Tablets, Seasonality, and Adoption Cycles

by Ben Bajarin   |   July 24th, 2013

There is an interesting shift happening in the hardware release cycle of the computing industry. When the PC was the only game in town bi-annual release schedules were the norm. Now with the increased growth in smartphone and tablets, it looks as though the industry may be shifting to a much more seasonal release schedule. In consumer markets seasonal purchasing has always been the norm. But in enterprise markets the bi-annual release schedules allowed flexibility to purchase new hardware to meet demands throughout the calendar year.

The entire industry appears to be shifting away from that bi-annual schedule and to a more consumer friendly seasonal emphasis. This is evidenced by the slowing growth of both smartphones and tablets on a quarter-over-quarter basis according to some of the latest device shipment data. My conviction is not that we are seeing saturation but seasonality. There are other factors at play which I will get into.

This does not necessarily mean that the tablet category is slowing. Rather, what it suggests is that the buying cycles for tablets are shifting to be more seasonal at large. This was always the case for smartphones at large, but it appears the end of the year is now also the hot cycle for tablets and traditional PCs.

What this means is that we are lining up to have a very loaded holiday quarter with new smartphones, tablets, and PCs competing for consumer dollars. This by itself brings with it ramifications for consumers and enterprises alike.

For the consumer market the challenge is going to be for OEMs to cut above the noise in what is going to be an extremely competitive holiday season. Retail placement, promotions, and online / offline marketing are going to be keys to success.

Market Experimentation

Earlier this week I wrote for my TIME column a piece titled “Why I’m Not Switching from the iPhone.” My overall point of the column was to paint the picture of a mature smartphone consumer. Someone who, through experience, has vetted the options and defined specifically needs, and wants.


This has always been at the base of our adoption cycle market methodology. When we research consumer markets and try to get the pulse of the consumer in our interview and observational research, much of our goal is in understanding how mature they are in understanding what they want and why. This was also why I wrote the article on our site here called “I need a PC and I know it.” Again emphasizing a self-awareness of technological needs.

We do not have this with tablets. Where I point out in my TIME column that most mass market consumers at a global level are only on their first or second smartphones, tablet owners are largely on their first tablet and the market for non-tablet owners, or tablet intenders is massive.

When we are in a position to get our first car we will take it any way we can acquire it.

We have gathered quite a bit of research suggesting a high level of buyers remorse for low-cost tablets. This backs up our points of where we are at with adoption cycles of these devices. I liken what is happening with low-cost devices for places like emerging markets or first time owners to our first cars. When we are in a position to get our first car we will take it any way we can acquire it. Then after time, generally speaking, more options will emerge and the choice and preference will become more refined.

For many first time tablet owners who just wanted to get in on the hype they wanted to see what the tablet buzz was all about. So they got one any way they could and for a portion of the market they went with cheaper devices. What our research is suggesting is that they learned their lesson, liked the form factor and the upside, weren’t happy with their choice and are looking to spend up on the next one. This data comes from all markets including emerging (like China) as well.

This point about buyers remorse feeds nicely into the data we see about why iPad usage remains so dominant compared to the competition.

So What Does it All Mean

It means that competing for the mind of the consumer is becoming harder and harder. Consumers are going to be faced with an overwhelming plethora of choices. For the masses who still may be defining and refining their needs and wants, as they look to spend up it will favor certain brands they trust or perceive as the market leader. This is why I have no doubt the iPad will sell marvelously this holiday season and why both the iPhone and Samsung phones are still the dominant global players.

Seasonality is going to change things in my opinion. Marketing for one is going to get much more tricky when we have the kind of loaded and confusing holiday quarter I think we are in for the next few years at least. How companies market and position their products to cut above the noise and gain consumer mindshare will be key.

One thing that our data and even the recent research we have compiled continually emphasizes is that as the adoption cycle moves from immature to mature, cheap goes off the table and the masses begin looking for value. This is why I’ll argue until I am blue in the face that a race to the bottom is not actually what consumers want. It may be necessary in some regions, but over time, even in emerging markets, I believe value is what we will be demanded.

Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • FalKirk

    Seasonality is an interesting idea. I haven’t fully wrapped my head around the implications yet, but your article has started the process. :)

    Thanks, as always, for sharing your insights with me (and with us).

  • albertkinng

    I think we are smart consumers now. coors and whistles aren’t make us buy the first toy we see. We know now that mobile devices are tools and we just go and grab the hammer if we need to hit a nail.

    • benbajarin

      I think a percentage of the market is savvy but its not everyone. Especially the big middle mass market. When we talk with these consumers it is very interesting thought buying psychology toward computing products. This is where much of my thinking of the opportunity for these devices and segmentation is coming from.

  • Rom

    When you say “bi-annual”, do you mean semi-annual? I read bi-annual as ‘every 2 years’.

    • benbajarin

      Yes I mean semi-annual. Twice per year. Perhaps this is a term we use inside the industry so I should clarify it better. Thanks for mentioning.

  • http://ElephantsPaycheck.com/ Elephant’s Paycheck

    Ben

    You write really great stuff. I wanted to say thank you.

