One became many: the tablet market stratifies


The compact tablet, with an 8.5 inch or smaller screen, will become the predominant size of tablet. The surge in sales of compact tablets is driving a stratification of the tablet base, similar but more profound than that experienced in the smartphone market over the last two years. Aside from screen size, tablets are also diversifying by weight, processor speed, memory capacity and price.

In the first quarter of 2014, the installed base of compact tablets will surpass the base of classic tablets for the first time. By end Q1 2014, the base of compact tablets to be 165 million units, slightly ahead of the classic tablet base, with 160 million.

Compact tablets will have taken segment leadership within about 18 months of the first mass-market models coming to market, and within four years of the launch of the modern tablet category. Compact tablets are generally lower-priced, as vendors of smaller tablets are likely to have different business models than those selling larger tablets. Retailer-branded tablets are likely to be sold at or near cost, with monetization resulting from product sales generated by the device.

The decline in average selling prices for tablets has led to a 50% growth in the base of tablets in the UK, with some 12 million tablets sold in 2013. By the end of January 2014, about half of Britons may own or have access to a tablet.

The growing range of tablets is leading to a diversifying ownership profile. Owners of the first tablets tended to be relatively prosperous, that is individuals who could afford a £300 tablet in addition to a laptop computer.

These individuals tended to have a higher propensity to purchase online. More recent owners of tablets include those for whom the tablet replaces an existing device, such as a handheld games console, or a netbook computer.

Tablets have gained popularity with extraordinary speed, and manufacturers will have to work hard to stay on top of the evolution of the market. There appear to be more users and use cases for tablets than many had imagined. Getting the balance of form, function and price right will likely be a moving target during 2014, especially at the lower end of the market.

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