Since Apple launched the first iPad in 2010, tablet PC shipments have grown continuously. Not only have tablet PCs been well-positioned between the casual and professional computing market segments, but the shift to mobility and the surrounding ecosystem exemplified by apps added to the attraction of the tablet PC. On the other hand, sufficient supply of components has also been a key driving force for tablet PC market growth, as the cost of the bill of materials (BOM) has fallen rapidly. One of the most important components is the LCD panel. According to the latest Quarterly Worldwide FPD Shipment and Forecast Report, tablet PC display shipments are expected to reach 342M in 2014, tremendous growth from 80M in 2011.
In the tablet PC market, brands, whether they are high end like Apple and Samsung or low-end like the white box makers in China, are introducing products for different segments. Display sizes range from 5” to 12”; operating systems include Apple’s iOS, Android and Microsoft Windows; processors vary from high-end to processor designs used in smartphones; multiple touch sensor designs exist, such as OGS (one glass solution) integration and GFF (glass-film-film). Meanwhile, not only have tablet PCs replaced some segments of the notebook PC market, but they have created new segments such as kids, elders or “bring your own device” commercial usage. While the OLPC (one laptop per child) project did not succeed in the notebook era, tablet PCs have reached the $99 or even $79 price point at which even families in developing countries can afford one. The tablet PC market seems to be prosperous and showing no signs of slowing down.
However, no party can go on forever. Since the beginning of this year, there have been indications in the supply chain that tablet PC demand is facing some challenges, with some buildup of components inventories. Even Chinese white box makers are struggling, as the low cost/price model has been impacted. The benchmarks – Apple’s iPad and Samsung’s Galaxy Tab – did not meet expectations in Q1’14 either. Given these indications that the tablet PC market might be starting to mature, it is notable that for the first time in our monthly tablet PC panel shipment tracking, tablet PC panel shipments have shown a Y/Y decline: shipments in April were 24.2M, a 4% Y/Y decline from 25.3M in April, 2013.
Monthly Tablet PC Panel Shipment Y/Y Growth Rate
The challenges for the tablet PC market we are seeing at this moment are :
- Competition from large screen smartphones, such as 5.5” or 6”, means that end-users can choose to carry only one smart device.
- Advanced notebook features like touch, better productivity in business environments, superior security and robustness, as well as low prices, mean that tablets can take some of the notebook PC market but not all.
- Slowdown in replacement. Tablet PC performance and applications are “good enough” and it is hard convince consumers to buy a new product. (Personally, my family has four tablets, all purchased at two years ago; it seems that there is not a need to immediately swap for new ones.)
- Oversupply by white box/lower tier brands has created many more options than is needed given the lack of motivation to buy a new one.
- Many new features, such as high resolution, slim bezel, ultra-slim, and lightweight are attractive but do not have enough of a “wow!” factor.
With less elasticity of demand, it may be time for the whole tablet PC supply chain to think about how to reverse the current mindset and to keep tablet PC on the main stage of the personal computing. Moving to larger sizes and into the traditional notebook PC zone is the main strategy, for example Microsoft’s 12” Surface Pro 3 and Samsung Galaxy Note Pro 12.2”. But these larger tablets require makers to develop new interfaces rather than just increase size. While touch penetration in notebook PCs is rising, although slowly, maybe another way to think about this might be to define the notebook as the tablet PC with keyboard rather than the tablet as the notebook PC with redundant keyboard. Eventually we might see the convergence between the notebook and tablet PC, especially in the larger screen sector.