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Tablet demand slows in wake of larger phones, cheaper notebooks

Regardless, shipments of larger-screened tablets will rise over the next several years, says market researcher NPD DisplaySearch.

Tablet demand is slowing, says research firm NPD. James Martin/CNET

Tablets just aren't as hot as they used to be, according to a report released Tuesday by NPD DisplaySearch.

Demand for tablets is slowing around the world, said the research firm, with shipments forecast to inch up only 2 percent in 2014 compared with 2013. The industry will ship 254 million tablets this year, a decline of 14 percent from NPD's previous estimate for 2014.

Further, growth will continue to remain in the single digits through 2018, with demand largely driven by people replacing their existing tablets.

NPD blamed much of the slowdown on the increasing overlap among screen sizes for tablets, notebooks, and smartphones. Shipments of 7-inch to 7.9-inch tablets will be cannibalized to some degree by smartphones and phablets with display sizes of 5.5 inches and higher. Among all tablets, the unit share held by devices in the 7-inch to 7.9-inch range is expected to fall from 55 percent this year to 35 percent in 2018.

"Leading brands are changing their business plans, because the rapid growth that tablet PC demand has experienced over the past several years is ending," Hisakazu Torii, vice president of smart application research at NPD DisplaySearch, said in a statement, "We can expect to see more competitive overlap among display sizes for tablet PCs, notebook PCs, and smartphones, as Apple has announced its new iPhone 6 Plus, with an increased screen size of 5.5 inches."

Other research firms have been predicting a downturn in tablet sales. In a report released in May, IDC lowered its tablet sales estimate for 2014 to 245.4 million units, down from 260.9 million previously. In cutting its forecast, the firm cited two factors: competition from big-screened phones and consumers hanging onto their existing tablets much longer.

To better compete against phablets, the tablet industry will increasingly introduce larger sized tablets, Torii said, pointing to Microsoft's latest 12-inch-screened Surface Pro 3 tablets. The average tablet screen size will increase from 8 inches this year to 9 inches in 2018, as demand for larger tablets eventually surpasses that for their smaller counterparts.

Shipments of tablets outfitted with screens 11 inches and larger will grow from 2 percent this year to 14 percent in 2018. But such tablets will gear up to compete directly with notebooks equipped with screen sizes up to 13 inches, NPD said.

NPD's tablet shipment forecast. NPD DisplaySearch

Meanwhile, the global notebook market is expected to start a recovery this year, according to NPD. The recovery will be due to several factors, including continued PC refresh cycles, ongoing migrations from Windows XP, and the rise in lower-priced Windows notebooks and Chromebooks. But the recovery may not last long, and demand for notebooks will hinge in part on how consumers take to Windows 9.

"The decline in notebook PC demand is expected to level off in 2016, with flat or slow growth thereafter," Torii noted. "Consumer acceptance of the Windows 9 user interface will be the key to continued notebook PC demand growth."