Strategy Analytics: Tablet market share is expected to fall below 75% in 2020

Strategy Analytics' Tablet and Touchscreen Strategies (TTS) service's latest research report, "Tablet Shipments, Market Stock and Penetration Forecasts by Country 2010-2020: Q4 2016 Update", points out that as tablets become cost-effective computing devices for entertainment and productivity, the tablet market is showing signs of improvement after two years of decline. Tablet shipments are expected to fall by only 1% year-on-year in 2017, and then the tablet market will grow moderately as demand for 2-in-1, Windows tablets and enterprise sales rebounds.

Peter King, Director of Strategy Analytics’ Tablet and Touchscreen Strategies service, said, “In the second half of 2016, we saw reasonable price drops for 2-in-1 tablets and high-end tablets, which are alternatives to PCs in developing markets, and this began to have an impact on consumer demand. Apple and other manufacturers have responded with corresponding products and business is beginning to show signs of recovery.”

Eric Smith, Senior Analyst, Tablet and Touchscreen Strategies Service at Strategy Analytics, added, “Windows 10 has given vendors the ability to reposition tablets against PCs, giving consumers the flexibility to perform most of their daily activities on a 2-in-1 device. For prosumer and enterprise users, tablet processors have become incredibly powerful, allowing high-end tablets to compete head-to-head with many traditional computers. Android tablets will continue to have an important role in the market for low-cost entertainment devices; but unless Android can transition to multitasking capabilities, it will continue to lose market share to Windows and iOS devices.” 

Figure 1: 2-in-1, Windows tablets and enterprise development lead the tablet market recovery

Chart 2: Strategy Analytics breaks down the tablet market into three main specifications

2-in-1/professional tablets will grow at a CAGR of 16% from 2016 to 2020, and prices will fall to more reasonable levels. Surface Pro and iPad Pro have shown how tablets can perform as well as computers, but many consumers do not need such high configurations for daily tasks, and most consumers cannot afford such high prices. Low-priced 2-in-1 tablets have been on the market for many years, with a market share of 8% in 2016. We expect prices of professional tablets to fall in the next few years, further driving market penetration.

Windows tablets will grow at a CAGR of 9% between 2016 and 2020, while Android will decline by 1% over the same period. iOS tablet shipments will remain stable and show signs of improving in the next few years as Apple's push into selling iPads to enterprises begins to pay off and consumers replace old iPads due to hardware and software innovations. Even though the latest version of Android (Nougat/7.0) has the ability to run multiple windows, it will take a long time for it to penetrate the extremely fragmented Android stock market and gain consumer acceptance, so Android will not be competitive with efficient iOS and Windows tablets. Until Android and Chrome fully converge, we believe Android tablets will remain an entertainment-focused platform - even if the growth outlook stagnates, Android tablet market share will still reach 57% in 2020. Amazon is the best example among Android vendors - it is able to generate growing revenue from software and services in the Amazon ecosystem after the device is sold, thereby profiting from the high demand for low-priced entertainment tablets.

In the non-consumer market segment, tablets will grow at a CAGR of 9% from 2016 to 2020, reflecting the importance of mobility in the enterprise. Driven by personal tablet use within the enterprise, enterprises will continue to improve their line-of-business applications and processes, set the touch model, and increase investment and deployment. As Microsoft shifts its PC OS business to more mobile product form factors and technologies, Microsoft Surface Pro tablets and Windows 10 products from other leading mobile-focused vendors and PC vendors will drive more commercial tablet shipments. iPad Pro will also drive commercial tablet shipments as enterprises begin to equip traveling employees with larger, more powerful iPad Pros as PC replacements.