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The Tablet Market Continues to See Weakening Demand

October 7, 2015 - Written By Fernando Bonilla

The current outlook for the tablet market doesn’t seem to be looking up. Weakening interest in tablets have hurt integrated circuit (IC) manufacturers, who are increasingly allowing their tablet-IC businesses to fade away.

Phablets, smartphones with uniquely large displays, have recently gained more traction as mainstream consumers pick them up. Although this might please smartphone makers like Samsung, who this year released an update to its Galaxy Note phablet line, tablet manufacturers are seeing a drop in demand as a result. Digitimes, citing Taiwan-based IC design houses, estimates the global tablet market will drop a significant 10-20% next year.

Android OS, predicted to run on 160 million tablets sold this year, is not exempt from the market’s decline. 2016 estimates place a dwindling figure of 120 to 130 million tablets. There are few signs the market might improve anytime soon. Additionally, tablet-IC manufacturers are involved in severe pricing wars, only exacerbated by shrinking demand. Some chip makers have dropped the tablet-IC market entirely, blaming progressively smaller profits.

Despite the slackening desire for tablets, the market isn’t short of yearly model updates and new entries. However, along with traditional tablets like Apple’s new iPad and Samsung’s Tab S2, manufacturers are increasingly interested in unconventional designs. Microsoft’s Surface line debuted the all-new Surface Pro 4 yesterday, expanding on their claim that the Surface can replace your laptop. Google follows Microsoft’s lead with a similar tablet PC form factor in the Android-running Pixel C, announced last week. Apple too played its hand with the iPad Pro, a comparable product running iOS. If anything, the growing number of tablets looking to challenge the market’s perception of mobile computing illustrates a parallel interest in reversing the tablet’s underperforming sales.

Remarkably, Taiwan-based chip maker MediaTek is actually reporting growth for its tablet segment. 45 million of its chips are expected to ship this year. Their success is something all manufacturers involved with tablets are seeking to replicate. Consumers may simply be adjusting to the lack of a need for larger screens, now that smartphones have increased in size. There are also reports that tablet users are waiting to upgrade their devices for much longer than they upgrade their smartphones. As modern tablets are capable of handling virtually any task one might require of them for years to come, consumers may not find a reason to need a new one.