The success of the tablet PC era, christened by Apple’s release of the iPad in 2010, is virtually without equal.
According to a recent survey projection, 64% of Americans will own a tablet or use one belonging to someone else in their household in 2014. In 2012, that number was 33%.1
And that’s just the US – toss in the estimated 35 million tablet users in the UK and 18 million in Germany this year, and the idea that 195 million tablets were sold across the planet in 2013 follows completely.
That success has also helped the bottom line and stock prices of companies building tablets and related components. The Tablet Takeover motif, for example, has risen 56.7% in the past 12 months. In that same time, the S&P 500 is up 21.9%.
In the past month, the motif has increased 4.2%; the S&P 500 has gained 0.8%.
With that lightning-quick success, however, has come the reality of a slowing market. According to market research group IDC, tablet market growth will come in at 19.4% in 2014. That level reflects a boom for just about every other industry. For tablets, it’s a virtual plunge from 2013’s growth rate of 51.6%.2
Of course, these developments didn’t just materialize overnight, and for industry king Apple it was a big reason for the company’s decision to introduce lower-priced iPad models, which spooked investors for a while by subsequently contributing to the company’s slowing iPad – and overall company – revenue growth.
But Apple was merely acknowledging the tablet market’s changing pattern, as the International Business Times recently pointed out. The new growth is coming from developing markets of China and India, where the affordably priced Android-powered tablets are getting high demand. The familiarity of the consumers with the Android software is backed by reduced prices and aggressive marketing by Samsung. Lenovo has made Android tablets to achieve an edge in the past against Apple tablets in Asia.
The question for investors in Apple and other tablet-related names is how well pricing power can be sustained as manufacturers seek footholds in unsaturated markets.
1TabTimes, “The State of the Tablet Market,” http://tabtimes.com/resources/the-state-of-the-tablet-market.
2Kalyan Kumar, “Tech Giants Seek to Revive Tablet Growth,” ibtimes.com, July 2, 2014, http://au.ibtimes.com/articles/557712/20140702/tablets-apple-ipad-samsung-lenova.htm, (accessed July 9, 2014).