Current tablet sales growth being driven by sub-$250 devices, IDC says

Posted:
in iPad edited November 2014
The average selling price of tablets continues to drop, according to the latest research from IDC, as sales growth in the tablet market is reportedly being driven by low-end, low-cost devices, just as Apple has entered the sub-$250 market with the first-generation iPad mini.




Total tablet shipments in the third quarter of 2014 are estimated by IDC to have grown 15 percent year over year to 56 million. The figures were spotlighted on Friday by analyst Katy Huberty of Morgan Stanley in a research note to investors, a copy of which was provided to AppleInsider.

Though tablet shipments are said to have grown, the average selling price dropped to $294, which represents a 13 percent year over year decline. In fact, tablet prices have been in a freefall for some time, as Huberty noted that the average selling price has declined year over year in each of the quarters throughout the entire tablet market's history.

She expects that more professional-focused tablets could be the key to stabilizing tablet price sales. In particular, Huberty cited rumors of a 12.9-inch "iPad Pro" said to debut in 2015 as a device that could shake up the tablet market.

For now, the largest growth in the tablet market is coming from the sub-$250 category, as tablet devices priced above that threshold saw a year-over-year decline in shipments.

Apple clearly has noticed this trend, as the company opted to keep its first-generation iPad mini available following the introduction of the iPad mini 3. The legacy iPad mini, which lacks a high-resolution Retina display, is priced at $249, hitting the sub-$250 market that continues to grow.

But as competitors push out cheap Android-based tablets with narrow margins, Apple this year opted to put its effort into the premium iPad Air 2 starting at $499, which was upgraded with the desktop-class A8X processor, improved cameras, a thinner design, and the Touch ID fingerprint sensor. Meanwhile, the $399 iPad mini 3 features the same design and components as last year's iPad mini 2, with the only change being the addition of Touch ID.




While IDC's figures suggest that overall tablet shipments were up in the September quarter, Apple once again saw a sales decline for its iPad lineup, dropping from 13.1 million units a year ago to 12.3 million units in the third quarter of calendar 2014. That decline came before the introduction of the iPad Air 2 and iPad mini 3, as well as the new $249 price point for the first-gen iPad mini.

Apple Chief Executive Tim Cook has repeatedly said that he remains bullish on the future prospects for the tablet market, and iPad lineup specifically, even as sales slump. In his company's most recent quarterly earnings conference call, Cook said that investors should focus on the big picture rather than the last 90 days.

"I view it as a speed bump, not a huge issue," Cook said. "That said, we want to grow. We don't like negative numbers on these things."

The Apple CEO noted that customers hang on to their iPad longer than they do their iPhone. And with the iPad only four and a half years old, Cook said it remains to be seen what the average upgrade cycle will be.
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Comments

  • Reply 1 of 105
    foggyhillfoggyhill Posts: 4,355member
    Quote:
    Originally Posted by AppleInsider View Post



    The average selling price of tablets continues to drop, according to the latest research from IDC, as sales growth in the tablet market is reportedly being driven by low-end, low-cost devices, just as Apple has entered the sub-$250 market with the first-generation iPad mini.

     





    Total tablet shipments in the third quarter of 2014 are estimated by IDC to have grown 15 percent year over year to 56 million. The figures were spotlighted on Friday by analyst Katy Huberty of Morgan Stanley in a research note to investors, a copy of which was provided to AppleInsider.



    Though tablet shipments are said to have grown, the average selling price dropped to $294, which represents a 13 percent year over year decline. In fact, tablet prices have been in a freefall for some time, as Huberty noted that the average selling price has declined year over year in each of the quarters throughout the entire tablet market's history.



    She expects that more professional-focused tablets could be the key to stabilizing tablet price sales. In particular, Huberty cited rumors of a 12.9-inch "iPad Pro" said to debut in 2015 as a device that could shake up the tablet market.



    For now, the largest growth in the tablet market is coming from the sub-$250 category, as tablet devices priced above that threshold saw a year-over-year decline in shipments.



    Apple clearly has noticed this trend, as the company opted to keep its first-generation iPad mini available following the introduction of the iPad mini 3. The legacy iPad mini, which lacks a high-resolution Retina display, is priced at $249, hitting the sub-$250 market that continues to grow.



