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IDC says that growth is slowing in the tablet market

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May 2, 2014

The meteoric rise in tablet sales could be tapering off a bit as analysts at IDC saw quarterly shipments fall short of previous sales forecasts.

The research firm estimates that while the market maintained positive growth over the same period last year, a number of top vendors did see their shipment volumes and market shares take a hit over last year's previous levels.

Among the hardest hit was Apple. But the company had previously warned of a drop in sales from its iPad line as shipments were down from last year's quarter.

According to IDC, the drop of 3.1 million units, to 16.4 million total, dragged Apple's total market share from 40.2 percent to 32.5 percent of all tablet shipments.

Overall, Samsung had no such worries though. The South Korean consumer electronics behemoth logged a 32 percent year over year increase on the back of 11.2 million shipments.

The company's 22.3 percent share, up from 17.5 percent in 2013, was good enough for second in the market behind Apple.

Lenovo also saw a jump in market as the company moved 2.1 million units, an increase of 224.3 percent over last year's first quarter tally.

Lenovo remains fourth overall behind Asus, which saw a 2.8 percent drop in shipments but still holds a 5 percent market share, compared to Lenovo's 4.1 percent share.

The biggest hit in market share for the quarter was felt by Amazon. IDC said the Kindle maker saw a 47.1 percent decline in its shipments, delivering just 1 million tablets last quarter and claiming a meager 1.9 percent of the market, according to IDC.

The lower tablet numbers could suggest the end is approaching for the boom in tablets. After years of soaring sales, analysts believe that the market may be settling a bit and leveling off, particularly in more developed markets.

"The rise of large-screen phones and consumers who are holding on to their existing tablets for ever longer periods of time were both contributing factors to a weaker-than-anticipated quarter for tablets and 2-in-1s," noted IDC devices and displays program vice persident Tom Mainelli.

"Additionally, commercial growth has not been robust enough to offset the slowing of consumer shipments," IDC was quick to point out.

That slowdown may also come as a welcome bit of news for PC vendors who have consistently watched their market eroded quarter after quarter as more end users opted to trade in their notebooks and desktops for tablet systems.

A recent uptick in shipments thanks to the end of Windows XP was not enough to bring the market as a whole into the black, but still gave vendors reason to hope that the worst of the decline may be over.

In other mobile news

There's a whole lot more to Google Fiber than what most people think, and lately the company has been much in the news when the words Fiber Optics are mentioned, especially in Texas, where gaming enthusiasts are frustrated by the poor performance of a slow internet connection.

And here's what we mean by this: right in the middle of an online match, gamer's sessions often freeze up, leaving avatars unable to move or shoot.

At other times, the game would pause or the buffer wouldn't finish to upload itself, or opponents would suddenly pop up unexpectedly in another location as the game lurched forward in real time.

But now, gamers in Austin Texas are among the first to sign-up online for Google Fiber when it was announced in April of last year. However, those gamers now got a call from AT&T with an offer for its new GigaPower service. Even though the 1 Gbps service wasn't yet available, AT&T offered them 300 Mbps-- more than 15 times the speed they were paying for.

The cost of that service would drop from $208 a month to $120. When AT&T finishes upgrading the electronics on the network later this year, gamers expect to see a 50-fold improvement.

With network speeds this fast, gamers will be able to stream without buffering at least five high-definition videos at the same time and still have enough to play games and surf the Web.

Call it the Google Fiber effect. Google makes a splashy announcement that it intends to build a super high-speed network in a city. Competition follows, which translates into higher-speed services and lower prices for all consumers.

"When you say to a community, 'Who wants fiber and a chance to have the most advanced network in the country and possibly the world?' you get a whole lot of hands going up," says Blair Levin, executive director for Gig.U project.

A year after Google unveiled its initial plans in Austin, investments in gigabit fiber networks are being announced across the country. Incumbent Internet providers like AT&T and new entrants alike are taking elements of the Google Fiber playbook and applying them to their own deployments as they try to stay ahead of Google.

AT&T last week said it was talking to 21 major metropolitan areas about an expansion of its U-verse service with GigaPower fiber service. Others, such as regional wireless operator C-Spire, which is using the Google Fiber business plan to build a fiber broadband network in Mississippi, are creating new lines of business using existing infrastructure.

How Google chooses the cities it deploys fiber to has been and still continues to be a mystery, but the site Tech Republic recently attempted to bring some clarity to Google's selection process.

