State of the Tablet Market: 3 Takeaways

By now, it's clear that anyone who thought tablets were a fad is dead wrong.

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By now, it’s clear that anyone who thought tablets were a fad is dead wrong.

According to IDC, tablet makers shipped 49.2 million units during the first quarter of 2013, for an increase of 142 percent over the same period a year ago. PC sales, meanwhile, are down to 76.3 million units shipped. At this rate, it’s safe to assume tablets will overtake PCs by the end of the year.

IDC’s figures aren’t gospel, because for the most part they aren’t based on official numbers from hardware vendors. But as a general sense of what’s going on, they provide us with a few interesting takeaways:

Apple Isn’t In Tablet Trouble

Percentage-wise, Apple’s tablet shipments aren’t growing as quickly as the competition. Samsung, for instance, enjoyed 283 percent year-over-year growth. Asus’ shipments went up by 350 percent, while Amazon’s shipments went up by 157 percent. Apple’s growth? A mere 65 percent. The difference led CNet to wonder whether Apple is “losing its edge” to other tablet makers.

No, it’s not. For one thing, the numbers for Apple represent sales to end users, rather than shipments, so it’s possible that the company has shipped many more units than IDC’s figures let on. Even if we ignore that discrepancy, iPad “shipments” increased by 7.7 million, compared to 10.6 million for the next four tablet makers combined. And most of those companies only boosted their market share by sacrificing profits and selling tablets for dirt-cheap–something Apple hasn’t done to nearly the same extent. Other tablet makers are addressing a part of the market that Apple hasn’t, but that doesn’t mean they’re eating Apple’s lunch.

Amazon Isn’t Destroying Android

Just like last year, Amazon’s tablet shipments dropped off big time after the holidays, with just 1.8 million Kindle Fires shipped, compared to 6 million in Q4 2012, but it’s not as bad as it looks. Shipments don’t equal sales to end-users, and as NPD analyst Stephen Baker pointed out a year ago, Amazon tends to ship lots of units during the holidays, and then sell them to customers throughout the following quarter.

Still, over the last two quarters combined, Amazon only shipped about 7.8 million tablets. That’s less than half as many as Samsung, and only a couple million more than Asus. The introduction of a larger Kindle Fire HD 8.9 and lower pricing for the basic Kindle Fire did little to boost Amazon’s market share.

Amazon uses a heavily-modified version of Android, with its own app store, which led several pundits to predict that the Kindle Fire would be a serious threat to Google’s ecosystem. Thanks to Samsung and Nexus tablets, plain old Android seems to be doing just fine.

PC Makers Are Getting Shut Out

When you compare the top tablet makers to the top PC makers, the only point of overlap is Asus, and the only reason Asus is on the tablet leaderboard is because it manufactures the Nexus 7 on Google’s behalf.

PC makers have failed to make the transition for a lot of reasons, but the overriding reason is that selling a tablet is not at all the same as selling a laptop. Being successful doesn’t just require good hardware, it also requires differentiated software (not to be confused with bloatware), ultra-competitive prices and tons of advertising. PC makers aren’t known for any of those things, and it’s hard to see how that’ll change.

12 comments
ForbesBenny
ForbesBenny like.author.displayName 1 Like

With many companies who continuously produces gadgets being innovative is important. Author of the 5-Star Business Networks Vivek Sood just mentioned on his blog that innovation is important to stay in the game.

FreddyJason
FreddyJason

@ForbesBenny Now that is note-worthy. The book on Goodreads THE 5-STAR BUSINESS NETWORKS by Vivek Sood said that "Business is the engine of the society and it will need newer models of commerce to fast track the recovery.” Thus the bottom-line for businesses to grow is INNOVATION and whether good sales or bad, this is innovation

 

DeweySayenoff
DeweySayenoff

Yeah, I love the fact that world wide, the total number of tablets shipped (let alone sold) is still an insignificant fraction of the total number of PC's CURRENTLY BEING USED, let alone PC's shipped or sold over the years.  The pundits proclaiming that tablets are PC killers are falling for the oldest fallacy in the marketing game: Sales versus use.

The tablet is still a toy because it's limited by its form factor to (at best) extremely narrow markets to be used for productivity (mostly in art and graphics), while as a consumption device, it's still a major pain to use.  Because of this, I still call it a fad and stand by that.  People are being marketed into thinking these things are the next sliced bread.  And in some very limited cases, some people have the time and patience to do all of the things they do with a computer (surf and very short, limited e-mail) on a tablet at a cheaper cost than most PC's.  But for serious productivity, real gaming, ultimate versatility and being able to do whatever you may need or want, a PC is the ONLY machine out there that will do it.  To call the PC dead it equivalent to saying that more water is no longer necessary.  There are millions of tablets.  There are BILLIONS of PC's.  The only reason tablets are outselling PC's is because they're well marketed (that is to say, the buyers are being lied to so well, they'll pay for them), they're generally cheaper than PC's and they're "new" - which is mostly a curiosity draw than actual interest.

Once ANY of those drops off, tablet sales will plunge.

When enough people get over their new tablet smell, realize how limited they are compared to PC's they go back to PC's.  (No one I know (and I know thousands, being in the business as I am) has abandoned their PC's for the tablet.  No one I know has replaced a broken PC with a tablet.)  That will make people realize these are not the miracle machines they've been marketed as (hype being Apple's specialty, but other makers are playing along for the the sake of profits).  They'll realize they're being lied to.  They'll mostly stop buying them.

