Talk about the future of tablet computers these days and you can get a lot of skeptical looks – and no wonder. Recent articles with headlines like “Tablet sales plummet” (Seeking Alpha), “Tablet market slumps as buyers find alternatives” (The Star Online), “Tablets are toast” (The Register) all anticipate a slowdown in the adoption of tablets for business or home use. These arguments are indeed grounded in reports by Apple and Samsung that sales of their tablet devices are down year over year by 12.8% and 17.1% respectively. Those are big numbers that understandably have a lot of analysts and retailers reassessing their plans for investing money and shelf space in tablets. So what’s behind this year on year decrease in sales? It turns out a lot of factors are driving those numbers and digging into them reveals that tablets are far from “toast.”
Some of the slowdown in sales growth can be attributed to the fact that tablet users aren’t replacing these mobile devices as actively as they do their smartphones, so after massive rates of adoption since the introduction of the iPad five years ago a slowdown should have been anticipated. Considering that the features added with successive releases of the iPad have been limited in terms of hardware advances and you have an environment where users are not compelled to trade up to the latest model. “We continue to get feedback that tablet users are holding onto devices upwards of four years,” wrote analyst Ryan Reith of International Data Corporation (http://gadgets.ndtv.com/tablets/news/tablet-market-slumps-as-buyers-find-alternatives-idc-758976).
More instructive for companies actively developing apps and accessories for tablets are comments from Cathy Boyle, a senior analyst at eMarketer, who points out that “(t)he most limiting factor is the use case for a tablet: It is not as clear-cut or compelling as a communication tool—the core capability and use case for a smartphone.” (eMarketerWorldwide Internet and Mobile Users Q1 2015 Forecast) And Faisal Kawoosa, Lead Analyst at CMR, a leading Indian IT and Telecomms research and consulting firm, notes that “(u)nless the industry make substantial differentiation in the value proposition for potential customers, tablet shipments are not going to grow… With not much value addition coming in the shape of specific solutions to enhance device usability at the moment, tablets are only becoming devices of convenience, essentially larger screen versions of smartphones.” (http://www.cxotoday.com/story/will-tablet-pcs-become-redundant-soon/ October 5, 2015)
We will take up the topic of the place that tablets can occupy distinctly from smartphones and laptops or desktops in a subsequent post, but rather than concluding that the tablet use base globally will decline, as some of the headlines referenced above may lead you to conclude, the Ambility team remains confident in the continued growth of the tablet user base, and we’re not alone. Indeed, eMarketer forecasts that there is still “significant room for increased penetration. The number of tablet users will jump from 13.9% to 19.9% of the global population and from 32.2% to 38.7% of internet users between 2015 and 2019.” (eMarketer Worldwide Internet and Mobile Users Q1 2015 Forecast)
In the world’s most populous countries the forecast is even more buoyant: “Approximately 41.0% of people in China will use (tablets) this year. By 2017, half of the country’s population will do so. China’s burgeoning middle class will be the main force behind growth… Indonesia and India will post the fastest tablet user gains worldwide over the next few years. The number of tablet users in both countries will nearly double in size by 2019.”
Lack of Positive Externalities for the Tablet
The concept of externalities and their impact on products or networks is old and frequently brought up when a technology standards war is underway – such as the ’80s/’90s war between Apple Macs and Microsoft PCs, and now iOS and Android. An externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. At Ambility, we are working hard to launch what we think is a positive external facilitator of tablet computing – an adjustable docking solution that fits beautifully into the home or office – and were struck by Cathy Boyle’s statement quoted above: “The most limiting factor is the use case for a tablet: It is not as clear-cut or compelling as a communication tool…”
We have long viewed tablets as extremely valuable devices for the home and office but recognize that hands-on or desktop usage only accommodates a subset of the overall use cases they are capable of effectively addressing. Yet the level of development for both apps and accessories for tablet-specific usage is limited compared to that for smartphones. According to Econsultancy 61% of companies report building apps specifically for iPads and 46% for Android tablets versus 86% of companies that are building for iPhones and 84% for Android phones. An Amazon search for “iphone accessories” yields 60,673,582 results while a search for “ipad accessories” returns 8,566,193 listings. Development for tablets is clearly of secondary importance, potentially leaving new solutions opportunities unaddressed.
The introduction of the iPad Pro and market adoption of the Microsoft Surface, however, show that the market is starting to appreciate the business related use cases for tablet computers. According to CXO Today Windows tablets are wooing the enterprise. In the Mobility Index Report published by Good Technology, Windows tablet adoption is reported to have increased 400%, from the last quarter of 2014 to the first quarter of this year. (http://www.cxotoday.com/story/are-tablet-pcs-failing-to-impress-business-users/) This is largely driven by the business apps on offer through the Surface and its Microsoft Suite, and iPad apps are slowly catching up. Add enhanced positioning solutions and hands-free interaction capabilities like voice control and look for tablet sales to regain their momentum in the consumer space as well.