Phablets Take a Bite Out of the Tablet Market

Smartphones with beefy screens are contributing to declining demand for tablets, according to IDC.

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A revised forecast from International Data Corporation (IDC) indicates that phablets – a term that describes smartphones with screens that roughly measure 5 to 6.1 inches – suggests that the public's hunger for generously sized handsets is crimping demand for full-sized tablets. The research firm now predicts that worldwide shipments of tablets and 2-in-1 devices will hit 221.8 million units this year, a 3.8 percent dip from 2014.

IDC previously expected shipments of 234.5 million units in 2015, a 2.1 percent year-over-year increase. The culprit, at least in part, are phablets.

Ryan Reith, program director of IDC Worldwide Mobile Device Trackers, noted that a shift in screen size preferences is taking shape, "with the share of small-screen tablets expected to drop from 64 percent of the market in 2014 to 58 percent in 2015, and declining to just under 50 percent by 2019," in a statement. "This illustrates the direct impact phablets are having on the market, as users with larger screen smartphones have tended to have less need for a tablet with a screen size comparable to their smartphone."

While tablet shipments are expected to fall this year, IDC sees growth potential in some segments.

Cellular-connected tablets, like 4G LTE-enabled versions of the iPad Air 2 and iPad Mini 3, will account for 33 percent of the tablet market in 2015 compared to 31 percent last year. By 2019, 40 percent of tablets will have the ability to use carrier networks.

"We're seeing cellular-capable tablets and 2-in-1 devices experience important growth in certain parts of the world and we think this represents a huge opportunity for the entire tablet ecosystem," said IDC research director Jean Philippe Bouchard in a statement. By providing a mobility-enhancing alternative to Wi-Fi, tablet makers can help offset declining sales.

"Those cellular-connected devices fill multiple needs for vendors and carriers around the world; they offer a quick solution to price and margin erosion, and when compared to smartphones, they offer a less expensive way for carriers to increase their subscriber base," Bouchard observed.

Gartner, meanwhile, anticipates that sales of non-smartphone cellular-enabled devices like tablets, PCs and mobile hot spots, will climb 5.6 percent this year to 112 million units. "Mobile access is not just about smartphones. Consumers and business users alike want to connect multiple mobile devices to the Internet at an affordable cost or at an acceptable data rate," said Gartner research director Tracy Tsai in prepared remarks.

When the price gap between Wi-Fi and cellular devices narrows to around 10 percent, or $20, the analyst group expects adoption to accelerate. "When this happens, the adoption of cellular devices will accelerate beyond 160 million in 2019, with the potential of more than 600 million units in 2019," Tsai predicted.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

Photo courtesy of Shutterstock.

Tags: tablets, phablets

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