How many tablets can the market handle?

With so many new devices released in 2012, the industry must find a balance between satisfying demand and over-saturation.

By Benzinga Nov 26, 2012 12:43PM

iPad mini, copyright 2012 Apple IncBy Louis Bedigian, Benzinga Staff Writer

Surface. iPad. Nook HD. Kindle Fire HD. iPad Mini. The list goes on and on. Consumers can try to escape the onslaught of new tablets, but they are inescapable.

Apple (AAPL), Sony (SNE), Samsung, Asus, Acer, Dell (DELL), Hewlett-Packard (HPQ), and Barnes & Noble (BKS) are among the many companies that have developed at least one tablet. Some of these companies are attempting to expand the market with the so-called tablet hybrids, which take advantage of Windows 8.

Microsoft (MSFT) released its first tablet, Surface, on Oct. 26. In the days after its arrival, the rumor mill began to churn out new reports of an Xbox tablet. This device would be geared toward the gaming market, which has already provided Microsoft with hundreds of millions of dollars in annual revenue. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

In 2013, all of the existing tablet makers are expected to upgrade and re-release these devices. This will lead to a fifth-generation iPad, a second-generation iPad Mini, a third-generation Kindle Fire, and so on. If that were the extent of tablet releases, consumers might be able to handle them. But these upgrades do not even include the possibility of new devices, which are sure to appear. Microsoft is not the only one trying something different. The next 12 months are likely to bring a wide array of new tablets from a large number of manufacturers.

Stroll the aisles of any Best Buy (BBY) to get a glimpse of the many tablets that have been produced in 2012. They are not all from big-name manufacturers.

From 2010 to 2012, the number of tablet producers has greatly multiplied. Now Google (GOOG) is getting into the mix, albeit with a little help from Asus and Samsung. In 2010, Amazon (AMZN) was not making tablets. Barnes & Noble was not either. But they are now -- and they likely will be for many years to come.

If the global market was large enough, this might be a positive development. The industry, however, is quickly approaching the point of over-saturation. Apple has already sold 100 million tablets. Between the various Android tablets available, it is safe to assume that there are another 30 to 40 million on the market. How many more tablets can these companies realistically expect to sell?

Tablets differ from smartphones in that they are not throwaway devices. Consumers do not buy them with the intent of acquiring a new tablet in 12 to 24 months. Granted, there are some consumers who happily upgrade every time a new iPad is released, regardless of the associated expense. But if tablets need to be replaced frequently, consumers are likely to stop buying them.

Right now it appears that there definitely are too many similar tablets on the market. Microsoft might be smart to develop one for gamers, since that market has yet to be completely fulfilled. But there are only so many differences that can be applied to a device that is supposed to do everything.

Thus far, Apple, Google, Amazon and Samsung are the only four companies that have had genuine success in the tablet space. In 2010 and for most of 2011, there was only one company on that list -- Apple. Despite the company's success, at least one analyst believes that Apple was forced to release the fourth-generation iPad this fall because of stale iPad sales. That strategy seems to have worked. In just one weekend, Apple sold another three million tablets. 

Regardless, the tablet market can only go so far. With such a large number of players entering the space, it won't be long before tablet sales peak.

Nov 26, 2012 3:40PM
These units have non-removable batteries.  Once the charging cycle of these batteries is reached, the user is forced to buy a whole new unit.   There will always be a steady demand for new units.

Thanks to Apple and friends, the US land fills will be more toxic than nuke waste...    since nobody sponsors true recycling programs and people don't care to learn.    Example, look how many cell phones are used in the US to how many get recycled.
Nov 26, 2012 4:37PM
$99 HP touchpad modded to run Android 4.0 is the best tablet out there.
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
264 rated 2
485 rated 3
679 rated 4
640 rated 5
617 rated 6
632 rated 7
493 rated 8
276 rated 9
153 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.