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Why Tablet Market Growth Collapsed and What Will Start It Up Again: Price. ~Hendry Blodget


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Henry Blodget writes:

Analysts have several theories for why growth in this recently ballistic market has suddenly tanked. They cite "increased penetration rates," "high price points," and "lack of innovation," for example.

And all those factors are indeed likely contributing.

But here's what I think is the real reason tablet growth has cratered:

Tablets do not yet solve a pressing need that is not already solved by a laptop or smartphone.

Put differently, there's no clear reason yet to own two or three expensive personal-computing devices. You can accomplish just about everything by owning one or two. Some people can get by with only a smartphone, especially now that smartphone screens are much larger than they used to be. (And if people have to own only one device, that's what they're going to own—a smartphone.) Others need two devices. For some people, the best two-gadget combination will be a smartphone and tablet. For others, a smartphone and laptop or desktop. Unless you're an Apple fanatic, you're not going to need to own and carry all three gadgets everywhere. And you're also not going to heavily use all three at home.

What would change this?

Price.

If the price is low enough, there's no reason not to have a couple of extra gadgets hanging around the house, even if they aren't "primary" devices or they don't get used all that much. The reason Android tablets are now outselling Apple iPads is almost certainly that Android-based tablets are available at much more reasonable prices. 

Drop the price of a tablet below $100 and growth will pick up again.

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