Between the iPad and its rivals, the tablet computer has become one of the most successful consumer electronic products ever. Apple (AAPL) has sold more than 210 million iPads since the device’s 2010 debut, about double the rate of iPhone sales in its first four years. The boom has helped the electronics industry make up for the drop in sales of desktop and laptop PCs. Suddenly, though, the market is slowing down.
Apple reported that iPad sales dropped by one-sixth last quarter from the same period a year earlier, and Microsoft (MSFT) said revenue from its Surface tablet, not robust to begin with, dropped about 40 percent after the holiday season.Amazon.com (AMZN) doesn’t break out sales, but according to researcher Gartner, it hasn’t moved up the market-share charts. Global tablet sales rose 19 percent in the first quarter, propelled by purchases of cheap models in emerging markets, but that’s paltry compared with growth of 83 percent during the same period last year and more than 100 percent during that period in 2012 and 2011, according to researcher Strategy Analytics.
The tablet’s early success has resulted in unrealistic expectations for the long term, says Horace Dediu, the founder of research and consulting firm Asymco. He’s surprised growth is slowing, because only about 40 percent of the U.S. market currently owns a tablet. For hot consumer electronics of previous generations, like color TVs and microwaves, this kind of decline in sales growth doesn’t usually happen until at least half the market has the product, he says. Tablets, Dediu adds, may ultimately prove to be more like game consoles: a large, valuable market that nonetheless cannot match the ubiquity of mobile phones. “It’s a very compelling product,” he says, “but isn’t of the same utility as a phone.”
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