Tablet Contenders Now Likely to Cannibalize Market Share as Worldwide Demand Tops Off

In a press release dated May 1, 2014, titled Worldwide Tablet Shipments Miss Targets as First Quarter Experiences Single-Digit Growth, According to IDC, IDC reported on worldwide tablet shipments for the first calendar quarter of 2014. The title mentions the quarter as a miss, but the forecast is not included in the summary. Year over year growth amounted to just 3.9%.

Microsoft® was no where to be found in the results published in the release, although the “Others” category, which is reported to have grown 11.5%, year over year, certainly includes any/all tablets running Windows 8.1, etc. Samsung was noted as growing its share of the world wide market, year over year, by 32%. Apple shipments were reported as declining, over the same period, by 16.1%.

These statistics lead me to assume markets will likely see vendors intensify competition with what I refer to as “cannibalization” strategies. These efforts can include generous trade in offers, either directly from competitors, or through sales channels (with, I would assume, competitors providing some incentive to channel partners to help pay for the effort). In fact, a visit to BestBuy’s web site on Saturday, May 3, 2014 revealed just such an offer.

As far as the likely impact of worldwide tablet markets hitting a plateau, at least for presently available technologies, on prominent contenders (Microsoft, Apple, Samsung, Google, other Android OEMs), I think it is likely Apple will have to report on some of this sales “pain”, while Microsoft may, as has been rumored, make some move towards the exit on the Surface product line. In contrast, Samsung’s substantial sales growth for these devices, year over year, may amount to good news for their bottom line, and perhaps, provide them with an incentive to proceed further in the direction of implementing their own O/S, or apps, etc.

Behind the scenes, for chip manufacturers, these results may amount to a sober wake up call. One of these, NVIDIA®, has already demonstrated substantial interest in other markets, including automobiles, and even serving graphics consumers with cloud-delivered GPU power.

But it is premature to render a definitive opinion on the impact on Intel® and its widely publicized mobile “catch up” effort. The Samsung Galaxy Tab 3 is powered by the Atom Processor. Microsoft, HP, Lenovo, Dell and Asus are all Intel OEMs, so the results may actually amount to good news for Intel. It will be interesting to read any news Intel may publish directly on its calendar 2014 performance in the Mobile market.

Consumers will likely benefit from the intensified competition. So, if you’re like me, contemplating a purchase of a new tablet, you may want to wait as these results will almost certainly produce some very attractive offers at a lower cost.

Disclaimer: I’m long Microsoft, NVIDIA and Intel, and have no present position in Apple, or Samsung. I am not affiliated with IDC. Finally, I have no substantive information beyond what’s included in IDC’s Press Release to support any of the claims made in this post

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

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