Big screen smartphones take a bite out of the market for tablets

The trend to larger screens on smartphones has taken a chunk out of the tablet market, but reports of the device's death are greatly exaggerated, writes Jamie Carter

PUBLISHED : Friday, 27 June, 2014, 12:03am
UPDATED : Friday, 27 June, 2014, 9:23am

It was the new kid on the block in the world of gadgets just a few years ago and everyone wanted one. Lately, however, it's become a target of critique.

Leading the charge in 2010 was Apple's iPad, which has since slimmed down as it's morphed into both the iPad Air and iPad Mini. Neither are groundbreaking devices any more, and the news in May that Apple sold fewer iPads in 2013 than in 2012 has led some to predict the demise of the tablet.

However, that conclusion is wrong. Sales of tablets around the world jumped by 68 per cent last year, while in Hong Kong, market researcher GfK's data shows that sales of tablets increased to 1.6 million units last year from 1.3 million in 2012.

The form factor of the smaller phablets and their versatility and portability is at the heart of their appeal

Could we be in the post-iPad era? Perhaps, but the tablet isn't going anywhere. Android-based tablets from Samsung, Asus, Sony and Lenovo all trail Apple in tablet sales in Hong Kong, and entry-level devices from mainland Chinese brands, such as Xiaomi's MiPad, are expected to take a slice of the pie this year.

Apple might still boast the biggest share by brand in a growing market, but it's a market that's increasingly dominated by the Android operating system. More than 195 million tablets were sold around the world in 2013. In 2012, Android had a market share of 46 per cent, with Apple's iPad accounting for the rest. By the end of 2013, Android devices had captured 62 per cent of the market, while Apple's share had fallen to 36 per cent.

"Of the 101 countries across the world where data is tracked, iOS devices dominated browsing in 34 countries, while Android came out on top in some 67 nations," says Ronan Cremin, chief technology officer of mobile web company dotMobi. "Our device usage figures show strong growth in Android use across the globe with 2,190 different Android-based tablets being tracked." Windows-based devices are also a coming challenger to Apple.

We're obviously all still buying tablets, but despite Android's growing domination, Cremin doesn't think we've entered a post-iPad era. Others agree. "The iPad still represents a beautifully produced and highly intuitive state-of-the-art product, in the midst of the Apple device ecosystem, that is unlikely to go away any time soon," says Jeremy Silver, an expert on the digital music industry and author of the book Digital Medieval.

"Never underestimate Apple's willingness to adapt in its own highly designed, über stylistic way to the evolution of the market," he says, adding that the increasingly competitive market for touch screen devices means a new approach from Apple. "The splitting of the iPhone 5 series into the S and C-class phones was the kind of thing Steve Jobs swore the company would never do," says Silver. "Today, however, with consumer behaviour changing extremely quickly, Apple will be looking to adapt and advance in as many innovative ways as it can."

Could that mean a bigger iPhone? Perhaps the biggest challenger to the concept of the tablet is the growth of smartphones. The first iPhone in 2007 had a 3.5-inch screen, while the iPhone 5S manages four inches. The Android clan has gone much further; the touch screen on Samsung's original Galaxy S from 2011 measured four inches, while the most recent Galaxy S5 offers 5.1 inches. But it's the brand's Galaxy Note, first launched in 2011 with a 5.3-inch screen, that has been the benchmark for a bigger class of smartphones. There are even rumours that Samsung is preparing to release a whopping seven-inch device, perhaps even with an Ultra-HD 4k resolution.

Known, among other things, as the "phablet", this new class of bigger smartphone is big news, especially in Asia - and nowhere more so than in Hong Kong. Market intelligence firm IDC reported last year that in Singapore and Hong Kong, sales of smartphones with screen sizes of five to seven inches were about double those of tablets.

"The form factor of the smaller phablets and their accompanying versatility and portability is at the heart of their appeal," says Silver.

"Asian markets have often championed miniaturisation, and in this case, it's the tablet that's being shrunk, and the phone functionality is the crucial addition."

It's a trend that's expected to eat away at the tablet market still further as people in growing markets such as India - where few have the budget to pick up one of each - choose a phablet.

"Economic constraints in emerging markets may well drive consumers to a single device purchase that covers all the bases," Silver says. "When cash is scarce, a product that does the job across a broader number of functions is always going to be preferable to the additional costs and security concerns of owning more than one device."

Although the tablet market is still moving - recording 12.1 per cent growth so far in 2014, according to IDC - it's nothing compared to the 51.8 per cent of last year.

"Two major issues are causing the tablet market to slow down," says Tom Mainelli, program vice-president for devices and displays at IDC.

"First, consumers are keeping their tablets far longer than originally anticipated," he says. "Second, the rise of phablets is causing many people to second-guess tablet purchases as the larger screens on these phones are often adequate for tasks once reserved for tablets."

The global market for phablets has doubled in the last year, from 4.3 per cent in the first quarter of 2013 to 10.5 per cent in the first quarter of this year, but IDC expects the market to rebound by shifting its focus back towards larger-screened devices. Could Microsoft's new 12-inch Surface Pro 3, Samsung's NotePRO 12.2 and perhaps even Panasonic's whopping 20-inch Toughpad 4K UT-MB5 (complete with an Ultra-HD 4k resolution) further eat away at the iPad?

"Microsoft is expected to benefit from this shift as the share for Windows-based devices is expected to double between now and 2018," says Mainelli.

Silver isn't so sure that there's an appetite for bigger 12-inch to 20-inch tablets. "As a home media consumption device, they don't represent enough of an upgrade from the phablet size to cut it - and compared to the big-screen TV experience, there's no candle to be held," he says.

It's perhaps not too important which devices are in vogue because, whatever their size, smartphones, phablets and tablets are all touch screen devices with very similar functionality. What's better for a particular function - be it watching video, reading or browsing - depends largely on where you are, what you can carry and how much you have to spend.

"There's an ever growing list of connected devices that allow people to access and use content in different circumstances," says Cremin. "And a greater amount of people will connect via a greater amount of devices in the future for this very reason. Ultimately, it doesn't matter what their name is as long as they serve a purpose."

With smart watches evolving fast on the horizon, and poised for a mass-market boom, our desire for ever more targeted touch screen devices is a story of diversity that will continue.