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Warning Signs for Tablet PC Market

In 1Q14, the global tablet PC market grew 19% over the past year to reach 58 million units. While growth continues, tablets fell short of the consensus (63mn units), and YoY growth lagged smartphones (33% YoY) for the first time

The South Korean research house, Korean Ivestment & Securiies that that this may be a warning signal.

They believe growth disappointed, as tablets have a longer replacement cycle, and the weighting of the phablet market (smartphone with five-inch or larger display) is increasing, and tablet demand has migrated to phablets. Also, they not that generally, tablets are relatively more expensive as there are no telco subsidies.

With tablets becoming increasingly commoditized and the weighting of entry- to mid-range models growing, Samsung and Apple should lose market share unless both players aggressively market lower-end models.

Specifically, the reseach house says that Samsung’s 2Q14 tablet shipments should decline to 10mn units (-23% QoQ) on inventory adjustments and a lineup change, reducing market share to 14% (Apple’s share should also erode to 23% at 15.7mn units, -4% QoQ).

They added that they believe the negative effects from the slow shipments and resulting price competition will be significant over the near term.

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