Why tablets haven’t seen their prices declining as much as smartphones

windows tablet

Less than an year ago, a phone with a qHD (540×960) display and 1GB RAM was considered a good option under $200. Today, we’re seeing smartphones breaking the FHD (1080p) resolution barrier in the same budget, while 720p is considered the norm. Certainly things have changed a lot in the market and it’s certainly not one company moving the market.

On the other hand, tablets have evolved in the same time period, but not as much. The choices are still the same as last year, with only minor hardware changes that are a result of natural evolution. So while at one point in time tablets with the same hardware (albeit bigger size) as smartphones used to cost a lot less, the tables are turned.

The smartphone market has managed to keep a healthy pace of growth driven by emerging markets like India and Brazil, as well as huge demand in China. This has lead to record number of phones being sold every quarter. A huge chunk of these phones now come from Chinese shores under Chinese brand labels. Naturally, brands like Xiaomi and Lenovo have taken advantage of low manufacturing costs in their home country and are passing the benefits to the customers. The huge number of entrants in the market has also resulted in stiff competition where vendors are using every possible trick to win customer loyalty. These include offering better specs at lower prices by taking a hit on their own margins. The net result of this rapid expansion by Chinese companies overseas has been a reduction in the cost of better technology across all markets. And while Chinese brands were usually considered white box manufacturers until sometime ago, these new names are giving a strong competition to market leaders in brand perception and reach.

Now, if you look at the tablet market, it’s growth has been somewhat a disappointment. Apple’s iPad which used to be the pinnacle of tablet technology has been seeing declining sales quarter over quarter, while Android tablets seem to have slowed down as well. The low demand for tablets has been partly due to the increasing smartphone size, which has made these devices obsolete for most of us. As such, the competition in the market is a fraction of what it is in the smartphone market and the well established brands still dominate the space. This has resulted in slower innovation compared to smartphones and the industry evolving at a much slower rate than smartphones. We’ve seen players like Xiaomi enter the market, but even they have had limited impact.

With the smartphone space saturating, we might see some shift to tablet market in the future, but given the low volumes, it could be that the same wave might never hit this market. With Windows based tablets expected to take the center stage in the future, it could be interesting to see if we might see some really cheap tablets from some of these Chinese brands that give Microsoft’s Surface Pro 3 a run for its money.

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