Tablet Sales Slow Dramatically, Slow Replacement Sales, Phablets, are Issues

August 06, 2014
By: Gary Kim

A growing number of forecasts and surveys suggest that tablet sales have slowed unexpectedly, and call for slower rates of sales growth than expected a year ago. The latest survey of 700 users by Business Intelligence shows some of the same trends other forecasters have observed, namely a rapid and unexpected sales slowdown.

The Business Insider survey focused on affluent owners and potential users, of which 70 percent live in the United States, United Kingdom and Canada. Some 92 percent own a tablet, and 80 percent of them own high-end brands, defined as Samsung (News - Alert), iPads/iPad Minis, and Nexus devices.

Some 59 percent have incomes higher than $100,000 annually.

As other forecasters have found, owners have few incentives to upgrade, and appear not to suffer as much damage as do smartphones which are carried everywhere. So there is less need to replace damaged devices.

Also, phablets (smartphones with large screens) are becoming viable alternatives to tablets.

So Business Intelligence estimates nine percent compound annual growth rates over the next five years.

In May 2014, for example, IDC (News - Alert) lowered its forecast for tablet sales to 12 percent annual growth, from an earlier forecast of 52 percent.

IDC says two different trends are at work. “First, consumers are keeping their tablets, especially higher-cost models from major vendors, far longer than originally anticipated,” IDC said. That means the replacement cycle often seen in the smartphone market, where consumers upgrade every two years or so, does not seem to be as prevalent in the tablet market.

"Second, the rise of phablets--smartphones with 5.5-inch and larger screens--are causing many people to second-guess tablet purchases as the larger screens on these phones are often adequate for tasks once reserved for tablets," IDC said.

Gartner (News - Alert) researchers also say tablet adoption is slowing. Tablets are currently moving onto the latter part of the adoption curve in mature markets, Gartner says.

Gartner estimates that sales of tablets will see a relative slowdown in 2014 to reach 256 million units, an increase of 23.9 percent from 2013.