Apple IPad Under Threat as Larger Phones Seen Gaining Favor
Tablets like the iPad are losing favor with consumers who are opting instead for smartphones with larger screens, putting pressure on Apple Inc. (AAPL) to cater to changing tastes.
Research firm IDC lowered its 2014 forecast for tablet shipments today, saying they’ll climb 12 percent to 245.4 million units worldwide. That’s down from an earlier forecast of 260.9 million, and it compares with a growth rate of 52 percent last year.
Some gadget users are concluding that with a bigger phone, they don’t need the extra burden of carrying a tablet too. Phones like Samsung Electronics Co.’s Galaxy Note 3, which sports a 5.7-inch (14.5-centimeter) screen, provide more space for watching videos and reading books, helping them compete with smaller tablets like Apple’s 7.9-inch iPad mini.
Larger smartphones, which IDC calls “phablets” since they combine features of phone and tablets, represented 10.5 percent of smartphone sales in the first quarter, up from 4.3 percent a year earlier, the Framingham, Massachusetts-based research firm said.
Apple is working to catch up with the trend, developing new iPhone designs that have larger screens with curved glass, a person familiar with the plans said in November.
The iPhone and the iPad together represent about three-quarters of Apple’s total revenue, making it crucial for the Cupertino, California-based company to stay on top of consumers’ preferences. IPad sales volume dropped 16 percent last quarter from a year earlier, the steepest drop on record.
While Apple’s gadgets use a proprietary operating system, called iOS, Samsung and other device makers rely on Google Inc.’s Android platform. By letting a wide variety of manufacturers use Android, Google can encourage more experimentation with different designs than Apple can produce on its own, producing successes like the Galaxy Note -- and plenty of failures.
Android phones, ranging from Samsung’s high-end models to cheap devices from little-known brands, will make up 80.2 percent of global shipments this year, IDC said yesterday. That compares with 14.8 percent for Apple’s iOS platform.
To reignite growth, Apple Chief Executive Officer Tim Cook is seeking to expand beyond the company’s most iconic devices, announcing an agreement yesterday to acquire Beats Electronics LLC for $3 billion. The deal gives Apple a popular line of headphones and a nascent music-streaming service.