A bitter pill for tablet computer makers as demand falls off a cliff

1 Sep 2014

The Apple iPad

After a second quarter of softer-than-expected demand, market research company IDC has lowered its forecast for the number of tablet computers to ship in 2014 to 233m.

Effectively, IDC has almost halved the growth rate for devices from manufacturers such as Apple, Samsung, Sony and Microsoft from 12.1pc to 6.5pc.

“When we look at the global picture, it would be easy to say that the tablet market is slowing down,” said Jean Philippe Bouchard, IDC research director for tablet computers.

“But when we start digging into the regional dynamics, we realise that there is still a good appetite for this product category. While mature markets like North America and Western Europe will combine for flat unit growth in 2014, the remaining regional markets will generate 12pc unit growth over the same period.”

IDC anticipates that price pressure on tablets with smaller screen sizes (fewer than 8 inches) and evolving tablet usage in emerging markets will fuel that unit growth.

Average tablet computer selling prices to fall 10pc

While average selling prices (ASPs) are expected to stabilise at US$373 in mature markets in 2014 due to the shift to larger screens and cellular-enabled tablets, ASPs in the rest of the world will decrease to US$302, representing an annual decline of 10pc.

As an illustration of evolving tablet usage, shipments of tablets featuring a built-in option of voice calling over cellular networks in the Asia/Pacific (excluding Japan) region reached 25pc this quarter, representing annual growth of 60pc.

This trend suggests that end users in this region are looking for a single device that can meet their needs in terms of voice communication and media consumption, and for some that single device is a tablet and not a smartphone.

“Driven primarily by small devices, we expect the rest of the world to account for the majority of shipments in the years to come,” said Jitesh Ubrani, senior research analyst for the IDC Worldwide Tablet Tracker.

“But in terms of dollars spent, medium- to large-sized devices in North America and Western Europe will still produce significant revenues.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years