Mobility

Are phablets cannibalizing tablet sales among business users?

A recent IDC report says that tablets sales are slowing and being cannibalized by phablets. Are tablet sales actually slowing, and are phablets truly a threat?

phablethero.jpg
 Image: Samsung

Some users appreciate the the added tablet functionality of a phablet without having to purchase a second device or sign a second contract, while others are critical of the larger screen sizes and bulky designs.

According to research done by International Data Corporation (IDC), the rise of phablet popularity is contributing, in part, to a perceived ebbing of tablet shipments. IDC had originally projected 260.9 million units, but has since projected a shipment of only 245.4 million units in 2014. According to Tom Mainelli, program vice president of devices and displays at IDC, it has dropped for two reasons.

"First, consumers are keeping their tablets, especially higher-cost models from major vendors, far longer than originally anticipated. And when they do buy a new one they are often passing their existing tablet off to another member of the family," Mainelli said in an IDC press release. "Second, the rise of phablets - smartphones with 5.5-inch and larger screens - are causing many people to second-guess tablet purchases as the larger screens on these phones are often adequate for tasks once reserved for tablets."

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IDC's tablet forecast by screen size.
 Image: IDC
The data that IDC uses to support the claim that phablets are cannibalizing tablet sales is its claim that the phablet share of smartphone shipments has gone from 4.3% at the beginning of 2013 to 10.5% at the beginning of 2014. According to the IDC press release, "'Phablet' is defined as a smartphone with screen size of 5.5 to 7 inches."

According to IDC, the tablet market, which includes hybrid tablet/laptops, had a year-over-year growth rate of 51.8% in 2013, which dropped to a projected year-over-year growth rate of 12.1% in 2014. While there may be some correlation between the rise of phablet sales and the slowing of tablet sales, it doesn't necessarily mean there is a direct causal link between the two.

When asked about his research and the research done at his firm regarding phablets and tablets, Michael Facemire, a principal analyst at Forrester didn't see a possibility for phablets to overstep their boundaries and take some of the tablet market.

"I simply don't see an under-sized tablet or an over-sized phone eating into the existing tablet market," Facemire said.

This is partly due to the fact that phablets are still very much smartphones and exist in a different product lifecycle than tablets do. But, According to Facemire, it makes sense for companies to sell a product that they can present as existing in two different markets.

"If I can blur the line between what is a phone and what is a tablet, now I can blur the line on growth numbers," Facemire said. "So, I as a phablet manufacturer, say Samsung with the Note products, I can take the best of both worlds. I can say I've got phone renewal rates plus tablet functionality. Therefore, sell at an equal or higher price point than a phone, and keep growth numbers alive."

You must first consider the use cases for tablets and how that compares to smartphones. Phablets entered the market in an attempt to combine some of the best features of tablets with a smartphone to eliminate the need to purchase a second device. So, there's a potential that phablet owners wouldn't have been tablet owners to begin with.

"There are some people who are very enthusiastic about large devices, just the same way that there are some people who are very enthusiastic about SUVs," said Carl Howe, a vice president at the Yankee Group. "That doesn't mean we're not going to sell any cars anymore."

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The Yankee Group's projections for tablet sales.
 Image: Yankee Group

Howe also mentions that Yankee's Current projected compound annual growth rate for tablets was 21% and its current projected annual growth of smartphones is 15.9%, meaning Yankee is actually projecting a higher growth rate for tablets than smartphones. When asked what he believes that 21% means relative to the original, astronomical growth numbers of the early tablets, Howe said: "You could call that a plateau, or you could simply call that a nicely growing mature market."

The main point of contention here with Mainelli's original statement is the correlation of phablet sales to a "decline" in tablet sales.

"I do not see a plateau, I do see a slowing down. It's just kind of a natural evolution," Facemire said. "When the iPad was announced there were tablet makers, but not real consumer tablet makers. So, obviously, there's going to be big year-over-year growth numbers; and that naturally has to slow down in a space where the hardware can remain functional for a long time."

When it comes to Mainelli's initial point that tablets are being kept longer than anticipated, that makes a lot of sense. Unlike smartphones, tablets do not exist in an purchase cadence that is necessitated by phone upgrades and 2-year wireless contract renewals.

The first iPad, which arguably initiated the consumer tablet market, was released in 2010, a mere four years ago. Aside from power users, most tablet users don't have the type of use case or use patterns that would necessitate a regular upgrade. Facemire mentions that both of his children have an first generation iPad, as do his parents and, four years later, it still serves its purpose for their needs.

Tablets are still young, and whether or not they are in danger of stalling out remains to be seen. However most tablets don't have a price point or software updates that are conducive to the upgrade cycle seen by smartphones.

That's why oversized phones, or phablets, are seeing some success, especially among professionals who don't want to carry two devices. Keep in mind that tablets often serve niche purposes in the enterprise, and phablets don't necessarily have the apps suite, screen real estate, or functionality to compete with these specialty use cases.

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About

Conner Forrest is a Staff Writer for TechRepublic. He covers Google and startups and is passionate about the convergence of technology and culture.

13 comments
pjboyles
pjboyles

When the portable device is easy to carry (phone sized) and capable of doing everything the average tablet can do it wins and the tablet stays at home or never gets bought. It's portability and only one device to carry.


