press time.
• T-Mobile’s MetroPCS prepaid brand entered the market with the launch of the $149 Alcatel One- Touch Pop 7 with HSPA+21Mbps cellular.
• EFun launched what it called the industry’s first Windows twoin- one tablet retailing for less than $200.
• Samsung teamed up with Barnes & Noble to launch their second co-branded Android tablet optimized for e-reading.
• AT&T brought an LTE-equipped 32GB Amazon Fire HDX 7 tablet to its company-owned stores and online store.
• Fuhu, maker of the Nabi Android tablet for kids,shipped the world’s biggest tablets: the Androidbased $449 20-inch Nabi Big Tab HD 20 and $549 Nabi Big Tab HD 24, both designed for kids and families to play together.
Meantime, Google announced that the first tablet running the Android 5.0 Lollipop OS will be available in stores starting Nov. 3. A price hadn’t been announced at press time for the HTC-made Nexus 9 with 8.9-inch display.
The recent new-product activity belies the market’s recent sales slide.
IHS Technology forecast that U.S. tablet shipments will fall for the first time in 2014, sliding 13.4 percent to 48.86 million units to a level below that of 2012. Sales will pick up next year, however, by 8.2 percent to 52.88 million, exceeding 2012 levels but below 2013 levels. The 2015 growth rate will fall behind 2013’s 12.2 percent gain and 2012’s 44 percent gain.
In dollars, U.S. volume at retail is forecast to shrink 10 percent in 2014 following meager 0.4 percent growth in 2013 and 25.3 percent growth in 2012, IHS said. Dollar sales will pick up slightly in 2015 by 2.9 percent.
Rhoda Alexander, IHS tablet and monitor research director, attributed the 2014 decline to multiple factors, with excess inventory playing a large role. “Tablet inventories in the channel were very high at the close of 2013, leaving less room than usual for sales into the channel,” she explained. “Competition from largescreen smartphones played a role in those high inventories, eroding some of the tablet demand in late 2013 and continuing to impact demand in 2014 and beyond.” Bigscreen smartphones, called phablets, appeal to consumers seeking an all-in-one-device solution compared with a multiple-device approach, she said.
Consumer Electronics Association (CEA) senior research analyst Kevin Tillmann agreed. Although “intere s t in tablets remains high,” he said, “increased competition from large-screen smartphones is having a substantial effect on the U.S. tablet market, since consumers now have more screen size choices than ever.”
In 2015, much of the tablet growth will come from the enterprise and education markets, but sales to consumers will still achieve modest gains, Alexander said. “Demand from the business and education markets is growing, but tablet penetration rates in those markets are still comparatively low. Demand from both the business and education markets is expected to grow significantly in 2015 and beyond, driving much of the future growth in tablets.” In the consumer market, she said, IHS Technology “sees opportunity for some modest growth in portions of the consumer market,” fueled in part by replacement sales.
Replacement sales account for a growing portion of tablet sales, analysts said, given the high penetration rate. In August, CEA said, a total of 54 percent of online U.S. consumers owned a tablet, up 4 percentage points from January.
Another factor contributing to slower growth, said IDC VP Tom Mainelli, is a replacement rate lower than that of cellphones. “Consumers are keeping their tablets, especially higher-cost models from major vendors, far longer than originally anticipated,” he said. “And when they do buy a new one, they are often passing their existing tablet off to another member of the family.”
Not even aggressive moves by AT&T and Verizon to market cellular-equipped tablets will move the tablet needle much, said Alexander.
Carriers are promoting tablets because of high cellphone penetration rates, but carriers’ tablet promotions tend to cannibalize Wi-Fi tablet sales, said IHS’s Alexander.
Cellular tablet sales represent “a relatively small portion of the overall tablet market,” or 7.4 percent of forecast 2014 U.S. shipments, she added.