Market for Tablets Is Changing and Declining, But What Does That Mean for Music?
Tablet sales are slowing. The types of tablets sold are changing, too -- and these trends will change how people experience music on mobile devices.
News of the tablet's fall has been everywhere. Apple announced year-over-year iPad unit sales dropped about 9 percent in the second quarter. Tech research firm IDC reported a sequential decline in global tablet shipments in the same quarter. And Best Buy's chief executive officer warned tablet sales are "crashing" at the retail chain (although Best Buy is having its own problems, too).
Is the future of the tablet in trouble? Not exactly, says Ben Bajarin, principal analyst at Creative Strategies. Tablets no longer have the astronomical growth rates that fueled their growth over the past few years, but sales haven't stalled or fallen off a cliff, either. "It's still growing, it's just not growing at the rate it was," he says.
A few years ago, the tablet was on its way to ubiquity. It became a mainstream product far faster than desktop and laptop computers and smartphones. The music industry was excited about the possibilities for immersive experiences and introducing interactive products that would update the album concept for the 21st century. Artists from Lady Gaga to Paul McCartney have released interactive album apps. It was to be the device for serious music lovers.
But expectations have changed as tablets are taking hits from all directions. One factor is the growth of the smartphone. According to PhoneArena.com, the average smartphone screen size has nearly doubled to 4.86" this year from 2.59" in 2007, the same year the first iPhone launched with a 3.5" screen. Today's biggest smartphones are called phablets, a mix of "tablet" and "phone," and are too big to fit into most pockets. With larger screen sizes for viewing video and using apps, consumers have less need for iPad Minis or other small tablets.
The replacement cycle is another factor. The smartphone is the more personal device that's replaced more frequently. The tablet is the more communal device that is replaced less frequently. Bajarin says Creative Strategies has found that over 60 percent of tablet owners share it with other person. "iPad is not essential," says Jeremiah Seraphine, CEO of app developer Groovebug. "The iPhone is essential."
And then there's the growth of smartphones. Music app developer Smule has seen smartphone users go from 43 percent of monthly active users January to 47 percent in July, says CEO Jeff Smith. Put another way, the user numbers of both smartphones and tablet grew over that time, but smartphones grew faster. The mix is changing because there are more new Android owners than iOS owners -- especially in developing countries. Four-year-old Xiaomi, a Chinese manufacturer of Android smartphones, had the world's fifth-largest market share in the second quarter, according to Strategy Analytics.
Why does the device matter? Smith says that Smule's user data reveals tablets offer a more immersive, engaging experience than smartphones. "From a qualitative standpoint, it's a better user experience for our products to run on tablet. We can see that in our data. Users will use our products longer on tablets. They're more likely to return if their first experience is on a tablet versus a phone. There are a lot of things we can do with the screen real estate to make the experience better."
Tablets are especially desirable to entertainment companies because they encourage ecommerce. Monetate, a provider of cloud-based services for online marketing, says during last year's November-December shopping season, the average order value on tablets ($153.44) was far more comparable to desktop computers ($164.13) than mobile phones ($129.42). Not only that, the amount people spent on tablets over that time grew faster compared to mobile phones -- 17.3 to 0.5 percent.
The type of tablet also matters. Smule has found that iPad users spend 10 percent more on Smule apps than owners of other tablets. This finding jibes with available research. According to the same Monetate study, the iPad's average order value outstripped that of Android tablets $155.36 to $109.80 in the fourth quarter.
So what does it matter if tablet growth is slowing and some consumers are content to own only large smartphones? For starters, a smaller screen size means a different experience and less real estate for developers to work with. It means consumers will prefer apps, like Internet radio, that require less mental bandwidth. And it means less time spent with apps on the best device for experiencing music. "We think the iPad still gives the best experience when you have an immersive, lean-forward experience," says Saraphine. "The phone is better for passive experiences."
More time spent on smartphones versus tablets will require music services and app developers to build great experiences in the smartphone's smaller real estate. Today's smartphones are great for viewing videos and listening to Internet radio, but they're not always good for on-demand subscription services that need mobile users to grow. And smartphones are far worse than tablets for media-rich music apps that try to re-imagine the album experience.
In the coming years, consumers won't choose between tablets and smartphones. Instead, they'll move painlessly between devices. Imagine an iPhone owner returning home to smart appliances controlled via an iPad and entertainment on Apple TV. "The future is going to be where devices will almost melt away," predicts Seraphine. "You'll have a user interface you carry around, but when you get to work or home, there will be a lot of different screens."