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The death of the tablet – Q2 shipments show crisis in market

The tablet market is on the brink of total implosion, judging by the latest market figures, with only the laptop/tablet hybrid offering some respite, targeted particularly by the Wintel brigade (see separate item on HP).

Global tablet shipments in Q2 2016 came in at 38.7m units, down 12.3% from 44.1m units in the same period last year, according to IDC’s Worldwide Quarterly Tablet Tracker. This is the seventh consecutive quarter or decline.

The research covers both slate and detachable tablets (those with keyboards), and it found that while sales of standard slate tablets are suffering, the smaller detachables or hybrids segment has seen impressive growth. The hybrid laptop-tablet has provided a get out of jail free card for some vendors, especially for Windows (see separate item).

This is the latest in a series of poor forecasts. Data from Strategy Analytics published earlier this year showed that global tablet shipments fell 8% to 223.3m units in 2015 and 69.9m in the final quarter, the worst year-on-year performance for the tablet market since the devices were born.

Despite IDC highlighting the 12.3% decline in tablet shipments in its research, it believes that tablets will continue to be prevalent devices on the market. It sees the next version of Android as a driver for upgrades, and cites Amazon as an important player as it has a proven route to market. Tablets running Android made up 65% of the 38.7m device shipments in the last quarter, while iOS accounted for 25.8%, and Windows for the rest.

Among individual device manufacturers, Apple topped the bunch with its 25.8% share, shipping 10m units in the last quarter, down 9.2% from the previous year. However, Apple’s most recent quarterly results, published last week, showed the company shipped less units while increasing net sales. iPad sales for the quarter were $4.9bn, an increase of 7% from the same period last year, but shipments were down 9% year on year to 9.95m units.

This was driven by higher ASPs (average selling prices) for iPads following the launch of the smaller 9.7-inch iPad Pro, but the bigger picture shows iPad sales from the nine months ended June 2016 down 14% to $16.4bn, and shipments were down 19% to 45m units.

Apple was followed by Samsung which shipped 8m units giving it a 15.6% share, but down a huge 24.5% from Q2 2015. Lenovo was third with a 6.6% share, shipping 2.5m units, up 3.1%, ahead of Huawei with a 5.6% share, shipping 2.2m units, up an impressive 71%.

The surprise of the lot was Amazon, increasing shipments year-on-year by 1,209% to 1.6m units in the quarter, up from just 100,000 in Q2 2015. The success of Amazon’s Fire tablets and purpose-bred Kindle ereaders over the last year can be put down to the cheap alternative they offer to the high end iPads, as well as the persistent marketing investments put into these products by the US ecommerce monolith.

Aside from evolving into detachable devices, another way to increase tablet shipments is to offer them as part of a package, either free or discounted – just as AT&T has done by offering free tablets from LG and Asus as part of a two-year contract plan. This week it added a Trek 2 HD for just 99 cents and a two-year agreement.

On the monetization side of things, recent research from Freewheel found that tablets had the lowest share of advertisement views of any device in the US with a 9% share and 13% in Europe. Desktops and laptops are still the top devices for ad views across all devices with a 37% share in the US and 49% in Europe. Over-the-top devices, such as Chromecast and Apple TV, had a 22% share of ad views in the US, but just 13% in Europe.

“The market has spoken as consumers and enterprises seek more productive form factors and operating systems – it’s the reason we’re seeing continued growth in detachables,” said Jitesh Ubrani, senior research analyst with IDC. “At present, it’s difficult for Android to compete with iOS or Windows detachable products. However, the next 12 to 18 months will be very interesting as Google launches the next version of Android with better multitasking support and as it begins to bring together its two operating systems.”

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