Projected tablet sales plunge challenges marketers' investments in market
A projected plunge in tablet sales this year raises the question of whether mobile payments will move more slowly into this market while challenging the investment of marketers who were betting on growing adoption.
Worldwide tablet sales this year are expected to slow to 7.2 percent from 52.5 percent just a year ago as owners hold onto the devices longer, according to International Data Corporation. At the slowdown?s core is the expectation that 2014 will represent the first full year of decline in Apple iPad shipments, raising implications for mobile marketers who have aligned themselves with tablet growth.
?The market is still being impacted by the rise of large-screen smartphones and longer than anticipated ownership cycles,? said Jean Philippe Bouchard, IDC?s research director for tablets. ?We can also attribute the market deceleration to slow commercial adoption of tablets.?
In the tablet market?s early stages, device lifecycles were expected to resemble those of smartphones, with replacement occurring every two to three years. Instead, many tablet owners are holding onto their devices for more than three years and in some instances more than four years.
Despite developments that ostensibly would lure buyers ? thinner devices, lower prices and a wider selection of models - shipments have continued to slow.
Amazon's Kindle Fire
?Since the tablet evolution, various brands and marketers have invested and built lots custom of apps, services and strategized processes around the tablet form-factor targeting tablet users,? said Neil Shah, research director for devices and ecosystems with Counterpoint technology market research.
?As a result, the slowing tablet market is challenging the vision and investment of mobile marketers which have aligned themselves towards tablet growth.?
The report underscores how the tablet market has a far lower replacement rate for devices than the smartphone market.
?Many buyers of their first iPad, and particularly iPad 2 or 3, remain wedded to those devices,? said J.P. Gownder, Forrester Research?s president and principal analyst serving infrastructure and operations professionals.
?This means that most of the sales have been to net-new buyers. So while the number of people using tablets has gone up, the sales have been plateauing, as saturation hits.
?Alongside this low replacement rate, new substitutes ? the rise of phablets, the rise of hybrid and convertible PCs like the Lenovo Yoga ? also created competition for tablets,? he said.
The growth spot is company-owned business tablets, which are growing as a percentage of the market and which enjoy faster replacement rates than consumer tablets.
?Marketers need to look not just at the shipments, but the total number of people who are using tablets,? Mr. Gownder said. ?Shipments of new devices don't necessarily reflect commonplace usage. People might still use that old iPad 2 every day, for example.
?But marketers must also think about the rise of newer devices like phablets and convertible PCs as venues for reaching audience.?
IDC?s tablet outlook found disagreement with some experts.
?According to Return Path email opens, consumers haven't shown a decline in iPad usage, despite slowing sales,? said Tom Sather, senior director of research for Return Path. ?This strengthens the viewpoint that the lifecycle of tablets is longer than smartphones.
?Mobile marketers focusing on contextual marketing should still focus on when and where consumers are using tablets - namely in the living room while consuming other media like television,? he said.
The findings raise the question of whether mobile payments, such as Apple Pay which was introduced with the iPad Air 2, may see slower adoption.
Android tablet promotion.
?The very definition of a tablet has been tested with large smartphones and tablet sizes that have been miniaturized,? said Jeff Hasen, founder and CEO of Gotta Mobilize. ?Not too long ago, the perception was that you needed a phone and a tablet. Much to the surprise of me and many others, that form factor works for many.
?Plus, there isn?t enough distinction between a tablet from two to three years ago, and a new one,? he said. ?Sure, the processing is faster and the resolution is sharper, but it?s incremental.?
Michael Barris is staff reporter on Mobile Marketer, New York.