Within a week of Google's declaration last spring that it planned to build a fiber network in the city of Austin, AT&T, which is based a few hours' drive away in Dallas, announced its own Austin fiber network. And in less than a year's time, AT&T and local cable operator Grande Communications have beaten Google to market with their own ultra-high speed services using newly built fiber networks.

"Google Fiber has been the biggest driver of the fiber-to-the home movement," said Blair Levin, executive director of the Gig.U project and head of the committee that wrote the 2010 National Broadband Plan for the Federal Communications Commission.

Six years ago, the Organization for Economic Co-operation and Development (OECD) ranked the United States as No. 15 out of 30 countries when it came to broadband penetration and speeds.

In 2008, with the U.S. in the midst of a massive recession back then, prospects for investment in new broadband infrastructure looked dismal. But since then, Google Fiber seems to have lit a fire under the feet of the broadband industry.

"In 2009 when we were writing the National Broadband Plan it looked like the US was headed toward a significant under-investment in broadband infrastructure by 2020," Levin said. "Other countries were well ahead of us. But I have to say since Google's announcements, things are a whole lot better than what we had predicted back in 2009."

Google says that it has also noticed an uptick in gigabit projects throughout the US, as broadband providers recognize that people have a "need for speed." "The truth is, people across America want access to faster Internet," said Jenna Wandres, a spokeswoman for Google Fiber.

"There's a growing demand for speed from users who don't want to wait for videos to buffer, and who don't want to fight with their family members for bandwidth. This was really the main reason we decided to build Fiber back in 2009," she added.

Google is still going through Austin's permitting process before it begins its initial fiber deployment. Currently, Kansas City and Provo, Utah are the only cities in which Google Fiber is available.

Earlier this year, the company listed 34 cities in nine metro markets that it was considering for deployment. Austin, a city of about 865,000 people, might be the luckiest city in the country when it comes to Internet access.

The once small college town, which is also home to the Texas state legislature, often makes it onto top 10 lists of best places to live in the US.

This, coupled with the city's thriving technology and arts scene, has made it one of the fastest-growing cities in the country. Whole Foods and Dell are headquartered there, and Apple, Samsung, Facebook, and DropBox are opening offices. SXSW, the popular music and tech festival, also makes its home there.

As a result, residents of Austin are particularly tech-savvy, according to AT&T's executives. Not only did the city have a higher concentration of Apple iPhone users compared to big cities like Chicago or New York when the smartphone was released in 2007, but broadband consumers in Austin often use 15 percent to 20 percent more data than the average AT&T U-verse customer, according to Dave Nichols, AT&T state president of Texas, who is a key lobbyist for the company in Texas.

"Since Google Fiber came on the scene, we've seen a significant shift in how municipalities view network operators," he added.

But Rondella Hawkins, the telecommunications and regulatory affairs officer for the city of Austin, said she had never heard about AT&T's plans before Google's news came out. Hawkins was part of the original committee that put together Austin's application to become the first Google Fiber city. The city ultimately lost out to Kansas City.

"Our application for Google Fiber would have been a good tip-off to the incumbents that we were eager as a community to get fiber built," Hawkins said in an interview. "But we never heard from them. Until Google announced that it was going to deploy a fiber network in Austin, I was unaware of AT&T's plans to roll out gigabit fiber to the home."

But even with such a tech-centric crowd, it's difficult to imagine that three companies-- AT&T, Grande and Google all decided at roughly the same time that this city should be among the first to get ultra high-speed broadband. It's even harder to believe that all three players would decide to offer service that is more than 50 to 100 times faster than what they're currently offering at a cost that's only about $20 to $30 more than their average broadband package.

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This is a huge leap in speed for a very small price increase, considering that AT&T currently offers 6 Mbps DSL service for $35 a month. In markets where it offers its regular U-verse broadband service, AT&T charges $45 a month for 18 Mbps service and $65 for a 45 Mbps service.

While it's clear that Google Fiber is not coming to every community, the pressure is on, nevertheless.

It's not surprising, then, that in every city in AT&T's 22-state footprint where Google is considering deploying fiber, AT&T also plans to bring GigaPower. That's a total of 14 markets, including Austin, the Triangle region of North Carolina, and Atlanta, home to AT&T's mobility division.

While AT&T refuses to acknowledge that its gigabit fiber plans are answering the competitive challenge posed by Google Fiber, others say that Kansas City may have been a wake-up call.

To be fair, Google wasn't the first company to use fiber to deliver high-speed broadband, but it was the first company to offer such high speeds at $70 a month. It was also the first to come up with a business plan that requires participation from the city government and community.

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Source: IDC Market Research.

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