But the recent announcement by Apple that tablet sales have fallen for two straight quarters has analysts wondering whether demand has peaked.
The strategic problem is that the tablet is the monkey in the middle. It is convenient and easy, but it is not as powerful as a PC for most business applications and it is not as easy to lug around as a smartphone.
Anecdotal evidence suggests that they have become an acceptable electronic baby-sitter for upscale parents because they are interactive rather than passive (though a review of some of the available content might cause those concerned to yearn for the days of the old tube). They also seem to pop up in the first and business class sections of airlines, among board members attending quarterly meetings and in other affluent venues.
The issue, as the following article explains, is that those who want them now have them. The news that internet access in China via smartphone now exceeds that from other sources like PCs suggests where this is going. As if no further indication were necessary, Apple's hint that it would be introducing a new line of larger screen iPhones indicates that the tablet will be supplanted by that device. The notion that busy and cash-strapped people would carry three devices always seemed a stretch. The tablet has been written off before and has proved nay-sayers wrong, but with larger and more powerful smartphones, it may now become as much of an evolutionary curiosity as its linear predecessor, the cuneiform tablet. JL
Daisuke Wakabayashi and Shira Ovide report in the Wall Street Journal:
They aren't as essential to many users as smartphones, nor are they as portable. They don't handle many work chores as well as laptop or desktop PCs. And while many people watch videos or read articles on a tablet, it isn't quite a must-have device for many consumers
When the late Steve Jobs introduced the first iPad in 2010, he acknowledged that many people already had a smartphone and a laptop computer. "Is there room for a third category of device in the middle?" asked the then Apple Inc.chief executive.His company initially answered that question with an emphatic yes, spurring the creation of one of the fastest-growing product categories in the history of high tech. But that old question suddenly has become timely again.Apple said on Tuesday that unit sales of the iPad—the best-selling tablet on the market—fell for a second straight quarter. IPad revenue has fallen in four of the last five quarters, and recent evidence points to slowing sales for imitators that rushed their own tablets to market.The slump suggests tablets are feeling a squeeze. As smartphone screens grow larger and laptop computers grow thinner and lighter, tablet computers are starting to look less appealing.They aren't as essential to many users as smartphones, nor are they as portable. They don't handle many work chores as well as laptop or desktop PCs. And while many people watch videos or read articles on a tablet, it isn't quite a must-have device for many consumers.In most cases now, tablets are "not a necessity but a want," said Ben Thompson, who writes the technology analysis blog Stratechery.Many of the people who want tablets already have them, industry executives and analysts say. When it comes time to replace them, tablet owners now often consider spending that money instead on new designs of smartphones or laptops."Like any new category there is going to be saturation," said Rob DeLine, a director at chip maker Intel Corp. who specializes in laptops and related devices. "There are more choices for computing that are competing for consumers' share of mind and share of wallet," he added.Related Video
Apple's earnings report indicated strong iPhone sales and weaker iPad sales, but previews of coming products may be the keys to watch for from Apple for the rest of the year. Walter Piecyk, BTIG analyst, joins MoneyBeat with Paul Vigna. Photo: Getty Images.Apple is gearing up for its biggest initial run of iPhones – up to 80 million units – for the model that is commonly known as the iPhone 6. The WSJ's Ramy Inocencio talks to Daisuke Wakabayashi about why it took Apple so long to go bigger with its screens.The competition is evident inside Apple's own product line. In the third quarter ended in June, iPhone sales rose 13%, Mac sales increased 18% while the iPad declined 9%.But signs of a slowdown began emerging earlier. In May, research firm IDC lowered its outlook for global tablet shipments by 5.9%, citing sluggish demand so far this year and "additional market challenges" that it foresees for the rest of the year. The firm projects tablet shipments to rise 12% this year, a far cry from 52% growth of a year before.Samsung Electronics Co. , the No. 2 tablet maker, ratcheted back its expectations for tablet sales in recent weeks amid signs of lackluster demand. Earlier