Mobile Marketer has re-launched! Click here to learn more!

Tablet slowdown accelerating as phone sales surge

International Data Corp. (IDC) cut its 2014 global outlook for tablet shipments after a second straight quarter of weaker-than-expected demand while forecasting strong growth in smartphone shipments. The contrasting results underscore a perception that smartphones are must-have items while tablets are luxury items, especially as phone screens get larger.

?I'm not really surprised by IDC's lower estimates for the slower growth of tablets globally,? said Joe Zahtila, general manager for North America for London-based polling platform Qriously. ?Tablets have reached a bit of an inflection point. The next big hurdle for growth is appealing to business users.

?We've even seen Apple begin to lean on the productivity aspects of the iPad in their marketing efforts,? he said. ?I think the key here is better onboard storage or ubiquitous, nearly free cloud storage.  My guess is that it will be a combination of both that re-ignite double digit growth.? 

Flat growth
IDC said global tablet shipments this year would rise 6.5 percent from a year earlier to 233.1 million units, well below its earlier forecast for growth of 12.1 percent. It said tablet growth has flattened in North America and Western Europe while emerging markets continue to see demand.

Despite a saturated world smartphone market, smartphone shipments are expected to jump 23.8 percent this year. For the five years ending in 2018, smartphones will have compound annual growth of 12.7 percent, IDC said.

The slump in tablet sales follows two years of explosive growth, fueled by the availability of tablets ranging from premium products to relatively inexpensive devices. 

The next big wave of growth is expected to come in two years when consumers who bought their first tablets in 2012 and 2013 start replacing them.

The tablet market could get a jump-start next year if Apple, as expected, begins making its iPad tablet with a bigger screen.

?Smartphones are must-haves while tablets are more luxury items,? Mr. Zahtila said. 

?Especially as smartphone screen size increases, the growth of tablets has to be impacted. Everyone that has an opinion on the topic is anticipating that Apple will release at least one larger screen iPhone. 

?Clearly consumers want larger devices that they can carry with them everywhere they go,? he said. ?Tablets really need to broaden their appeal to business users to differentiate from smartphones.?

Bruising Apple
The slowdown has been tough on Apple, whose once-dominant role in tablets has shrunk significantly.

Apple promotes iPad on Web site.
The iPad made a big splash when it was first introduced in 2010 and virtually owned the market for 18 months. As Android?s influence has grown, however, the iPad?s share dropped from 61 percent in the second quarter of 2011 to 56 percent in 2012 and then plummeted to 28 percent in 2013, according to figures from Strategy Analytics.

Despite diminished tablet shipments, the devices will dominate ecommerce transaction in the years ahead. In May, a report from Forrester Research said tablets would account for 42 percent of total ecommerce sales by 2018 and smartphones would represent 9 percent of total ecommerce sales. By 2016, smartphone retail sales will reach 11 percent of total ecommerce sales.

IDC?s statistics suggest the laptop?s days are numbered as smartphones and tablets merge in terms of the size of their screens. 

?The lines between smartphone and tablet have blurred with the rise of larger screen, phablet-type devices,? Mr. Zahtila said. ?Replacing the laptop is really the next logical evolution of the tablet.? 

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York.