    But as competitors push out cheap Android-based tablets with narrow margins, Apple this year opted to put its effort into the premium iPad Air 2 starting at $499, which was upgraded with the desktop-class A8X processor, improved cameras, a thinner design, and the Touch ID fingerprint sensor. Meanwhile, the $399 iPad mini 3 features the same design and components as last year's iPad mini 2, with the only change being the addition of Touch ID.

     





    While IDC's figures suggest that overall tablet shipments were up in the September quarter, Apple once again saw a sales decline for its iPad lineup, dropping from 13.1 million units a year ago to 12.3 million units in the third quarter of calendar 2014. That decline came before the introduction of the iPad Air 2 and iPad mini 3, as well as the new $249 price point for the first-gen iPad mini.



    Apple Chief Executive Tim Cook has repeatedly said that he remains bullish on the future prospects for the tablet market, and iPad lineup specifically, even as sales slump. In his company's most recent quarterly earnings conference call, Cook said that investors should focus on the big picture rather than the last 90 days.



    "I view it as a speed bump, not a huge issue," Cook said. "That said, we want to grow. We don't like negative numbers on these things."



    The Apple CEO noted that customers hang on to their iPad longer than they do their iPhone. And with the iPad only four and a half years old, Cook said it remains to be seen what the average upgrade cycle will be.

     

    Most of those cheap tablets are pure trash that are barely useable in their primary function... No wonder Tablet sales are going down with such bad PR. Yes, I have seen some of those unfortunate "tablets".

  • Reply 2 of 105
    dachardachar Posts: 321member
    It would be interesting to know what the average replacement period is for someone who owns both an iPad and an iPhone. I have an iPad 4 and iPhone 5. I am keen to replace my iPhone next May when my 2 year contract ends as I can see the added value of an iPhone 6. For my iPad, having tried out the new Air and Mini, neither felt compelling enough to seek an upgrade.
  • Reply 3 of 105
    rogifanrogifan Posts: 10,669member
    No way I'd recommend a 1st gen iPad mini to anyone. I don't know why Apple is selling it other than getting rid of existing stock that might be remaining.
  • Reply 4 of 105
    jungmarkjungmark Posts: 6,486member
    rogifan wrote: »
    No way I'd recommend a 1st gen iPad mini to anyone. I don't know why Apple is selling it other than getting rid of existing stock that might be remaining.

    For those price conscious customers that don't need the latest and greatest.
    IDC: we make up numbers to benefit our clients.
  • Reply 5 of 105
    Quote:
    Originally Posted by foggyhill View Post

     

     

    Most of those cheap tablets are pure trash that are barely useable in their primary function... No wonder Tablet sales are going down with such bad PR. Yes, I have seen some of those unfortunate "tablets".


     

    I've often worried/wondered about that. How many people have bought a tablet, usually some Android powered pile of garbage, and then say "I don't get the point of tablets, they're dumb".

     

    It's times like that when I wish garbage companies (RCA, I'm looking at you) weren't allowed to make consumer electronics.

     

     

    That being said, IDC's numbers are suspicious as always.

  • Reply 6 of 105
    Quote:
    Originally Posted by Rogifan View Post



    No way I'd recommend a 1st gen iPad mini to anyone. I don't know why Apple is selling it other than getting rid of existing stock that might be remaining.



    If you just wanted it to read books, watch movies, it might not be a bad bargain. I've considered getting one just for those reasons. (sadly, not seeing some crazy BF deal for one) I wouldn't need it to run the big bad apps, as that's what my Air is for (I so look forward to 64-bit requirements on new apps & updates, my Air should get faster as time goes on).

  • Reply 7 of 105
    rogifanrogifan Posts: 10,669member
    jungmark wrote: »
    For those price conscious customers that don't need the latest and greatest.
    IDC: we make up numbers to benefit our clients.

    iOS 7/8 sucks on non-retina devices. Clearly Apple's news OSes were made for retina displays.
  • Reply 8 of 105
    Quote:

    Originally Posted by Rogifan View Post



    No way I'd recommend a 1st gen iPad mini to anyone. I don't know why Apple is selling it other than getting rid of existing stock that might be remaining.

    We bought the 1st gen mini this summer when Target and Best Buy had them for $199. It was the magic price point. Over that was too high. 

