Blog Post

Tablets May Not Be The Silver Bullet Some Had Thought

Some cold water splashed on the loved-up tablet market, courtesy of Ashok Kumar of investment bank Rodman & Renshaw. In a report to clients, the analyst says that the iPad may have trouble hitting analysts’ targets of selling 6 million devices in Q4, and that tablets in general may suffer in sales overall as consumers continue to cut back on discretionary spending and/or opt for smartphones and laptops instead.

The conclusions of the report – which was cited by Bloomberg and Fortune, among others – fly in the face of other analysts’ more optimistic predictions.

Last week, Chetan Sharma went so far as to claim that within five years, in the U.S. tablets would generate more revenue for mobile operators than the entire prepaid segment, and that tablets would eat away at the market share of devices like netbooks. He does point out, though, that tablets represented only three percent of data revenues in Q3.

— Meanwhile, in his research note, Kumar notes that Apple (NSDQ: AAPL) may sell as few as 5 million tablets in Q4, making it the second straight quarter that iPad would have missed analysts’ estimates for sales (Q3 sales were 4.19 million against expectations of around 5 million).

— Supply-chain checks indicate that Apple is unlikely to produce more than 2 million iPads by year-end, 1 million off the predicted 3 million devices, he writes.

Apple isn’t the only one. Also citing talks with suppliers, Kumar says the Samsung Galaxy Tab is also apparently cutting production by about 50 percent, in the wake of slow sales. And RIM (NSDQ: RIMM) is reportedly also continuing to see technical problems with its yet-to-be-released PlayBook and production forecasts are being “ratcheted down.”

Battle of the “Tweeners”, or devices that fall between more distinct product categories such as smartphones and laptops. Kumar cites “anecdotal” evidence that the slimmed-down laptop MacBook Air is actually eating into sales of the iPad device. This is nearly the opposite of other predictions that netbooks would be the ones to disappear as tablets continue to gain popularity. Writes Kumar: “A fully functional notebook in a very attractive form factor may be resonating more with consumers than a content consumption-only device.”

2 Responses to “Tablets May Not Be The Silver Bullet Some Had Thought”

  1. I think this article is spot-on. The ipad is really a ‘content consumption-only device’. It’s pretty great at that…but I’ve stopped using mine for those “couch computing” moments of checking email/web browsing. Not being able to easily reply (in other than a couple of sentences) as well as lack of Flash support are among the reasons why my iPad is gathering more dust than I’d like.

    I think we’re going to see the tablet category come back down to earth a bit between now and January