    I particularly like this point/insight:

    “We have gathered quite a bit of research suggesting a high level of buyers remorse for low-cost tablets.”

    Combined with “remembering” that tablets are so new, we (enterprises & consumers) haven’t yet established buying patterns and preferences.

    Personally, I think most people are talking/acting like the tablet market is inheriting the maturity of the PC & smartphone markets, without really understanding the shift that’s occurring.

    Anyways, I look forward to your next article!

    David

    • benbajarin

      Much appreciated David. I’m glad that we have this outlet so I can share things I think are important publicly.

      We have also been doing some behavioral economics work among first and even some second time smartphone owners and even in parts of that market I’m finding points where they are still refining what they want. So all of this brings up very interesting implications across the board I believe.

      Thanks again for the comment, much appreciated.

  • Defendor

    Annual release is no real change for Apple, as they haven’t really done bi-annual releases in recent memory. Also a seasonal component to gift type gadgets is only obvious and has always been present.

    I do think we are already in the beginning of a tablet growth slowdown(not deline, just slowdown in growth rate). I really don’t think there will be rapid turnover of tablets, like there is for the subsidized phone market that encourages it.

    IMO, Tablet turnover IMO is going to look a lot more like PC turnover.

    • benbajarin

      I think it will trickle throughout the household probably like the PC and even more. For a while things like corporate turnover was every 2 years and it will be interesting to see if we see these bumps.

      The slowdown will probably be a result of a big PC refresh we expect from roughly 400-500 million PCs older than 4 yrs in the market. All these customers being people who need PCs and a tablet is not a replacement. This number could actually be larger but I’m erring on conservative. We have just gathered quite a bit of research on the current tablet owner mindset, usage, usage with other devices, etc., and much clarity has come to the market and the potential market size.

  • SockRolid

    Great piece, Ben. I’d add that Apple seems committed to releasing updated iOS devices in late CY Q3 because of two reasons: 1. They want to be ready for the holiday quarter with fresh hardware and software (like everybody else), and 2. WWDC happens in the summer, to give developers a few months to get their apps ready for the year’s new iOS release in the September quarter.

    I don’t see any reason why Apple would want to change that Summer WWDC -> fall iOS hardware update -> big holiday season strategy. So what can Apple do to fill the first half of the year with new releases? Well, the various OS X hardware lines can be released whenever Apple (or Intel) is ready, at any time of year.

    And, if the rumors of some kind of television-related product are true, the first half of the year would be a fine time to introduce it. The current Apple TV runs a stripped-down version of iOS, and the Apple TV interface is actually an app. The interface is independent of any particular iOS release, so Apple TV doesn’t need to be released along with the other iOS devices in the fall. And, of course, future television-related iOS products could also be released any time of year.

    Wouldn’t it be great if Apple actually does build a 4K television set with Apple-specific features and iCloud ecosystem integration? They could announce the new model in Q1 every year, so it would overshadow CES. Just like the original iPhone intro in 2007 and the iPad intro in 2010.

    • qka

      In recent years, Apple has had (in the US at least) a back-to-school promotion that starts mid-July and ends in early September. They have had a number of new product introductions that happened very shortly after that promotion ends. Think of them as just-after-school-starts products. So they can pick up some student related sales, and maybe use those early adopters as word of mouth advertisers, leading into the busy holiday sales period.

      Also, CY Q1 is the big gift giving time in Asia. So everyone gets two big sales quarters, all the more reason to delay new model introduction to as close to those two quarters as possible.

  • James King

    “Consumers are going to be faced with an overwhelming plethora of choices.” – Tim Bajarin

    Seems to me that the choices are:

    1. iOS/Apple – two excellents models;

    2. Android – a million different models that range from pure suckage to “this ALMOST makes me not want an iPad.”

    As a consumer, that really isn’t much of a choice. I wish there was more OS variety or at least a better second choice than Android.

    • Defendor

      I would consider the new 300+ dpi Nexus 7 just released today as an Excellent model as well.

      I realize specs aren’t everything but it is quite a step up on the Mini nearly everywhere (for $110 less) and Android continues to improve at a fairly rapid space.

      • James King

        I agree with you re: the newest Nexus 7. As for Android, I think Google is just Microsoft with only slightly better UX and much more user surveillance.

      • Samuel

        Apple is too busy figuring out how to sever ties with Samsung. It has distracted them from delivering improvements to their products in a timely fashion.

        • Joe_Winfield_IL

          They can do two things at once. There are tens of thousands of employees, and those tasked with product development are not the same as those tasked with managing vendor relationships.

  • jfutral

    Maybe it is the way tablets get used vs smartphones. I think people are learning that tablets have a much longer use period than phones (which can get damaged much sooner, at the very least, because of how they are used). My iPad2 is still doing just fine for all the things for which I use it. I really have no reason to buy a new iPad for myself (yet). But I did buy mini’s for my girls so I don’t have to share mine anymore.

    Android is a cheap buy-in (as you point out) to learn what all the hubbub is about, then people either don’t find a use for them or buy up to iPad, thus the huge disparity between supposed Android sales vs Android web use.

    Joe