     

    Wouldn't mind the retina mini, but Apple has kept tablets in the luxury realm for most buyers - whether they can't afford it or don't want to pay that price.

     

    If you are going to read books and have the occasional game, the device should not be expensive. Not when you can get a laptop for the same price or cheaper than an iPad. Going back to Chromebooks, they offer far more value than an iPad and at a lower cost (and I type on one now as its my go-to computer).

     

    The 1st gen mini is fine for $199. $249 is a little high, but still okay (because of the software available). For those of us used to retina iPhones, they are a bit of a step down and a disappointment.

     

    A 1st gen mini is just fine for most people for nearly all purposes and you don't have to spend an arm and a leg.

  • Reply 9 of 105
    Quote:

    Originally Posted by pfisher View Post

    Going back to Chromebooks, they offer far more value than an iPad and at a lower cost (and I type on one now as its my go-to computer).

     

    Depends. If your private data is worth something to you than Chromebooks are the most expensive option on the market. Especially with the cheap Windows laptops available now.

  • Reply 10 of 105
    rogifan wrote: »
    iOS 7/8 sucks on non-retina devices. Clearly Apple's news OSes were made for retina displays.

    I certainly don't doubt that iOS 7 (circa 2013) was designed for Retina displays (circa 2010) but I think it's hyperbole to say the new UI sucks on non-Retina devices. At this point, how many non-Retina devices still support iOS 8? The iPad 2 and original iPad mini? I'm guessing those won't support the iOS 9 next year.
  • Reply 11 of 105
    MacProMacPro Posts: 16,945member
    IDC needs to create new classifications for their stats. I suggest "Toys" be included and would cover most of the Android devices. This would prevent all this confusion, and had it been done sooner, the false belief by the masses, as to how well Samsung were doing.
  • Reply 12 of 105
    rogifanrogifan Posts: 10,669member
    solipsismy wrote: »
    I certainly don't doubt that iOS 7 (circa 2013) was designed Retina displays (circa 2010) but I think it's hyperbole to say the new UI sucks on non-Retina devices. At this point, how many non-Retina devices still support iOS 8? The iPad 2 and original iPad mini? I'm guessing those won't support the iOS 9 next year.

    Well I'm obviously biased as I think anything non-retina sucks.
  • Reply 13 of 105
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

     

    Depends. If your private data is worth something to you than Chromebooks are the most expensive option on the market. Especially with the cheap Windows laptops available now.


    Won't debate that. You can log into a Chromebook in guestmode. 

     

    Privacy isn't necessarily an on/off yes/no binary situation. Someone should write a big-old article on the topic. Because most opinions and topic discussion on privacy are very black and white. It would be good for people to reference when they want to put privacy controls on their laptops.

     

    Privacy? A lot of people don't block trackers. Maybe most people? 

  • Reply 14 of 105
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

     

    I've often worried/wondered about that. How many people have bought a tablet, usually some Android powered pile of garbage, and then say "I don't get the point of tablets, they're dumb".

     

    It's times like that when I wish garbage companies (RCA, I'm looking at you) weren't allowed to make consumer electronics.

     

     

    That being said, IDC's numbers are suspicious as always.




    We have Google and Android to thank for that.  Google has set no standards on how cheap components can be because Google doesn't care very much about consumers as much as they do about market share.  They should at least set some standards instead of just allowing companies to do as they please with what type of hardware they use.  Google basically said to hardware manufacturers, "Here, take this Android OS and cut as many corners as you can to sell as many units as possible."  Anyone is allowed to build Android products and there are no quality checks required.  It's a do-as-you-please type of platform and Wall Street loves it for its market share.  If I wanted to build Android devices in my basement made with reject components, no one would stop me and there's something horribly wrong with that.

  • Reply 15 of 105

    This is the Apple MO. They will just keep older models around and sell them at a lower price point instead of designing a cheaper tablet. I support this strategy. This probably means we will have an iPad mini 2 with retina display for $249 next year. That is going to be an amazing deal for price conscious customers.

  • Reply 16 of 105
    Quote:

    Originally Posted by sog35 View Post

     

     

    Dude.  Lay of the weed.  99% of people don't cross shop iPads with POS chromebooks.


    Mainly cheap school districts, for consumers they're mainly shopped against laptops, which is how The Google has marketed them.

