Are tablets a fad?

iPad 2

I'm not the first to ask that question, but there's good reason to pose it again. Media tablet shipments plummeted 28 percent sequentially during first quarter, says IDC. Even iPad missed earlier expectations.

The analyst firm released the data today, expressing some surprise for the sudden slowdown and offering little explanation. Merely 7.2 million tablets shipped in Q1. Apple shipped 4.94 million tablets, according to its quarterly earnings report, putting iPad's share at about 69 percent, by extrapolation. However, IDC's number is lower, with Android tablet share stated at 34 percent. The analyst firm described first-quarter iPad shipments as "below expectations".

To be clear, IDC measures sales into the channel, not those out to consumers. The lower numbers could reflect that vendors had overstocked during the holidays and pulled back shipments for Q1. Another explanation: Given the volatility of the market, IDC might merely have over-forecast Q1 tablet shipments.

Something doesn't jive because of iPad 2, which launched late in quarter. Apple flooded the sales channels for the launch and even then was unable to meet demand. Given iPad's enormous market share, iPad 2 should have boosted number of overall shipments going into the channel. Hence, that circles back to my reason for asking if tablets are a fad.

Despite the sequential decline, IDC raised its shipment forecast to 53.5 million units -- up from 50.4 million. In April, IDC rival Gartner predicted 69.8 million media tablets will ship this year.

IDC's data is surprising and somewhat contradicts statements made by analysts there and Gartner just two months ago. PC shipments also declined during first quarter, with the analyst firms citing consumer adoption of tablets being a factor. However, IDC may have been more accurate in its analysis than Gartner.

"Consumers turned their attention to media tablets and other consumer electronics", says Mikako Kitagawa, Gartner principal analyst, in an April statement. "With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs".

IDC was more cautious. "While it's tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles," Bob O'Donnell, IDC vice president, says in a statement made the same day.

Three months later the story is somewhat changed, with same cause affecting both product categories. "Like the PC market, media tablets had a bit of a challenging quarter in Q1, as concerns about general macroeconomic issues and the post-holiday letdown took a toll on demand", O'Donnell says in a statement issued today. "We expect the rest of the year to be much stronger".

The seasonal slowdown also affected ebook readers. While shipments rose 105 percent year over year, they declined sequentially to 3.3 million units shipped. IDC expects 16.2 million ereaders shipped for the year, up 24 percent from 2010.

Circling back to tablets, IDC identifies a problem I warned about in February post: "The real reason Android tablets don't stand a chance against iPad -- onerous monthly data fees". IDC observed that consumers are resisting buying hot Android tablets like the Motorola XOOM because they don't want to commit to 3G/4G data plans. "We believe vendors who continue to focus on the telco channel for distribution will face serious challenges". Samsung was wise then, perhaps, to launch Galaxy Tab 10.1 as Wi-Fi only through retail, with cellular carrier distribution coming later on.

The point: At Apple's insistance, AT&T and Verizon sell iPad 3G with no data plan commitment. It's a huge competitive advantage.

Now we return to this post's headline question: Are media tablets a fad? I ask mostly because:

  • IDC gives no convincing reason why media tablet sales declined
  • Apple flooded the channel with iPads during first quarter
  • Analyst firms previously blamed tablets for PC declines

So what's your answer? Are tablets really here to stay, or will they burn brightly and fade like netbooks did? Please answer in comments or email joe at betanews dot com.

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