Tablet Market Misconceptions

on January 19, 2015

The vast majority of commentary on the tablet market have a fair number of misconceptions about the segment. The tablet market is both a unique computing category as well as the most diverse one. So it is not surprising so many people misunderstand it.

The biggest fundamental mistake most make when they think about the tablet category is to see it as only one thing. When, in reality, there are many tablet markets. To use a somewhat imperfect analogy, we can use the automotive segment. The auto industry will lump annual sales of all motorized vehicles, cars, trucks, motorcycles, boats, RVs, etc., into a single statistic. The point of this statistic is to simply show how many motorized vehicles were sold each year. Yet, to truly speak accurately about the automotive industry, it is more helpful to see the entire category broken out into each segment. At a big picture level, it is fine to know how many motorized vehicles were sold each year, but that alone doesn’t actually tell us anything truly helpful. It is more interesting to know how many small cars, or large cars, or trucks, or motorcycles, or RVs, etc., are being sold. Growth or decline in each category tell us more about the market than simply lumping all of them together.

This is exactly what is done with tablets today. The fault many make is when they think “Tablet Market”, they think iPad. Yet the iPad is only one kind of tablet — albeit one more similar to a computer that happens to be in tablet form. Yet the iPad’s growth or decline is currently lumped in with kid’s tablets. The two are entirely different in their usage yet spoken about without the key functionality of each being understood separately. The tablet market is harder to analyze than the market for motorized vehicles because of the computing power and underlying software contained in tablet devices. One form factor can genuinely be used in so many different ways.

I have consistently tried to look at the diverse ways the tablet market is segmenting. Below is a chart I use during my presentation on the category.

Screen Shot 2015-01-18 at 4.39.17 PM

When I see a forecast saying the tablet segment will be up or down in 2015, I like to ask, which segment? Will gaming tablets be up or down? Computing tablets like the iPad? Tablets that get stuck on walls at retail? Which ones are growing and which are not? No good answer exists to these questions because those projecting such numbers are not looking at the market this way. Yet this is the most helpful way to understand the category.

The Rise of Appliance Tablets

With this in mind, I want to make a comment about something fascinating happening at the sub $100 tablet segment. In this article on the low-cost tablet era for our Tech.pinions subscribers, I explain how usage of devices in this price tier are starting to cause people to do a double take. Most never anticipated the way these low end tablets are being used. I explain that, under $100, the tablet becomes a cheap, somewhat disposable piece of smart glass. Walmart sells an RCA 7″ Android tablet for $59.99. At these price points, some fascinating things take place with smart glass. Buy one and stick it next to your bed and use it as an alarm clock with widgets for weather, stocks, etc. Buy one and put it in your workshop as a TV. Buy four and have them in your car for the kids to play with and use. Buy several and have them in every room as a quick and easy web browser. Our research of how these low cost tablets are being used by consumers in every country continue to highlight new uses cases — these devices are being used in ways most don’t understand.

What is intriguing is, while these tablets may be capable of quite a lot, the price is so low they are actually becoming more specific in their use. The other very clear trend of a large number of tablets is how they are being shared. Over a year ago, I was among the first, if not the first, to highlight data showing over 40% of people we researched indicated they shared their tablet with at least one person. Our most recent research near the end of 2014 indicated that number had grown to over 50%. Each group of sharers — sharing with two people, three people, and four people — grew in percentage in our recent data. The striking one that stood out was how many responded they shared their tablet with four or more people. At the end of 2013, 7% of respondents indicated they shared their tablet with four or more people. By the end of 2014, 21% of respondents in our global survey indicated they shared their tablet with four or more people. What becomes clear is, for a large number of the tablet installed base, it is more of a communal than an individual product.

What is happening in this category is fascinating. Most of this heavy segmentation and diverse usage is being driven by the sub $100 category. In fact, while many will argue the tablet market overall will be down in 2015, I’d argue they will actually be up because of quality sub $100 tablets hitting the market from recognizable name brands. How these will be used will be diverse and somewhat hard to predict. But as we research the market and hear from consumers themselves how they use these products, it will help us understand the market at a much deeper level.