People Love Their Tablets. That's Bad News for Apple - Wired

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Apple sold more than 70 million iPads last year. People love them. But they might love them a little too much for Apple’s taste, if new predictions of shrinking growth in the tablet market turn out to be true. Tablets are so good, it seems, that people are keeping the ones they have and not buying as many new ones.

New figures released today by market research firm IDC see growth in the tablet market shrinking by nearly one-third in 2014 compared to the previous year, with sales topping out at about 261 million new devices. “Consumers are deciding that their current tablets are good enough for the way they use them,” says Tom Mainelli, IDC vice president of devices and displays. “Few are feeling compelled to upgrade the same way they did in years past.”

The forecast did not single out Apple or its iPads as being uniquely affected by the slowdown. The prediction appears to apply to the tablet market as a whole. But the declining eagerness to buy new tablets is particularly bad news for Apple.

First, 2013 was the year tablets running Android really exploded into the mainstream, more than doubling in annual sales to almost 121 million units, according to IDC competitor Gartner. That figure gives Android devices nearly two-thirds of the tablet market, a market Apple once essentially had all to itself when it launched the first iPad less than four years ago. If the growth slowdown is evenly distributed, that’s worse for Apple, since a pullback for Android is merely going from meteoric to rapid, while Apple’s goes from modestly steady (about 9 million more iPads were sold in 2013 than 2012) to more modestly steady.

And if there’s anything Apple shareholders hate, it’s modesty. That’s the second reason slowing growth in the tablet market hurts Apple in particular. Anything other than dramatic increases these days sends Apple shareholders scurrying to press “sell.” The IDC forecast only confirms the general pessimism around Apple’s stock that the market for the company’s existing products is becoming saturated. Shrinking growth in tablet sales only increases the pressure on Apple to move ahead quickly into new products like wearables.

The glimmer of hope for Apple in IDC’s prognostication is that the trend toward lower-priced tablets appears to be bottoming out. Consumers are moving to higher-end devices that work better and last longer, Mainelli says. If Apple is anything, it’s high-end, and if relatively weak sales of its experiment in a “cheap” iPhone, the 5c, are any sign, it’s high-end devices that people want from Apple. The good news is that if people want a new tablet and they want high-end, Apple is a likely place they’ll turn. The bad news is that Apple has done such a good job with its iPads that people may just stick to the ones they already have.

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