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IDC: Tablets Will Continue To Outpace eReaders in 2012

Tablet shipments will hit around 80 million next year, with eReaders growing to just around 18.5 million.

Though eReader purchases have continued to grow faster than tablets for the time being, it seems the trend won’t last too long, according to Bob O’Donnell, IDC vice president for clients and displays. In a telephone interview Tuesday O’Donnell predicted, based on quarterly shipment data collected by IDC from around the world, that tablets will outpace eReaders by larger margins.
The vice president says that current IDC numbers available suggest that worldwide eReader unit shipments will hit 18.5 million in 2012, compared with an estimated 16.2 million units for 2011, while tablet shipments will increase to about 80 million next year, up from a predicted 53.5 million for 2011.
In total, according to IDC, there were about 17.9 million media tablet shipments into sales channels worldwide last year.
O’Donnell says that normally newer products, like tablet devices, see a consistent growth year to year, like walking “a straight ramp upwards, at least for a few years, and then it falls into seasonal trends where it goes down in Q1 and Q2, then starts to grow in Q3 and peaks in Q4,” and so on.
Yet, he points out, in the first year of tablet existence these products already showed some seasonality, with sales dropping from Q4 to Q1 and numbers overall turned out to be below the expected forecast.
“In Q4 there were a lot of sales of media tablets and lots of gift giving of media tablets,” he says. “It wasn’t a shock but we were surprised to see its seasonality already, with a lot of other product categories it takes about two years before we’d see that and not in the first year. But it also reflects the fact there was a heck of a lot of sales of media tablets in that first year so you can interpret it a number of ways.”
There was a 28 percent dip on tablet shipments into sales channels for the first quarter of 2011, averaging 7.2 million units worldwide. EReaders also saw a sequential decline for Q1, according to a news release from IDC, to about 3.3 million units, with the post-holiday season proving to be harsher. While eReader numbers did see that decline they enjoyed a 105 percent year-over-year growth.
When asked why there would be such a large gain for media tablets between 2010 and 2012—an increase of 63 million—O’Donnell says it may be attributed to public perception.
“Tablet devices have captured the imagination of consumers in the U.S. in particular but around the world as well,” he says. “They give you additional flexibility and access to content, information and services that people’s lives are increasingly more and more dependent on.”
The State of eReaders
The affordability of eReaders, which run around $200, is likely the reason for the device's success, O’Donnell said.
“The color NOOK, which was a popular product, we saw that introduced late last year, Q1 was the first full quarter where it was available, and people clearly showed a strong interest in the color NOOK, that’s what helped Barnes and Noble overtake Amazon,” he says. 
EReading device shipments are predicted to increase by 24 percent this year and while the color devices seem to be more popular, O’Donnell doesn’t see them completely overtaking the eReading avenue.
“A lot of people that are buying eReaders want them for magazines,” he says. “Obviously for magazines people want to have a color screen experience to see the photos of magazines, and everything else. We think that color eReaders will grow as percentage of all eReaders. For people who read novels, quite honestly, the black and white eInk type displays are a better solution—they’re easier on your eyes and you can read them in more environments (like outside). So I think we will continue to see both products, but we expect to see a lot more color eBooks as well.”
As eReaders become more sophisticated, and more bring color to the screen, O’Donnell says added competition for media tablets could resurface.
“It’s harder and harder for us to define what the difference between these devices are,” he says. “It was easy when eReaders had a black and white screen, that was very simple. That rule has already fallen down by the waist side and there’s now a good portion of sales of the color NOOK in Q1 and we guess that in Q2 it will be significantly larger. [In] Q3 is when we expect to see Amazon introduce a product with lots of focus as a color eReader, partially because they’re positioned as a somewhat lower cost alternative to an iPad. The cheapest iPad is $500, an eReader is half that price. That opens up a lot of possibilities because there are a lot of people that won’t spend $500 on an iPad, they cant afford to spend $500 but they’ll spend $250 on something like a color NOOK or whatever Amazon comes up with."
O’Donnell also pointed out that devices like the NOOK color are already becoming more sophisticated—he compared it to a small sized Android tablet.
When asked what these numbers could mean for the magazine industry, O’Donnell says that strategy for publishers will lie in practice.
“A lot of this boils down to business models more than anything else,” he tells AD. “In the old days, you put out a magazine, you distributed it to newsstands and that was it. Nowadays, distribution is a very different animal. The challenge is: can magazines figure it out? People want to read magazines, there’s never a question of that. The question is can you figure out the right business model to enable magazines to make money sufficiently—how many ads are people willing to live with in magazines? What sorts of formats do those ads need to be in? What sort of subscription level price points do people need to accept? Those are the big questions, they’re really all about business model and philosophy.”
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