How the tablet market can fix its growth problem

IDC says growth in tablet shipments are slipping. Market saturation may be one cause, but usefulness is another.

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A roller-coaster nose dive in year-over-year quarterly table shipments from 75.3% to 28.2% would turn stomachs. In its tablet shipment statistics released yesterday, IDC identified the cause to be high levels or consumer saturation. There is another problem - usefulness.

Almost everyone who has a tablet also has a smartphone, and not vice versa. If it were really easy to tether a tablet to a smartphone, so easy that your grandmother could do it, free or nearly free of data fees and overages and secure (true confession: I once used a colleague’s unsecured smartphone Wi-Fi in an airport without telling him), tablet shipments would pick up. A WiFi-only, 16 GB version of the Nexus 7 only costs $229, and the large-screen Wi-Fi-only iPad Air with 16 GB costs $499, with a lot of affordable choices in between.

Tablets are fantastic for a lean-back experience, but they don’t fit all lean-back situations. The reason is that so few LTE 4G tablets ship in comparison to Wi-Fi-only tablets that hardly any market forecasting consulting companies follow it.

To the majority of Wi-Fi-only tablet users, this means leaving tablets at home or using it like a Kindle to read stored content. Of course, the consumer can hop from Wi-Fi hotspot to Wi-Fi hotspot and count on the generosity of Starbucks and other businesses to supply the Wi-Fi. But this can be unpredictable.

Tethering a tablet to a smartphone in the consumer’s pocket using Bluetooth or Wi-Fi can be straight forward, but mobile carriers charge for tethering. Verizon charges $10 per month for a shared data plan. The tablet’s data consumption is charged against the user’s 6 GB monthly cap, and excess data consumption costs $10 per GB per month. AT&T doesn’t charge for a shared data plan, but charges $5 per GB per month if the consumer correctly forecasts data usage in advance and $15 per GB per month for usage over the plan limit. The typical smartphone data plan would be consumed by watching three Netflix movies.

Slowing tablet shipment growth is not a failure attributable to Apple, Samsung or any other tablet vendor. Without mobile data services, tablets are sedentary devices like PCs.

In Apple's defense, it did succeed when many companies failed to make tablets a mainstream consumer product. So the 100% market share the company had in 2010 when the iPad was introduced was doomed to fall from the start.

Samsung has also done a commendable job growing both shipments and market share as the shipment rate has decelerated.

Amazon provides a 4G LTE data plan for $50 per year, but it only gives the user 250 MB per month. As objectionable as AT&T’s sponsored data plans are, it would let internet media producers pay for the consumers’ data usage when downloading its content, which could create an uptick in tablet shipments. But the simplicity of setting up tethering and security isn’t easy enough for everyone to use it.

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Copyright © 2014 IDG Communications, Inc.

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