About that Holiday Spike in Tablet Sales

Tablet and e-reader sales nearly doubled from mid-December to early January, increasing the number of American adults who own least one tablet or e-reader to 29% from 18%, according to a recent Pew Research report. There’s a caveat to the happy news, though: this sales spike followed a rather stagnant sales period that stretched from summer 2011 well into autumn. Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Barnes & Noble (NYSE:BKS) might want to wait before they link arms in a victory dance.

The reason these digital devices made it into more holiday wrapping this year is that tablet prices declined. The Kindle Fire and Nook Color are neck and neck at $199, though they’re considered by some to be glorified e-readers. Apple’s iPad is more expensive at $500, but the price may seem reasonable to those loyal to the brand and users who are replacing their PCs with iPads.

Device replacement, in fact, seems to drive many tablet purchases. An eight-market surveyfrom the Boston Consulting Group found that up to one-half of tablet owners in the U.S., Europe, and China were planning to use a tablet in lieu of a previously owned device. One-third of consumers surveyed preferred tablets to netbooks and the same percentage preferred tablets to PCs. Here’s another caveat, though: a third of respondents also said they’d prefer an e-reader to a multipurpose tablet.

E-readers versus tablets

E-readers are still holding their own against tablets because the majority of consumers are using the devices merely for entertainment. According to the Pew report, 90% of U.S. tablet owners use the device at home, in the evening, for personal amusement. This circles back to the holiday sales spike. Many of the tablets sold because they were thought to be fun, not practical.

Consumers in the Boston Consulting survey said that work use of tablets remains impractical for many people because of the machines’ slower operating speeds and lack of Windows compatibility. Microsoft (NASDAQ:MSFT) is hoping to have the latter problem solved by year’s end. The forthcoming Windows 8 operating system is designed with touchscreen tablets in mind, though it will also function on PCs.

Workplace integration will be the force that drives tablet sales into a long increase rather than a seasonal spike. The market will reach a point where most consumers who want a tablet for entertainment will already own one or will have moved on to some other acquisition. The business world would present a more stable user base, assuming the new wave of tablets greatly increases work efficiency.

Investors recognized that the Pew report highlighted a sales surge rather than a trend that’s going to carry through the spring. Tablet manufacturer shares remained fairly constant on Monday, with Barnes & Noble up 0.25%, Amazon down 2.53%, and Apple up 1.69%. It would take a few more periods of strong and steady sales before stocks would spike based on tablet data alone. Time will tell if 2012 is set to be the year of the tablets.

Article printed from InvestorPlace Media, https://investorplace.com/2012/01/the-holiday-spike-in-tablet-sales-aapl-amzn-bks/.

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