Tablet Penetration Only 5 Percent, But Growth Is Promising

For a product that really just got going a little over a year ago, it shouldn’t be surprising that the reach of tablets is limited. Nielsen said Wednesday that tablet penetration is just under five percent, which helps put the buzz around tablets in some proper perspective. But while some are using the numbers to deflate the hype around slates, the big growth of a new product category along with a recent spike in the penetration of e-readers, suggests a bright future for tablets.
Nielsen said in a survey of 12,000 U.S. consumers, 4.8 percent reported they owned a tablet in the first quarter of this year. Meanwhile, among other mobile devices, smartphones led the way with 36-percent penetration, followed by media players (13 percent), e-readers (nine percent) and netbooks (eight percent). While the numbers put tablets well behind all other devices, it’s important to note how much growth tablets have seen in just one year since the iPad (s aapl) launched in April of 2010.┬áThe first competitive e-reader, the Kindle (s amzn) debuted in late 2007, but by the first quarter of last year, just 3 percent of people said they had an e-reader, according to Nielsen. Netbooks, which have also been around for several years, were at 5.8 percent in the first quarter last year.
For tablets to reach 5 percent in the first quarter is, I would argue, a very good showing, considering there weren’t many real Android competitors to challenge the iPad. And the iPad 2 didn’t launch until March, so sales were likely slower for the iPad in the lead-up. We may see even more constrained growth due to limited supplies of the iPad 2. The continued high demand suggests the category is still appealing to many consumers. And as more Android (s goog) tablets running Honeycomb begin to roll out, we should see sales accelerate.
As we’ve noted too, it’s important to also watch the e-reader category. With the latest update, the Nook Color is essentially a cheap Android tablet, not just an e-reader. Amazon could also offer more low-end tablets later this year when it’s expected to announce its first foray into tablets. If big names like Barnes & Noble (s bks) and Amazon can establish solid but really affordable e-reader/tablet offerings, it could be a big catalyst for tablet sales.
And price matters. We’ve seen tablets establish themselves despite selling for about $500 or more. But as those prices likely come down, it should stimulate even more sales. Look at what has happened in the e-reader market: Sales of e-readers went from five percent in the third quarter of last year when Amazon introduced a $139 Kindle to nine percent in the first quarter of this year.
It’s still early in the tablet race, but I think the device has a lot of room to grow. Gartner (s it) is also bullish on tabs, predicting 294 million tablets sold to end users by 2014. It’s hard to say if those numbers will prove true, but after one year on the market with a lot of new innovation on the way, I’d say five percent isn’t a bad start at all.