Demand for tablets is slowing—here's why

Richard Waters

It took Steve Jobs, the unrivalled magician of personal technology, to conjure the tablet market into existence. But nearly three years after his death, larger-screen computing slabs are experiencing growing pains.

Depending where you stand in the personal computing wars, either tablets are reaching the limits of their usefulness as substitutes for the PC, or they are mutating into the life-changing devices they were always destined to be: a ubiquitous new form of computing that will have more impact on the world than PCs ever achieved.

Andrey Rudakov | Bloomberg | Getty Images

To the tablet sceptics – particularly in the PC industry, which has been battered by two years of declining sales – the "post-PC" world may not have arrived after all.

Michael Dell, one of the pioneers of the PC era, summed it up in a tweet earlier this month: "Where does productivity come from? PCs growing, tablets are slowing down. What gives?"

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The latest telling data point was this week's news that sales of Apple's iPad are falling.

Some 13.3 million were sold in the latest three months – not bad for a device that did not exist four years ago and which now produces sales of more than $30 billion a year. But the number is more than a fifth below the level of two years ago.

What's more, the average sale price has dropped to $444, compared to more than $650 after the 2010 launch. iPhones, by comparison, have barely budged in price as the market has boomed.

This is partly because Google's Android operating system has stolen up on the iPad, much as it did the iPhone before. Thanks to Android machines, overall tablet sales were up 11 percent in the past quarter, according to tech research firm IDC. Yet this was still a sharp slowdown from the 57 percent of the previous year, raising a question over how quickly tablet sales, which reached 220 million last year, will overtake PCs, at 316 million.

Some limits to tablet sales have become apparent since Mr Jobs first sought to carve out an entirely new market between the smartphone and the laptop computer.

One is the incredible success of smartphones themselves, whose sheer convenience means they are used for tasks many thought would be limited to larger-screen machines. Expanding smartphone screens have also played a part: Mr Jobs may have argued for a clear distinction between the iPhone and iPad, but his heirs have been happy to blur the difference – first with a 7 inch iPad and, later this year, with the expected launch of larger iPhone screens up to 5.5 inches across.

Other types of machine may also be encroaching. Sales of Google's Chromebooks – presented as alternatives to laptops, though their longer battery life and simplicity make them in some ways competitors to tablets – have taken off.

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The PC industry is also trying to hit back with its own new brand of hybrids, machines that come with keyboards that can be snapped off or swivelled round to turn them into tablets.

At the same time, tablets have also failed to make the leap into the business world. Though sometimes seen as potential PC-replacements for travelling executives, most cost-conscious companies have yet to take to them, says Ken Dulaney, an analyst at Gartner. In a sign of how far it is now rethinking its traditional approach to doing business, Apple recently forged an uncharacteristic partnership with IBM to try to make iPads more palatable for work.

A further reason for the iPad slowdown is that – unlike laptops, which need to be upgraded frequently to keep pace with new operating systems – there is also less reason to replace them with new ones. "The battery in the iPad 2 is like the Energizer Bunny – it just goes on and on and on," said Mr Doherty.

None of this, though, undermines the fundamental case for the tablet, according to its supporters. As with all truly disruptive technologies, there is a temptation to view the new as a direct replacement for the old, points out Steven Sinofsky, a board member at venture capital firm Andreessen Horowitz and former head of Microsoft's Windows business.

But in practice, new, more convenient technologies – even if inferior in some ways to what came before – encourage new uses which eventually expand to overshadow the old.

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Tablets could be a case in point. Their all-day battery life, intuitive interfaces and app-store approach to life have made them a simple and convenient way of staying connected around the home. With prices for the cheapest machines falling below $100, they look set to proliferate.

"They have hit price points that weren't imaginable two years ago," said Mr Dulaney. "They are getting down to calculator range. Why not have them littered all over your house?"

That may not be precisely what Steve Jobs had in mind when he presented the first, expensive iPad to the world. But it points to a revolution in computing nonetheless.