Cheaper?  PC's are being sold at $25.00, although they're hardly polished machines.  One COULD make a decent PC with one of those that will do most everything (about as well as a medium-end laptop) from those at about half the cost of an iPad (whose premium pricing is beginning to hurt it since there are a lot of alternatives that do the same thing - or more - only a lot less expensively).  The time is coming when a PC will be much cheaper and more versatile than tablets.

As for the newness, let's face it...  Curiosity is satisfied, then interest wanes.  Tablets are consumption devices and limited.  Anyone who has ever used one has to agree with this.  You have to HOLD ONTO IT all the time to really use it.  The touch-screen keyboards aren't as fast or accurate as a regular, full-sized one.  The screens are too small (unless you LIKE sitting with one up to your face!). And any wrong touch means you get to touch it again to get back to where you were.  Given that it's HAND HELD, a wrong touch is guaranteed.  After a while, that gets tedious.

It's hard to sell tedious things

So no matter what the pundits say, it has an inherent handicap that no amount of marketing, delusion or hope can overcome: Form factor.  That makes it inherently unsuitable for almost all PC applications.

Yes, one can spend more money on accessories to turn it into a netbook (it still isn't as good as even a cheap laptop), but that adds to the TCO and increases its overall cost to the consumer (One of the legs - it's cheaper than PC's, remember?)  More good money thrown after bad makes the tablet a bad prospect for the consumer.

It's a fad.  It will fade.  Pet Rocks and Disco were around a lot longer than Tablets have been around.  They were discarded upon the heap of no longer visited fads.  Tablets have only to pass through all the phases and they, too, will be relegated to the fad heap.  Some may use something sort of like a tablet (when the PC evolves into a more useable form factor than it already is), but tablets as flat, expensive paperweights will be as old and loved as polyester leisure suits.

AlanRalph
AlanRalph

@DeweySayenoff I have to ask - have you ever used a tablet? Whilst there are some things that PCs can do that tablets cannot, and some more things that PCs can do better than tablets, both of those lists have shrunk by quite a margin over the last few years as developers have come up with ways to use the tablet's portability and power to best advantage.

Yes, there are millions of PCs out there. The problem for PC makers is that those machines are being replaced a LOT less frequently, particularly in businesses. Producing cheaper PCs to try and tempt customers has merely resulted in even slimmer profit margins, lower reliability and worse customer support.

I was initially dubious about the iPad when it first launched - what won me over was the fact that developers were producing software that would allow me to do a lot of stuff that I was doing on my PC in a more convenient way. I've since traded in my original iPad for an iPad 3. I've also gotten an iMac after suffering two PCs failing me in the space of 16 months. It's not an either / or decision - the iPad handles all the stuff that would otherwise be distracting me whilst I work on the iMac, and I can share and sync information between the two using Dropbox, iCloud and other services. My iPad is also a portable radio and music box, as well as keeping me up-to-date with what's going on in the world. And it's great for casual gaming too. I have Adobe Creative Suite and other software on the iMac for work, plus I can fire up an FPS game when I'm in the mood. The best of both worlds. :)

Both tablets and PCs are going to evolve over time - tablets will become more powerful, whilst PCs will become even more modular than they are now. Neither of them will go away, but they probably won't be recognisable from what we have now in a decade's time.

zaglossus
zaglossus like.author.displayName 1 Like

Reports of the death of the PC (even the old desktop) are greatly exaggerated.

gregg.butler
gregg.butler

Every new product that becomes high in demand will hit a ceiling and level out or drop off a bit. Tablets are hear to stay, but they do need to be improved! They can not replace the PC or Laptop the way they are currently. Most tablets (mainly Apple) do not support external drives, SD drives or other media plug in's (Android is better than Apple and the BB Playbook is the best I've seen so far). File access, network access and drag and drop is not as fluid as a Laptop. And this is where the iPad\iPod really fails, where the desktop needs to have iTunes running to really share information. Believe it or not, most big businesses do not use WiFi for network connectivity on their Intranets and I have never seen iTunes on a Government PC or a major businesses PC. 

Tablets need to do the following if they want to capture the laptop playing field.

- Act independently from cumbersome and restrictive propriety software like iTunes.

- Allow for better file and application integration with the Host PC or Network

- Allow for Third party installations or direct installations with out an App store.

- Allow full access to the local file system and operating system. Let IT and Developers customize or make their own flavour of the OS.

- Support for serious business tools (Oracle, MS SQL, SAP, eDOCS, Crystal Reports) 

- Integrated security with Microsoft ADS networks

- Better direct connection methods to PC's in business and 1 common connection type. USB should be the norm.

- BETTER SECURITY! believe it or not, but many businesses and government agencies can not use tablets for their lesser security. 

- Allow for direct connection of a larger range of peripheral components (printers, scanners, portable drives, security card scanners etc) with out having to purchase specific dongles or converters (this goes back to 1 type of connector).

Android and Blackberry are making great strides in these areas to bring to the public a real "Business" model tablet, but Apple has completely stopped and almost refuses to help businesses out in these areas. At this point, the next business that addresses in their tabletsss these topics will take the lead in the next wave of sales. 

AlanRalph
AlanRalph

@gregg.butler In other words, you're saying that tablets need to become PCs? Tablets have succeeded because they've focused on complementing what PCs can do, not trying to replace them. It remains to be seen if Microsoft's Surface and Window 8/RT can bridge that gap. The market tried 'tablet PCs' back in the mid-2000s - that didn't really work out, and it will take a lot to convince people that they're a good idea now.

EricaWong
EricaWong

If this rate of growth continues, Samsung will pass Apple in just less than 11 1/2 months.

Also, will be interesting to see what the next Nexus 7 will look like and if it can compete even more effectively versus Samsung.