The appetite for tablets is slowing – down to the lowest level in two years — and sales forecasts are being cut. The devices are still in demand, but the early adopter market is being saturated, consumers are turning to less expensive 7-inch versions, and phablets have emerged as a cheaper alternative to buying both a smartphone and a tablet.
According to a Pacific Crest analyst, as sales slow Apple (AAPL) is in line to take the majority of the punishment. The company isn’t sitting still — Apple watchers have October 22 circled on their calendars as the date the company will unveil the next generation of its iPad and iPad Mini tablets — but there’s a real possibility that refreshed iPads won’t be enough to keep Apple’s lucrative tablet business from sliding further.
The coming holiday season will be ground zero for the next phase of the tablet war. Here’s what the major players are up to.
While smartphone rival Samsung (SSNLF) is notching up huge tablet gains, sales of iPads were down 14% last quarter compared to the previous year. The iPad now holds just one-third of the world tablet market it once owned, compared to more than 60% for devices running Google’s (GOOG) Android operating system.
Apple has stuck with the high-margin, premium hardware approach and stubbornly resists cutting prices. But competitors have caught up and are making it difficult to justify paying the so-called “Apple tax.”
If Apple announces an iPad Mini with a Retina display this month — addressing the primary complaint about its current offering (besides the price) — expect it to move as many as it can sell over the holidays. If it’s only able to offer up a refreshed look and spec-bump, that low resolution display will be very difficult to overlook.
A new, full-sized iPad with thinner bezel, A7 CPU and possibly even the iPhone 5S’s fingerprint sensor will spur upgraders, but the price point is not going to set holiday sales on fire.
Amazon (AMZN) released a new line of Kindle Fire HDX tablets with killer specs and a pushbutton “Mayday” feature that summons instant technical support via video conference. A 7-inch Kindle Fire HDX with Mayday for consumers who are less comfortable with technology, a high-density display, beefy processor, 11 hours of battery life, complete integration with Amazon’s online media offerings and a $229 price tag is going to be a tough competitor.
For the budget-conscious, Amazon upgraded last year’s 7-inch Kindle Fire HD to offer a faster CPU, dual speakers and HD display at $139. Compare that to the cheapest iPad Mini at $329.
Google continues to be a player with its Nexus series of tablets. The latest Nexus 7 — built by Asus — features a high-density 323 pixel-per-inch display. The current iPad Mini’s display manages just 163 PPI and even the iPad with Retina Display is currently at 264 PPI.