Apple CEO Tim Cook introduces the new iPad Pro during an Apple media event in San Francisco, California, September 9, 2015. Reuters/Beck Diefenbach - RTSCOY
Photograph by Beck Diefenbach — Reuters

It may just be what the tablet market needs.

By Don Reisinger
November 10, 2015

Apple’s iPad Pro is launching on Wednesday, and it may just be what the tablet market needs to stage a much-needed turnaround.

The tablet market is in free fall. Research firm IDC reported in October that during the third quarter, total tablet shipments fell 12.6% year-over-year to 48.7 million units. Market leaders Apple AAPL and Samsung SSNLF saw shipments fall 19.7% and 17.1%, respectively. If not for two-in-one hybrids, or devices that come with a detachable keyboard so they may be used as a tablet or notebook, things would have been even worse for the market.

The troubles facing the tablet market are numerous. One of the main issues, IDC reported, was that consumers were increasingly turning to large-screen smartphones, or “phablets,” rather than small-screen tablets, causing a significant slowdown in that end of the market. Meanwhile, owners are now holding onto their tablets for much longer, leading to a meaningful decline in the pace at which consumers are buying new tablets.

“We continue to get feedback that tablet users are holding onto devices upwards of four years,” Ryan Reith, program director for IDC’s Worldwide Quarterly Mobile Device Trackers, said in a statement.

Still, the market is pressing on, and aside from growth in hybrids, there’s a renewed sense that large-screen tablets may be the ticket to success. In just the last couple of months, three of the world’s largest technology companies have unveiled large-screen tablets. Apple’s iPad Pro comes with a 12.9-inch screen, while Samsung’s recently unveiled Galaxy View features an 18.4-inch display. Microsoft’s MSFT latest tablet, the Surface Pro 4, comes with a 12.3-inch screen.

Those devices indicate that some of the world’s top tech companies believe big-screen tablets—which are often viewed as having screen sizes of 12 inches or larger—will “help the tablet market,” Jean Philippe Bouchard, research director at IDC, says. He added that IDC, which tracks the market each quarter, believes big-screen slates may be critical to a market turnaround.

“Companies are going big because demand is stronger, it is less cut-throat in terms of average selling price (for the moment) and margins are better,” Bouchard says. “It’s also a way to take a chunk of the aging portable PC installed base.”

J.P. Gownder, vice president and principal analyst at Forrester Research, agrees that devices like Apple’s iPad Pro will help the tablet market, but he argues that the benefit they’ll bring won’t be in unit sales, but rather marketwide revenue growth.

“Large-screen tablets will definitely help the tablet market, but we have to put things into context: Big, expensive devices like iPad Pro or Surface Pro 4 will do well, but they won’t generate the volume that small, cheap tablets did at their peak,” he says. “So we have to stop measuring the market just by volume: An iPad Pro and a $99 Android 7-inch tablet simply aren’t part of the same market, and shouldn’t really be thought of as such.”

There’s also a benefit for vendors. According to both Bouchard and Gownder, companies have much higher margins on large-screen tablets. They’re typically priced at substantially more than their smaller-screen counterparts but don’t have the same leap in cost. For companies like Apple and Samsung, therefore, offering a large-screen tablet may not result in more unit sales, but a popular big-screen slate could generate far more revenue and boost profits, thanks to higher per-unit profit compared to their smaller (and cheaper) counterparts.

“Small screen tablets are currently perceived as ultra-low-cost devices and ultra-competitive with low margins and return,” Bouchard says. “It’s basically a volume game or in Amazon’s case, a play to increase other revenues such as Prime or ads.”

“Big screen tablets are the way to go,” he added, pointing to higher per-unit margins.

While neither Gownder nor Bouchard could say if the devices will do enough to end the tablet market’s free fall—few, if any, after all, could have predicted its current troubles—the researchers believe that big-screen tablets will start to eat into smaller notebook sales as several types of customers enter the market for large-screen slates.

“Large-screen tablets will appeal to prosumers (who mix business with pleasure), hyper-mobile workers (who can now access a great deal more content and many more apps on the go), students, and millennials,” Gownder says. “By tapping into productivity as well as the consumption of media (like Netflix NFLX ), these devices offer a hyper-mobile option for on-the-go computing.”

Gownder added that larger tablets will also appeal to corporate customers. In 2010, just 6% of all tablet purchases were made by businesses, Forrester research shows. That figure will jump to 20% by 2020, thanks to big-screen tablets.

Ultimately, Bouchard says, the trend seems to be heading in the right direction. After years of trouble for the tablet market and the companies that make them, the confluence of big screens and healthy demand (along with a nice dose of hype) could lead the device type out of its dark ages.

“[Customers are] looking for something else, essentially something they can be productive on,” Bouchard says. “There’s also a bigger hype at the moment for larger screens.”

In other words, bring on the iPad Pro. The market is ready.

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