IDC Lowers Tablet Forecast Amid Phablet Gains

Because of a far steeper decline than expected in demand in the first quarter, IDC on Thursday lowered its outlook for tablet shipments this year. The research firm projects 245.4 million tablets and 2-in-1 hybrid devices will ship worldwide in 2014, down from its prior forecast of 260.9 million.  

IDC earlier this month reported that tablet shipments in the first quarter fell 35.7% from the fourth quarter, while increasing just 3.9% from the year-earlier period.

The updated forecast represents a growth rate of 12.1%, well below the 51.8% rate that propelled tablet shipments to record levels in 2013. IDC had previously predicted a slowdown to about 22% growth in 2014.

The firm highlighted two major reasons that consumer demand for tablets has fallen off so sharply.

First, people are keeping their tablets, especially high-end models, much longer than previously anticipated. Second, the rise of phablets -- which IDC defines as smartphones with 5.5-inch or longer screens -- is leading many to reconsider buying a tablet. The larger screens on phones make it possible to perform tasks once reserved for tablets.

Phablets’ share of smartphone shipments has more than doubled, increasing to 10.5% in the first quarter from 4.3% in the same period a year ago. As large phones eat into near-term tablet growth, IDC expects the market to rebound by shifting back to larger-screen devices. Devices with larger screens, like Microsoft's new 2-in-1, the 12-inch Surface Pro 3, are expected to play a bigger role.

“The shift back toward larger screens will mark a welcome sea change for most vendors as the average selling price for these devices will remain roughly 50% higher than the average sub-8-inch device," said Jitesh Ubrani, an IDC analyst focusing on the tablet market.

That trend is expected to benefit Microsoft, with the share of Windows-based devices predicted to double between now and 2018.

To catch up with the shift toward phablets, Apple is rumored to be introducing a new iPhone model with 5.5-inch screen this fall, along with one featuring a more conventional 4.7-inch screen. The company that practically created the tablet category with the launch of the iPad in 2010, hasn’t been immune to the market’s chill. iPad sales fell 16% in the first quarter to 16.3 million even as iPhone sales increased 17% to 43.7 million.




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