When the tablet does (many) things I need that phone cannot do, it becomes a must have to bring with me for when I need to do those items.


No one needs to carry a large device with them everywhere.  Unfortunately many people think they always need a phone.

dmcclellan164132
dmcclellan164132

My surface is great, and I will upgrade to surface 3. With the surface I can access my phone and my one-drive cloud storage . I also access to my surface through my phone  

programit
programit

I found that the tablet as such has lost its appeal in many areas. Its not a trendy toy anymore. 

I bought a Note 3 and found that since then I have rarely used the tablet as there is basically no need. The note 3 has more power and storage and a much better size for mobility.

Long ago I realised the tablet was near useless for anything but games and basic web viewing etc. They were too big for general carrying around and too small and awkward for real work. I have a desktop and laptop computer for real work.

I have an iPad 2 and an Acer sitting in the junk box and realistically I can't see myself ever getting a  basic tablet in the near future. 

A good size phone (5.5 to 6") and a light decent size laptop (12 to 14")



Vulpinemac
Vulpinemac

The charts displayed seem to have little relevance to the article itself, while IDC's numbers seem based on very little real data. Even trying to estimate a market 4 years out based on current products is an exercise in futility as any one company could produce a product that blows away an entire segment of that estimate.

JackOfMostTrades
JackOfMostTrades

I have a Galaxy Note 2 and an iPad 2.  I use both when it's convenient.  It's useful having two different operating systems from which to choose apps. (I have trouble finding similar apps on my Note that are of equal quality to the ones on my iPad.)  I bought the iPad mostly for reading documents, and that's what I use it for because of the bigger screen.  However, when it comes down to it, my Note fits in my pocket, which means I can take it anywhere.  The Note screen in not even close to as big as the iPad but it's big enough to decently read things when I have no other choice.  Before I got it, I would take my iPad to various stores and other places to have on hand for looking up stuff; it was the biggest pain in the ass ever lugging it around, and I never do anymore.  So, my guess would be that any large phone (I refuse to say "phablet") that can still fit in a normal pocket will probably eat into tablet sales, assuming a person is budgeting only for one of them.  Once you cross the pocket threshold, I say they're competing directly with other tablets and quality alone will win the day.


As an aside, if anyone knows of a pdf and document reader as good and functional (Dropbox integration necessary) as Documents by Readdle that's made for Android, let me know.  That is a full-on five-star app, and I've come across nothing even close in quality on Android in my searches.  If my iPad was stolen or bricked tomorrow, I'd have to buy another iPad simply because of its high app quality, specifically that one.

JonathanPDX
JonathanPDX

Phablets? Seriously? That's just Phabulous. (rolling eyes)

Large-screen format phones have their uses as do regular tablet computing devices, and some people will always champion something different, even if it is absurd.

Aside from the surge associated with the introduction of some new form factor and/or technology, people will gravitate toward the device(s) that help them be the most productive. For some it will be tablets, for others phones, and still others a combination of the two.

Excuse me, I need to sue my Phryer (Phone+Hair Dryer) and PhapStick (Phone+ChapStick) then do yardwork with my Phower (Phone+Mower) and Phwacker (Phone+Weed Whacker).


Treknology
Treknology

I have had tablets, and I don't see the point of having a second SIM just for the sake of Net access when I can't make a phone call and therefore have to cart around both devices. Tablet = gone. Give me one of those over-size cell phones with Kindle e-paper (longer battery life) so that I only have to carry one device with a bluetooth earpiece and decent sized touch keys for sending text messages. Color isn't exactly a necessity for calls, text, and basic data organization. There has to be an alternative market for "netbooks" that also use e-paper.


Even on a larger "phablet", I'm still not going to be accessing facebook or ebay until I get home and can look at a proper sized screen.

rwnorton
rwnorton

I have both a tablet (Surface Pro) and a phablet (Nokia Lumina 1520).  There's no way the phablet would replace the tablet for me.  I also have to say that the phablet is an inconvenient phone - it's simply too large to carry around in a pocket or on a belt clip-on.  However, if I weren't in the IT support business, then I can see maybe feeling differently about the phablet.  I do carry it "socially" such as when going out to dinner, friends houses, etc.  But I'm not convinced that I wasn't just as happy with a smaller phone for that purpose.


As for me, next time I'm going back to a smaller phone.

Tesla's Spark
Tesla's Spark

Are light bulbs cannibalizing  candle sales?

douglas_john_ledet
douglas_john_ledet

"Tablets" are not a category upon themselves.  They are simply personal computers with an alternative input device.  You wouldn't call a personal computer with a printer a PRTPUTER would you!

einaschern
einaschern

"Phablet" is the stupidest term I have ever heard. Can we stop with these ridiculous portmaneaus?

adornoe
adornoe

@Tesla's Spark Yep, they are, but...

When Apple reinvents the candle, people will be dropping their use of light bulbs and buying the  iCandle; Apple stock will soar to $2 trillion. 

adornoe
adornoe

@einaschern The word is "portmanteau"; but it's too late now.


Ask celebrity couples how they feel about having their names joined to form one that identifies both or them together?


BTW, any complaints about "iPhone" or "iPad"?  Apple could have also named them MacPhones and MacPads.  But, the "i" sounded cooler with the internet age.