this month, the South Korean company said sluggish sales of those devices would contribute to an expected profit decline of about 24% from a year earlier, citing consumers' reluctance to upgrade their tablets as often as they buy new smartphones.Within tablets, some of the uncertainty surrounds those offered in screen sizes between seven- and eight-inches diagonal. Those are seen to have the most overlap with new large-screen smartphones.Microsoft Corp. said on Tuesday it has decided not to move ahead with a smaller-screen version of its Surface tablet, which had been in development for many months. The company didn't say why, or whether it might introduce a similar product at some point.But analysts said Microsoft would have a hard time standing out from a glut of tablets on the market. Microsoft also loses money on its Surface device.One fear for tablet makers is that the category winds up being subsumed by others, like the way iPod music players gave ground to smartphones that could also store digital music. Many analysts think those fears are overblown, particularly given strength in some markets for new low-end tablets selling for less than $100.Tablets produced by small companies—many based in China—are using low prices to grab market share from brand-name offerings. The least-expensive iPad Mini starts at $299 and the latest versions of the 9.7-inch iPad start at $499. IDC estimates the average selling price of all tablets running Google Inc. 's Android operating system is now $228.Wireless carriers have been aggressively pushing cheap Android tablets. On Tuesday, Verizon Communications Inc. said it added 1.1 million tablets in the second quarter, thanks in part to promotions like an Ellipsis 7 tablet at no cost to customers who add it to their monthly data plan.If carriers are giving away tablets or steeply discounting, customers are "not going to walk down the block to the Apple store and spend $500," said John Hodulik, a UBStelecom analyst.The iPad slump is a reversal of fortune for a product with one of the most successful debuts of a consumer electronics product, outpacing even the iPhone in the first few years. The tablet market swelled as other players emulated the iPad.PCs, which hit the market in sizable quantities the mid-1970s, took roughly four decades to reach 200 million annual unit shipments, IDC data shows. Tablets surpassed that mark with less than four full years of sales, reaching 219 million units in 2013, the firm estimates.Amid the competing devices, however, Apple's iPad sales began to slow about a year ago as bigger-screen phones became the norm and less-expensive tablets flooded onto the market.Apple may be adding to the pressure on devices like its 7.9-inch iPad Mini, and to the choices for consumers to ponder. According to people familiar with the matter, Apple is preparing to release two new models of iPhone later this year with screens measuring 4.7-inches and 5.5-inches diagonally.The Cupertino, Calif., company says it remains bullish on the iPad. Apple Chief Executive Tim Cook this week cited high rates of customer satisfaction and usage for Web browsing and e-commerce.He said there will be more innovation coming to the iPadthrough new hardware, services and software. "This isn't something that worries us," said Mr. Cook Tuesday.Apple said it sees opportunities in pushing the iPad into the corporate sector. In an effort to change that trend, Apple struck a partnership with International Business Machines Corp. last week under which the plan to create more than 100 apps, for industries including retail, health care, banking, telecommunications, travel and transportation. IBM also will sell iPads to its customers.So far, however, few companies have replaced PCs with tablets as standard-issue tools for all employees. And consumers aren't finding them as essential to their daily routines as other gadgets.In an online survey, the firm Technalysis Research recently asked about 1,000 U.S. respondents how they divide up their time among devices for 22 tasks that include browsing the Web, updating social media, sending emails and watching TV. Tablets were used just 11% of the time, on average, compared with 37% for PCs and 26% for smartphones, the firm found.Asked by the firm about their buying intentions in the next 12 months, the same group put large smartphones as their most likely purchases, with tablets ranking behind multiple products that include TVs, notebook and desktop PCs."Those that are going to be interested in buying a tablet in the U.S. by this point already have," said Jeff Orr with analysis firm ABI Research. Consumers in China, India and South Korea aren't yet buying enough new tablets to fill the gap. "There's a lot of weight on those next countries to pick up the slack. It's probably unrealistic."
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