Friday, July 8, 2011

Report: Decline in Tablet Shipments


"Although media tablet sales were not as high as expected in 1Q11 due to slower consumer demand, overall economic conditions, and supply-chain constraints, we believe... the market will sell close to 53 million units for the year and continue to grow long-term," said Jennifer Song, a research analyst at IDC.


Tablet shipments are tanking, but the future looks bright, according to new data Relevant Products/Services from IDC. The firm is reporting that worldwide media tablet Relevant Products/Services shipments dipped a significant 28 percent in the first quarter of 2011 to 7.2 million units. But the firm has raised its shipment forecast for 2011 to 53.5 million units, up from 50.4 million.

IDC reports demand for tablets may not be quite as strong as media hype suggests, and notes the e-reader market saw a similar seasonal dip. E-reader shipments declined by 3.3 million in the first quarter. However, IDC said, e-readers saw a 105 percent year-over-year growth as the devices continue to grow.

"Like the PC Relevant Products/Services market, media tablets had a bit of a challenging quarter in Q1, as concerns about general macroeconomic issues and the post-holiday letdown took a toll on demand," said Bob O'Donnell, vice president, of Clients and Displays at IDC. "We expect the rest of the year to be much stronger, but we believe vendors who continue to focus on the telco channel for distribution will face serious challenges."

The iPad Relevant Products/Services 2 Effect

Apple recently launched the iPad 2 with strong success, but other tablets have struggled to find a sweet spot among consumers. Still, even Apple's shipments were down in the first quarter -- in fact, shipments were well below expectations. IDC attributes the dip to supply Relevant Products/Services chain hiccups on screens as well as the pre-release announcement of the iPad 2 several weeks before its actual availability.

Meanwhile, mobile Relevant Products/Services phone vendors, like Samsung and Motorola, found moderate success with their telco carriers distribution strategy. Nevertheless, sales were stymied by many consumers' unwillingness to sign up for the 3G/4G data plans that the carriers typically require along with these devices, IDC reported.

On the e-reader front, Barnes & Noble's Color Nook helped the company to take the lead in the e-reader market for the first time. Amazon's Kindle was second, but IDC said the lack of a color offering has clearly impacted the company's previous dominance in the e-rseader market. IDC forecasts the worldwide e-reader market to ship 16.2 million units in 2011, a 24 percent increase over 2010.

"Although media tablet sales were not as high as expected in 1Q11 due to slower consumer demand, overall economic conditions, and supply-chain constraints, we believe with the entrance of competitive new devices in second half of 2011, the market will sell close to 53 million units for the year and continue to grow long-term," said Jennifer Song, a research analyst at IDC.

Up or Down?

But some analysts are questioning the way IDC calculates its forecasts. Actual numbers are not supporting future forecasts, according to Rob Enderle, principal analyst at The Enderle Group.

"This showcases the nature of IDC. IDC is a firm that is funded largely by industry players. This isn't a firm that is funded by buyers. It's funded by sellers. If you sell numbers that show declining forecasts, people won't buy the reports," Enderle said.

"They know that they've got to show rosy forecasts in order to get people to invest in their services and so that's where you get this discord. When you see a dichotomy like this, one where numbers are going up on one hand but actual numbers are dropping on the other, you really do want to start questioning the forecast."

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