Smartphone, Tablet Pile-up May Affect Suppliers in Q1, 2013

There are a few reasons for bad tablet sales through the holiday season

1) people are super picky about which tablet or phone they want... it is a gift you buy yourself, not one you get for someone else, and people have really cut back this year on their Christmas spending to begin with.

2) We will not see mass adaptation of tablets until business really start using them and buying them in bulk, and the real business grade tablets have only just come out a few months ago, and most companies will wait until the 2nd or 3rd gen before moving to them, so we still have a year or two before we see mass adaptation.

3) Tablets are expensive for what you get, and cell phones have a high cost of ownership. I read somewhere that the iPad has a grand total of $250 of parts inside, while it sells for $500+. Android devices are substantially cheaper, but there is so much market fragmentation on the phone side, and so much miss-information on the tablet side that the general public that does not already have one is afraid to get one, or else very confused as to what to get. And then there is winRT... which is so damn close to being useful that it is frustrating, and being on 1st gen devices it is generally avoided (all it needs is the ability to run apps in the desktop environment like OfficeRT does and it would kill all competition). Win8 on a tablet would be awesome, but then you have the cost of an x86 tablet which is too high on these first gen offerings. WP8 (IMHO) is the best thing since sliced bread, but the bad rap and lack of marketing that early WP7 devices got has really kept the general public away, and the stupid decision of not having SD cards on high end models are keeping power users away (hopefully the ATIV S fixes that). So in Tablet land you either pay a ton of money for a really useful x86 tablet, a lot of money for the trendy iPad, or you trade lower price for the time and effort required to educate yourself on what is available and good in the android market (because there are a lot of terrible Android phones and tablets... but the good ones are great). Phones are much simpler as you pay your $50-100 for your device of choice (and WP8, Android, and IOS are all pretty even on capabilities these days), but you are then tied to that cell phone plan where they gouge you. TCO for a tablet is $3-800 for as long as it lasts, while the TCO for a smartphone is ~$900 per year per device (device + 2 year contract / 2 years). Those prices (often per person) will make anyone 2nd guess their 'need' for such a device, and it firmly prices them out of reach for lower income families where bulk sales are made. It may not be so bad for a single person who has a job... but for a family of 4 your are talking about $2,600-3100/year in cell phones (plus replacement costs for broken/lost/stolen devices). That just hurts if all that is going on is Angry Birds and text messages.

4) Tablets and phones have seen amazing 3-4x performance gains every year combined with substantial feature additions and price decreases each year. Many people are not willing to jump on something that costs more than $100 unless they know it is going to be relevant for a few years. When you hear about the 'next big thing' coming out every 2-3 months it makes it difficult for people to jump in on a device that you want to be happy with for 2-3 years. I think in 2013 we are going to start seeing a decrease in the frantic pace of performance increases, and with that people will be more willing to get into their ecosystem of choice when they are confidant that they will not be left behind in a matter of months.

5) Ignorance. Most people I know who have bought a tablet did not understand what they were getting, and have been disappointed. They thought they were buying something that could be used instead of a laptop or desktop (which in some cases they can), but really they are (for the moment) accessories to a larger machine, and I think if laptops came with better screens then most people would be happier with that. Until a tablet can really function alone (which we are beginning to see), they will not take off because people want to replace devices, not add more of them. Another thing of ignorance is that most people think they have to purchase a data plan for their tablet, which is flat out wrong, but it prevents them from getting one.

6) What on earth are you going to use it for? A smartphone with a data plan is a bit expensive just to play angry birds, and while I love the form factor of a dockable tablet to replace a laptop, the OSs tied to the affordable ones severely limit what you can do, while x86 tablets are astronomically expensive at the moment. My wife and I got our smartphones because we are both terrible about taking our laptops anywhere, and we both run small businesses where we need to respond to emails and messages nearly immediately. We also enjoy all of the other features that smartphones bring, and we love that we have consolidated 9 portable devices into 2 (and other than the Kindle and laptops, the phones are actuially better than the devices they replaced), but if it were not for the business communication aspect we were perfectly happy with our good 'ol dumb devices. And there is no way on earth I would pay for my kids to have a smartphone unless they are footing the monthly bill for it.

7) Analysts predicted that people would want a smartphone AND a tablet, when that is really not the case. What I am seeing with my friends and family who are buying such things now (not the early adopters or apple fanboys) is that they buy smartphones for each individual, and then they get a tablet for the household (mostly so the little kids don't mess up the smartphone). Tablets are oddly becoming more public devices that are shared in a home or office environment rather than being a personal device like the laptops they often replace. I have always wanted to put some sort of touch-screen device in the kitchen in order to watch movies while doing the dishes, or look up recipes when cooking, and I think that tablets are perfect for that kind of public, simi-disposable (water and cooking hazard) use. Or in a warehouse for doing inventory work, or in a store being used as a POS (like apple does), are all perfect uses for tablets. They are just generally not used as the laptop replacements that they were originally designed to be. The phone and the desktop/laptop have become the personal domain, while the tablet and console have taken a more public role.

CaedenV*snip*
Holy batman!

Wall of text!


It's a nice read and all but that's a lot of text for a comment on a article! o.o

Yes, it was an interesting read. I don't always read a long post but this one stayed the pace. :-)