Demand For Tablets Not As Strong As ‘Media Hype’ Suggests, IDC Says

Demand in the tablet market “may not be quite as strong as recent media hype suggests,” said a report International Data Corp. released Friday. IDC said seasonal trends typically found in more mature consumer electronics and computing categories “had a notable impact on the burgeoning media tablet market.” Despite a 28 percent drop in tablet shipments in Q1 2011, shipments are expected to grow to a higher-than-expected 53.5 million units for the year, up from a forecast of 50.4 million units, IDC said. A challenging Q1 owed to concerns over macroeconomic issues and a “post-holiday letdown” that took a toll on demand, IDC said.

E-readers experienced similar seasonality, undergoing a sequential decline in shipments to 3.3 million units as the post-holiday season was challenging for that category as well, IDC said. E-readers enjoyed 105 percent growth in sales, however, which IDC attributed largely to the popularity of color devices such as the Nookcolor.

The iPad and iPad 2 continue to dominate the tablet market, “as other vendors have had a more difficult time finding market acceptance for their products,” IDC said. But even Apple’s shipments for Q1 were “well below expectations,” IDC said. Supply-chain hiccups on screens and the pre-release announcement of the iPad 2 several weeks before its actual availability combined to have a “noticeable impact” on the company’s shipments for the quarter, IDC said. Sales of Android-based devices, on the other hand, grew to to 34 percent of the total tablet market, a share increase of 8.2 points over the previous quarter, IDC said.

Meanwhile, a report released by DisplaySearch on Friday said retail has been an “overlooked challenge” for many tablet companies but is key to the success of the category. Retailers are still “working out the kinks” of differentiating tablets from notebooks and smart phones while educating consumers on how to shop for a tablet, IDC said. Tablets are “much more about the computing experience,” with apps and services being the key characteristics of the device, which is different from “the speeds and feeds” consumers typically use to judge the value of a product, DisplaySearch said.

Apple has an advantage in selling its tablets because it can explain the iPad to consumers at its own retail stores through dedicated sales staff, DisplaySearch said. “This provides handholding that consumers will likely need” as mobile devices become less about hardware and more about software and services, DisplaySearch said.

HP, which launched its $499 TouchPad tablet this month, started an initiative called “Top Gun” in which it has stationed HP employees at kiosks dedicated to the TouchPad at 100 Best Buy locations. The HP staffers are trained to market the TouchPad, and the program will run through the year, DisplaySearch noted. “This will certainly help HP differentiate its TouchPad from the other tablets sold in Best Buy stores and help consumers better understand what the TouchPad offers compared to notebooks and smart phones,” DisplaySearch said. Although retailers such as Best Buy have been making efforts to differentiate product categories such as tablets and smartphones, they are still challenged by having to distinguish tablets from each other, DisplaySearch said. “As more brands with incompatible operating systems and apps enter the market, things could potentially get more confusing for consumers,” it said.