Tablet Market Nears Saturation, Analysts Describe Market As 'Grim'

It might be some tough road ahead for the tablets as they begin to reach a saturation point in the U.S. market. 

As a category, tablets posted an 8% revenue decline (compared with the entire consumer electronics market’s flat growth) during the back-to-school season and have seen even steeper declines (an 18% revenue drop) in the eight weeks since, according to The NPD Group. Those results don’t bode well for the upcoming holiday season, says Stephen Baker, NPD’s vice president of industry analysis.

“The slowdown has been pervasive, and even the launch of the new iPads at the end of this period has not served to reignite sales growth,” Baker says. “With the holidays fast approaching, the potential for a positive tablet sales season appears grim.”



For the past few years, tablets have been the hot category in consumer electronics. But as they have reached saturation, consumers aren’t finding a compelling reason to upgrade to the latest models, Baker says. 

“Part of the product problem for tablets is the upgrade path is unclear,” Baker tells Marketing Daily. “Once you’ve got a two- or three-year-old tablet, you’re not seeing a lot of value for an upgrade.”

Perhaps even more troubling, the sales declines are occurring across most tablet form factors and operating systems. Android tablet sales dollars are down 22% since the end of the back-to-school season, and Apple’s sales dollars declined 20% in the same period. Windows tablets, a small sector of the market, actually increased in dollar sales by 11% (based on the success of the Surface Pro 3), even as unit sales dropped 23%, compared with the same period in 2013. 

As a product between smartphones and traditional laptop computers, tablets are being squeezed on both ends. More computers are adopting tablet functionality, while smartphones are getting larger. The task for tablet makers now is to continue to offer competitive pricing, more alternatives and settle in for the long replacement-driven sales cycle, Baker says. 

“Tablets are competing with larger phones and lower-cost notebook computers. There’s a lot of other things that give you a different experience and might to more than tablets,” Baker says. “When the net starts getting bigger, you start looking for where the holes are and sew them up.”

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