IDC reports show tablet sales continuing to fall; tech, industry observers contemplate why
Only Amazon, with its low-cost Fire tablet line, is continuing to see any growth; meanwhile, Apple and Microsoft continue to push the power of their tablets to small niches of users
The tablet market shrunk worldwide, according to the IDC Worldwide Quarterly Tablet Tracker, something that would have been big news a couple of years ago, but today produces only a yawn. Yep, tablets are dead.
Well, kind of. Amazon’s sales are growing, as it pursues a low price strategy.
“For Amazon, the low price is part of a strategy that CEO Jeff Bezos has referred to as “the Amazon Doctrine.” In a nutshell, Amazon cares less about tablets as end products and more as direct commerce channels for users to buy products from Amazon,” ZDNet said in their report yesterday.
“But the Amazon news was not at all surprising, for two reasons,” Nate Hoffelder of The Digital Reader said today.
“Amazon’s most-promoted and cheapest tablet last quarter cost half as much as the Amazon’s most-popular tablet from the same period last year. That is obviously going to boost sales, but more importantly IDC wasn’t counting Amazon’s best selling tablet last year – not as a tablet, anyway.” Hoffelder said.
The AAP released its eBook sales report recently, which once again said that eBook sales were down. That report is a bit controversial because it takes its data from the large book publishers and so really is only a snapshot at their sales. Many think the eBook market, while maybe not booming right now, is not declining when sales from all channels such as Amazon and self-publishers are considered.
But with tablets, forgetting for a minute whether one product is included in the report or not, the picture does indeed seem to show a declining market. Why? Is this the effect of smartphones becoming more powerful, larger? Yes, very likely. But I would argue on other thing: where tablets are best, outside of reading, the market is small.
Both Microsoft and Apple have been advertising the ability of their tablets to be creative tools for artists – about as small a market as I can imagine. Amazon, on the other hand, is pushing “entertainment” – by which they mean Kindle Editions and video content. If there is not much you can do with a tablet why do you need to spend $599 and up for a new iPad Pro? Apple would tell you because “it’s an uncompromising vision of personal computing for the modern world. It puts incredible power that leaps past most portable PCs at your fingertips. It makes even complex work as natural as touching, swiping, or writing with a pencil.” How nice.
I go back to the original presentation of the iPhone for guidance. Steve Jobs, in his coy way, introduced the iPhone as actually three devices – an iPod, a phone and an Internet communications device. At the time, that was something we did not all have. If I choose not to buy a new tablet, where am I lagging behind?
Apple, which used to be pretty good at figuring out how consumers would see the advantage of their products, seems now lost as to how position tablets in the market. So does it competitors with the exception of Amazon which sees its niche pretty clearly.
I’ve always felt that interactive publishing was Apple’s niche, and the reason to buy an iPad over any other tablet. But three years ago they stopped caring about the digital publishing community and I think this is at least one reason why the iPad, while still the number one tablet, has seen is sales fall nine quarters in a row.
I doubt that convincing Apple’s executives to return to the original vision for the iPad is possible. While I could see Steve Jobs curling up with a book, magazine or newspaper while listening to a CD, I see Eddy Cue more likely to watch 30 year old MTV videos for his leisure time enjoyment. You don’t need an iPad to do that, a Kindle Fire will do just fine.
Here is IDC’s announcement for their latest tablet shipment report:
FRAMINGHAM, Mass. – April 28, 2016 – First quarter seasonality combined with an overall disinterested customer base led to an annual decline of 14.7% in worldwide tablet shipments during the first quarter of 2016 (1Q16). Worldwide shipments of tablets (including slate and detachable form factors) reached 39.6 million, according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker.
Slate tablets continued their decline while still accounting for 87.6% of all shipments. More importantly, the slate tablet segment has become synonymous with the low-end of the market. While this may bode well for vendors like Amazon that rely on hardware sales to increase their ecosystem size, it has not helped vendors who rely solely on greater margins for hardware sales. Meanwhile, detachables experienced triple-digit year-over-year growth on shipments of more than 4.9 million units, an all-time high in the first quarter of a calendar year.
iPad’s future will be largely relegated to replacements – of older iPads or PCs—rather than net new additions.
“Microsoft arguably created the market for detachable tablets with the launch of their Surface line of products,” said Jitesh Ubrani, senior research analyst with IDC’s Worldwide Quarterly Mobile Device Trackers. “With the PC industry in decline, the detachable market stands to benefit as consumers and enterprises seek to replace their aging PCs with detachables. Apple’s recent foray into this segment has garnered them an impressive lead in the short term, although continued long-term success may prove challenging as a higher entry price point staves off consumers and iOS has yet to prove its enterprise-readiness, leaving plenty of room for Microsoft and their hardware partners to reestablish themselves.”
Likely due to eroding margins in regular slates, 1Q16 also saw the introduction of detachable tablets from traditional “mobile first” vendors like Samsung and Huawei. The mid-range pricing for these new devices will make them a difficult sell as consumers seeking performance will likely go for a Surface-like device, and the budget conscious seek wallet-friendly options from vendors like EFun, RCA, or others.
“The introduction of detachables from traditional smartphone vendors is only beginning and pose a real threat to traditional PC manufacturers,” said Jean Philippe Bouchard, Research Director, Tablets at IDC. “Their understanding of the mobile ecosystem and the volume achieved on their smartphone product lines will allow them to aggressively compete for this new computing segment. It is likely that those smartphone vendors will utilize the detachable segment to create new mobile computing end-user experiences if customers are using their detachables in combination with their smartphones.”
Tablet Vendor Highlights
Apple’s dominance in the overall market is unsurprising. iPad’s future will be largely relegated to replacements – of older iPads or PCs—rather than net new additions. The latest iPad Pro 9.7″ and more enterprise friendly storage options for the slightly older iPad Pro 12.9″ are healthy additions to the iPad lineup. The recent price drop on the iPad Air 2 should help sway those who were previously undecided to upgrade their older iPad 2s.
Samsung’s Galaxy Tab lineup continues to do well and is one of the last remaining “premium” Android tablets. The launch of the detachable TabPro S has been somewhat tepid due to the high price point, though this is likely a short-term hiccup as Samsung is typically quick to offer various products and different price points.
Amazon’s low-cost Fire tablet is certainly not the first of its kind, but its success speaks to Amazon’s prowess as a household brand and a distribution powerhouse. Though the year-over-year growth is an astronomical 5421.7%, it is important to note that Amazon’s 1Q15 lineup featured a 6″ tablet which was not counted by IDC as it did not meet the requirements of our taxonomy.
Lenovo continues to suffer from slowing demand for Android slate tablets. While Lenovo has introduced some detachables and increased its Windows 10 portfolio, there are still gaps in its lineup in terms of performance and price points. IDC believes those gaps will soon be filled, allowing Lenovo to benefit from detachable growth.
Huawei rounds out the top 5 with a vast majority of its shipments falling in the slate tablet category. Huawei’s introduction in February of its first detachable, the MateBook, will help it build momentum in the next quarter of 2016. The impressive growth recorded by Huawei is a clear indication of its resource allocation and optimization of its carrier relationships as a channel for its portfolio.