    Quote:

    Originally Posted by sog35 View Post

     

     

    This is liking saying a person should buy a bike instead of a car since its a better value. please. we have standards here.


    <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

  • Reply 17 of 105
    Quote:

    Originally Posted by Rogifan View Post





    Well I'm obviously biased as I think anything non-retina sucks.



    I've heard complaints about the system typography on the non-Retina screens (thought 7.1 improved that, or so I heard). It's probably good enough for book reading, the Mini is 163ppi IIRC. Not great, but not terrible. Definitely better than the iPad and iPad 2.

  • Reply 18 of 105
    Quote:

    Originally Posted by sog35 View Post

     

     

    Dude.  Lay of the weed.  99% of people don't cross shop iPads with POS chromebooks.

     

    This is liking saying a person should buy a bike instead of a car since its a better value. please. we have standards here.


    Point is, a lot of people (more than 1%) looking for an auxiliary internet device under $300, are going to look see an iPad and see a cheaper non-Apple device, whether Windows, Chrome, or other tablets.

     

    That explains the market share pointing toward cheaper (non-Apple) tablets.

  • Reply 19 of 105
    shsfshsf Posts: 302member
    Quote:
    Originally Posted by pfisher View Post

     

    We bought the 1st gen mini this summer when Target and Best Buy had them for $199. It was the magic price point. Over that was too high. 

     

    Wouldn't mind the retina mini, but Apple has kept tablets in the luxury realm for most buyers - whether they can't afford it or don't want to pay that price.

     

    If you are going to read books and have the occasional game, the device should not be expensive. Not when you can get a laptop for the same price or cheaper than an iPad. Going back to Chromebooks, they offer far more value than an iPad and at a lower cost (and I type on one now as its my go-to computer).

     

    The 1st gen mini is fine for $199. $249 is a little high, but still okay (because of the software available). For those of us used to retina iPhones, they are a bit of a step down and a disappointment.

     

    A 1st gen mini is just fine for most people for nearly all purposes and you don't have to spend an arm and a leg.




    You can try last gen mini which is much cheaper and it's the same without touch id. Also try any retina iPad, I would go 4gen because gen 3 emits more light, for a very decent price off of eBay, or owc (macsales - they have great deals). It's a shame to go with chromebooks, they really offer no value in terms of the universe of excellently done applications and games on the iPad, book, pdf and article reading (longform, instapaper, readability), you can do on them, etc. etc. Off the top of my head I can come up with at least 200+ apps that work and look better on the iPad than any platform on the globe. And cheap MS notebooks are much better value too.

     

    I am not saying you shouldn't be naturally enjoying and being attached to your own chromebook, as a decently done (privacy invading, sorry I had to say that, cause it's true) notebook, but you are missing out on a magical device. Ain't no doubt about it, people might have laughed then, but SJ was absolutely right.

     

    Quote:
    Originally Posted by pfisher View Post

     

    Point is, a lot of people (more than 1%) looking for an auxiliary internet device under $300, are going to look see an iPad and see a cheaper non-Apple device, whether Windows, Chrome, or other tablets.

     

    That explains the market share pointing toward cheaper (non-Apple) tablets.




    If you really want a product because you know it's better than the competition you can also have a look at the Grade A+ used or refurb market. And there are plenty of iPads that sell for around that price and have a long long life ahead of them. 

  • Reply 20 of 105
    shsfshsf Posts: 302member
    Quote:



    Originally Posted by TheWhiteFalcon View Post

     



    I've heard complaints about the system typography on the non-Retina screens (thought 7.1 improved that, or so I heard). It's probably good enough for book reading, the Mini is 163ppi IIRC. Not great, but not terrible. Definitely better than the iPad and iPad 2.


    That's were I'd place it too, not great but not terrible. But now that we've seen the light with retina iPads, I wouldn't either go for an iPad mini gen 1 or suggest one, unless someone really doesn't care about these things, and there are plenty of people who don't for sure.

     

    Because also, the ppi might be higher than iPad 1 and 2 but the screen is smaller so you do need it to be sharper and crispier. But like I said a lot of people don't mind at all. (sorry for two posts in a row). It's like small sized books, you really do need better typography there, because a larger one can afford larger font, same with font and ui elements on a small screen. 

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