Android and Apple still battling in tablets

Tablets drove UK distributor sales in Q413 despite slowing growth in the market, confirms Marie-Christine Pygott

The year 2013 was another great one for the western European tablet market, and no country was able to take advantage of the growth opportunities that arose in distribution quite as well as the UK.

While tablet volume distribution expanded significantly throughout the year across all western European countries - and in most cases was able to more than offset the effects of softer sales in the traditional consumer PC segment - the UK remained by far the largest market for tablet sales in distribution and the strongest volume growth driver.

According to our data, 26.9 per cent of all sales through western European distribution last year was in the UK, increasing to almost one third in the consumer-driven Q413 holiday season.

The growing installed base and increasing penetration began to take a toll on growth rates during 2013. The triple-digit quarterly year-on-year tablet sales increases enjoyed by vendors and the channel previously, even into the first half of 2013, were clearly not sustainable.

Year on year, growth of almost 415 per cent was registered in Q113 across UK distribution, but this slowed gradually, to 53.1 per cent year on year in Q4 before Christmas.

Still, tablets managed to turn a mere 1.8 per cent expansion year on year for traditional PC sales during Q4 into 28.7 per cent in unit terms.

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Consumer sales remained strongly driven by aggressive pricing and promotions, which over the past year or so led to increasing vendor competition in the lower-end Android space. In Q4, just like in previous quarters, much UK volume growth was driven by budget Android tablets, particularly in the 7in segment.

Established Android vendors, supermarket chains and traditional PC vendors all fought for a bigger slice of the tablet pie; ensuing competition and pricing pressures pushed distributor selling prices down 24 per cent year on year pre-Christmas, from ￡194 in Q412 to ￡147 Q413.

As a result, volumes in the segment more than doubled in Q413 versus the year-ago quarter, and the share of Android-based tablets in UK distribution rose to 76.8 per cent from 53.7 per cent in that time.

Sales of Apple iPads also grew strongly in Q413, albeit from a smaller base than Android. During the pre-Christmas season they went up 45.7 per cent year on year across UK distribution as the new Airs and minis with a Retina display proved popular. Although iPad growth was slower than Android's in Q413, the share of iPad sales declined slightly from 23.2 per cent in Q412 to 22 per cent in Q413.

It seems clear that the Q413 tablet market in UK distribution remained a two-horse race between Android and iOS. Windows 8 systems have not managed so far to approach their success.

In the consumer segment, sales of Windows 8 tablets were hampered by high pricing and a user preference for alternative OSes; uptake in the commercial space was slow as touch functionality has not so far been widely adopted. Windows 8 tablets are expected to increase their share in the course of 2014, but this will only happen slowly.

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It is also clear that year-on-year growth rates for tablets will slow further as penetration continues to rise. The lower, 7in end of the segment might also face increasing competition from the phablet segment in future.

Nevertheless, a recent rise in demand for 8in tablets, as well as the onset of tablet replacement cycles once saturation is approached, means there are still opportunities for UK distribution in this segment as we move further into 2014.

Marie-Christine Pygott is a senior analyst at Context