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Apple-Samsung Tablet Tussle Upends E-Readers for Holidays

Photographer: Andrew Harrer/Bloomberg

The past few years’ promotions and sales were focused on notebooks and this year has been all about the new iPad. Close

The past few years’ promotions and sales were focused on notebooks and this year has... Read More

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Photographer: Andrew Harrer/Bloomberg

The past few years’ promotions and sales were focused on notebooks and this year has been all about the new iPad.

Diana Dawson has over the years bought her twin children digital cameras, e-book readers and media players as Christmas presents. This holiday season, she’s covering those bases with one device: a tablet computer.

“They do it all,” Dawson said outside an Apple Inc. (AAPL) store in Walnut Creek, California, after buying iPads for her now 27-year-old daughters.

Dawson’s purchasing underscores the changes roiling the consumer-electronics market. While the industry once benefited from year-end sales in categories from cameras to printers to desktop personal computers, this holiday period brings the clearest signs yet that shoppers are focusing on fewer gadgets. Tablets and smartphones are now the Swiss Army knives of technology, tackling an array of tasks once performed by multiple gizmos.

The winnowing raises the stakes in the rivalry between iPad maker Apple; Samsung Electronics Co. (005930), which produces the Galaxy line of devices; and Amazon.com Inc. (AMZN), with its Kindle Fire tablets. Consumer polls by research firm Parks Associates show that iPads are the most sought-after gadget gift for the second straight holiday season, compared with televisions and laptops in previous years.

Photographer: David Paul Morris/Bloomberg

Two women look at their Apple Inc. iPads inside the company's store in Hong Kong. Consumer polls by research firm Parks Associates show that iPads are the most sought-after gadget gift for the second straight holiday season, compared with televisions and laptops in previous years. Close

Two women look at their Apple Inc. iPads inside the company's store in Hong Kong.... Read More

Close
Open
Photographer: David Paul Morris/Bloomberg

Two women look at their Apple Inc. iPads inside the company's store in Hong Kong. Consumer polls by research firm Parks Associates show that iPads are the most sought-after gadget gift for the second straight holiday season, compared with televisions and laptops in previous years.

In total, tablet shipments are on pace to rise more than 54 percent this year to 221.3 million units, from virtually nothing in 2010, according to IDC. The Consumer Electronics Association projects 19 percent of the $33.2 billion anticipated to be spent on technology during the holiday season will go toward tablets.

Taking Advantage

Retailers are capitalizing on the shift. Wal-Mart Stores Inc. (WMT), the world’s largest retailer, said it sold more than 1.4 million tablets on Thanksgiving night alone. Target Corp. (TGT) said it is focused on promotions around tablets this year, instead of laptops as in previous holiday periods.

“The past few years’ promotions and sales were focused on notebooks and this year has been all about the new iPad Air and iPad mini devices and Samsung tablets,” said John Butcher, vice president of electronics at Target.

By contrast, sales of PCs, digital cameras and e-readers are all projected to fall, according to IDC and Gartner Inc. Shipments of PCs to consumers alone are anticipated to drop almost 15 percent this year, said IDC. That is set to pinch the results of PC makers and other electronics manufacturers such as Hewlett-Packard Co. (HPQ), Dell Inc. and Canon Inc., which typically got sales boosts in the end-of-year shopping period.

TVs, Consoles

Apart from tablets and smartphones, flat-screen televisions and video-game consoles -- especially new consoles from Sony Corp. and Microsoft Corp. -- remain popular among big-ticket items. And technology companies aren’t giving up on traditional PCs.

David Bent, a vice president in Lenovo Group Ltd. (992)’s consumer group, said that while tablets are “clearly where customers are putting their dollars,” it would be foolish to ignore shoppers looking for more feature-rich machines. Lenovo’s Yoga, which combines features of a laptop such as a keyboard and folds over to become a touch-screen tablet, has seen sales double from last year’s holiday, he said.

Yet the swing toward tablets is unmistakable, technology executives said.

“In the old days, they were very specific and very segmented -- a video-game player was a video-game player,” said John Barbour, chief executive officer at LeapFrog Enterprises Inc. (LF), an Emeryville, California-based company that makes tablets for children. “These devices do multiple tasks.”

‘IPad Christmas’

Trudy Muller, a spokeswoman for Apple, referred to comments made in October by CEO Tim Cook, who said “it’s going to be an iPad Christmas.”

Adam Yates, a spokesman for Samsung, declined to comment. Amazon referred to a statement from Dec. 4, in which the Seattle-based company said Kindle Fires were the “best-selling items on Amazon.com.”

Michael Thacker, a spokesman for Hewlett-Packard, said the Palo Alto, California-based company is adapting to the mobile shift by debuting its own tablets and devices that combine laptop and tablet features. The company is experiencing good traction with its consumer tablets, he said.

For consumers, the focus on tablets and smartphones comes at an opportune time. Intense competition within the mobile category has spurred introductions of new machines with beefed-up features at lower prices.

Apple in October unveiled the iPad Air, which is lighter than previous models, as well as a new iPad mini that sports a high-definition screen. Amazon and Google Inc. (GOOG) have improved the screen quality of their tablets, while Samsung in September debuted a 10.1-inch Note tablet with a stylus for writing. Scores of lower-cost models also have been introduced.

Just $49

While Apple’s tablets start at $299 for last year’s iPad mini, Best Buy Co. offers tablets starting at about $60.

“I’ve seen them down as low as $49,” said Tim Bajarin, an analyst with Creative Strategies, a technology-industry research and consulting firm.

Even so, market-research data suggests tablet growth may slow in the years ahead as the devices saturate the market. Tablet shipments will grow 22 percent to 270.5 million units in 2014, according to IDC, and will climb less than 10 percent by 2017.

For now, tablet purchases are increasingly being condensed around the holiday season, mirroring sales patterns of a television rather than a smartphone where a service contract influences when a new model is purchased, said Stephen Baker, an analyst with NPD Group Inc.

The stiff competition and slowing market are going to lead to an eventual industry shakeout, said LeapFrog’s Barbour.

“I think there are many tablets that are on the shelf right now that you won’t see next year,” he said.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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