Tablet sales stall, but a closer look shows why another growth spurt is inevitable

May 11, 2014

I don't dispute that tablet growth has slowed, but I'm not at all as concerned about the industry going forward, in fact I think tablet sales will accelerate again soon. Here's why.

We are at an inflection point with tablets. In many developed markets, PC penetration is high and smartphone penetration is high. The role of the tablet between these two screens is not yet clear in the minds of many consumers. For example, today in most US homes, the tablet is a communal device which members of a family access and share.

According to recent data we (Creative Strategies) gathered, over 50% of tablet owners indicate they share the device with at least one other person. This dynamic has added to the tablets sales slowdown, along with a refresh cycle closer to a PC than a  smartphone.

Another interesting observation is that the bulk of tablet purchases in 2013 were in the 7-8" screen size. When you look at the growing size of smartphone screens ranging all the way from 4-6.5 – inches then it begs the question as to why a small screen tablet is larger than a big screen phone? My gut tells me the growing screen sizes of smartphone has also played a role in the slowing tablet sales.

But I don't believe this will be the case for long. In reality, it is hard to look at a one or two quarter slowdown and claim it as the new norm or a long term trend. There are many dynamics at play with regard to tablets that look to set them up for more prime growth.

Bigger is better

One is the trend of larger screen phones I mentioned above. We believe that larger tablets, meaning those closer to 10" or larger, are primed to be a growth area. Since a great deal of smaller screen tablets represent a large portion of the installed base, it seems reasonable that larger screen tablets become more attractive, especially if one has a large screen phone.  

Look for this trend to play out on the business / enterprise side as well. From salespeople making impromptu and formal one-on–one presentations to managers working with documents and spreadsheets, bigger screens offer more value. 

If this happens we believe more consumers will see the value of the tablet as a legitimate PC replacement. Tablets have been largely supplemental to PCs up to this point. Part of the reason is because smaller tablets are not viable PC replacements. However, data point after data point, suggest to us that once consumers get their hands on larger tablets they begin seeing its value as a primary computing device.

Great deals

The other dynamic that could bring tablet growth back is connectivity. To date, most tablets sold are wifi only. However, we believe this may all be about to change. Carriers are looking to make tablets a growth area for them and we hear of interest to either heavily subsidize tablets or even move to an installment plan model.

What this means is that for very little to no upfront cost, consumers will be able to get a connected tablet from their carrier and just pay a small fee per month for the hardware and the data plan.  Carriers looking to do aggressive bundles with hardware tied to their services is a major trend we see coming.

For IT managers this could mean even more consumers wanting to bring their tablets to work. More importantly, it could mean more consumers wanting to bring their tablets to work which are now connected at all times and not just while on wifi.

If we are right and there is a trend to larger and connected tablets, then a new dynamic and opportunity for hardware companies and software companies may be shaping up as well as new use cases for enterprise users.

Tablet sales may be levelling off in the short term, but to say their growth has peaked is way off target.

(For more news, trends and insights about the the tablet market, sign up for TabTimes' free Tablet Business/Productivity newsletter)


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