Larger Cell Phone Screens Undermining Tablet Sales

28 Apr, 2015 By: Erik Gruenwedel

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The once-hot tablet market continues to cool as cell phone screens get bigger and more versatile, according to new data from The NPD Group.

Growth of tablet activation to wireless carriers is projected to diminish 30% in 2015 and 10% in 2016, compared with 90% growth in 2014.

Indeed, 233 million tablets shipped in 2014, which was up 8% from 2013, according to research firm IDC. Yet shipments actually declined in the fourth quarter, with sales of Apple iPad and Samsung Galaxy dropping 17.8% and 18.4%, respectively.

“One of the major reasons we expect to see the cellular tablet connection growth slow down over the next couple of years is the cannibalization by larger smartphone screens,” Brad Akyuz, director of connected intelligence at NPD, said ion a statement.

Akyuz said that as demand increases for smartphones boasting screen sizes from 5 inches (i.e. Samsung Galaxy S-6), the value proposition of the tablet diminishes. However, he said cellular connected tablets will still continue to be an important factor in boosting the active connection base for U.S. wireless carriers.

By the end of 2014, there were 18.3 million actively connected tablets in the U.S., a 90% increase from 2013, according to NPD.

That should be good news to Verizon, which is planning to roll out an over-the-top video service this summer targeting mobile users. The company added 621,000 4G smartphones and 820,000 4G tablets to its customer base in the first quarter. 4G devices now constitute approximately 70% of the retail postpaid connections base, up from 49% a year ago. Verizon said growth in 4G device adoption continues to drive increased data and video usage up 54% year over year.

Apple April 27 reported a 40% increase in second-quarter (ended March 28) year-over-year iPhone unit sales to 61.1 million with revenue up almost 55% to $40.2 billion. Meanwhile, iPad unit sales dropped 23% to 12.6 million with revenue down 29% to $5.4 billion.

Regardless, NPD believes new growth opportunities for the carriers will emerge in the wearables space as cellular embedded wearable devices are poised to be widely available by the end of 2016.

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