Best Buy CEO: “The tablets boomed and now are crashing”

Back in 2010, Apple launched iPad tablet following which number of companies including Microsoft released various tablets in the market. Everyone expected tablet sales to exceed PC sales in 2014, but it never happened. Tablet sales growth is now at a decent 45% YoY which is not a bad thing, but for a new product which is gaining adoption around the world, this growth story is not encouraging. The main reason for lack of explosive growth is the purpose to upgrade old tablets and their too restrictive use cases. If you own a tablet, you can use it for browsing, watching videos, playing games and few other things. When you are on the go, you prefer your smartphone to be with you. When you want to get some real work done, you will use your laptop. In such scenarios, a 2 year old tablet can still serve the same purpose of light web browsing, watching videos, etc, with ease.

BestBuy CEO recently spoke with Recode on tablet sales, here is the response from him,

You said the tablet had “crashed.” Do you believe it’s going away?

Yeah, “crashed” is a strong word. So, the tablets have been an unbelievable phenomenon. I don’t think there’s a category that ever took off so quickly and so big in the history of tech.

The issue has then been that, once you have a tablet of a certain generation, it’s not clear that you have to move on to the next generation.

As a consumer?

As a consumer. I think replacement is the issue. The penetration has gone so fast that it’s reaching an amazing degree and therefore it becomes more of a replacement market, and the level of innovation in the past year has not been as great as it had been in the previous two years. So, there again, the jury’s out in terms of what’s going to happen, because it’s going to depend on what innovation comes to market. But you need a reason to replace.

He also revealed that BestBuy actually had a revival of the PC business this quarter, part of it was that Microsoft stopped supporting Windows XP and users are upgrading them to latest devices. He also revealed the 2-in-1 devices like Surface Pro 3 should see success in the market.

The tablets boomed and now are crashing. The volume has really gone down in the last several months. But I think the laptop has something of a revival because it’s becoming more versatile. So, with the two-in-ones, you have the opportunity to have both a tablet and laptop, and that’s appealing to students in particular. So you have an evolution. The boundaries are not as well defined as they used to be.

If you take the [Microsoft] Surface, is it a tablet or a laptop? I think it’s both. So I don’t think the laptop has said its last word.

Read the full interview at Recode.

Source: Recode

  • Tips_y

    LOL, the CEO is overly dramatic! 45% growth is a good one. I don’t think by any stretch of the imagination can you call 45% growth as crashing.

    • techguyMS

      Its not a growth..its decent means going down. has gone down by 45% as compared to previous year. please read it again.

      • RoadOfMajor

        The word you’re looking for is “descent”, but the article says “decent” which means above average.

        “Tablet sales growth is now at a decent 45% YoY which is not a bad thing, but for a new product which is gaining adoption around the world, this growth story is not encouraging.”

      • Tips_y

        Actually YOU should read the article again. While you’re at it, take up Reading Comprehension courses as well!

  • hushv

    If market trend moves towards either laptops or 2-in-one devices, Microsoft and it’s partners are positioned to win.

    Either way, Microsoft’s strategy would win if and only:
    1. Intel tablets are able to beat ARM tablets in battery life
    2. Prices of really good windows tablets get to the sub $500 range
    3. Google and Apple make a mistake somewhere in the future

    • John G

      I think that While Microsoft has aim for the niche market with the price of the surface 3, has it price at a more affordable price, then it is fair it say that the surface should have been even more successful.

      I said more successful because of all the praises that the Surface Pro 3 has received. I am buying one but I have a 16 inches Sony that is very in good shape. I am trying to justify spend $1500 on a new products because I really like the form factor of the Surface 3. As of today, I don’t think Google and Apple has anything to offer that is seriously better than the Surface Pro 3 or that category.

      • koenshaku

        If the price is lower then corners would be cut and the line will begin to blur with OEM offerings all the more. Do you want an atom surface pro or reduced resolution? I think that is what the ARM surface line is for and many of the OEM devices like the asus vivo tab note etc. It is like saying bring down the price of the MacBook Pro. While you may get different flavors it will be higher than the rest of the market because of the build quality and components you get with the device.
        I bought one and couldn’t be more satisfied I barely feel in in my backpack when biking and I can leave my charge cable at home for a few hours of study at the café and when studying on my laptop being able to split the screen and take notes, highlight, organize and sync to all my devices is simply brilliant!

    • donzebe

      A couple of sub $100 tablets Will be hitting the market this holiday.

      • hushv

        Thanks I’ve been following news. A sub $150 dollar tablet from a big name would cement the process.

        I won’t be comfortable buying from a no-name manufacturer – I’m not speaking for the market on this one :)

  • Jeff Hung

    Justifying buying a new tablet when you already have one is getting more and more difficult. Simply beefing up hardware spec might attract some hardcore electronics fans to upgrade their tablets which perfectly work, but it’s not the case for most consumers.
    But don’t get trapped in the same fallacy of “post-PC”. “The end of tablet boom” doesn’t mean “the end of tablet”, just like “the end of PC boom” doesn’t mean “the end of PC”. People still use and like tablets, but just don’t buy as many tablets as before because they already have one.

    • VHMP01

      My daughter has an 2.5 year old Galaxy Tab 1, she is not even a teenager yet, but she took really good care of her Tablet over 2 years with no extra case or anything, by mistake she dropped it and crack the screen, so the question was to buy her another because she is resposible and had an accident… The answer was just to get a screen protector and that original Tablet still does everything a new one does. Point being, she now uses a lot more an old Galaxy S3 Mini that I gave her, and the Galaxy Tab 1 still Works for whatever the Galaxy Tab 1 Works for!

  • Jackal

    Consumption devices that are ‘good enough’ to do the job really don’t need to be upgraded all that often, despite what Apple would have their Lemmings believe.

    • hushv

      You are right – people don’t need to upgrade every time apple brings out a new shiny toy.

      Do people want to?

      Now, that’s another story entirely.

  • donzebe

    A couple of years back, l have this big dream of owning a tablet. I told myself several times how the tablet will make my job easier and faster. I work had and save a couple of hundreds of dollars and bought me a tablet. I was very excited with it the first couple of days and by the end of the month the reality began to kick in. I came to realized that l needed a real keyboard and a mouse to get my job done, and to read a book, nothing feels better than that real paper back.
    Now the tablet is sitting some where on the self and I proudly dust it now and again and show it off to visitors.

    • hushv

      Here’s an analogy that might explain why tablets might beat PC

      They say “once you go black, you never go back”…
      If she never tastes “black,” she won’t be disappointed with way she has.

      On a more serious note… The reason you are dissatisfied with tablets is because you’ve used something better suited to productive work.

      Many young ones are having tablets as their first computing devices. They won’t have that itch you and I have for something better, faster and more suitable to getting work done.

      Good enough becomes the enemy of best.

  • LexicoRed

    The product is still growing at 45%, this guy just wanted to get headlines. Yes the replacement cycle is longer then smartphone, subsidized at every two years, so that will affect growth. Like he said there has never been a product with so much early adoption, as developers create specialize programs we will continue see growth and laptop canalization.

    • NGM123

      Interesting that in the past you have always bashed Microsoft for manufacturing hardware, do you know what holds the world record for the fastest selling consumer product in history, way faster than an apple tablet?
      The world record belongs to Microsoft for the “Kinect “, the fastest selling consumer product on the planet, not bad for a software manufacturer.

      • hushv

        Seriously? I got to research it. Gimme a link if you got it

        • NGM123
          • hushv

            I found read two articles on it – thanks.

            btw: The fancy wallpaper on Bing is a waste of bandwidth. One other things – it’s actually faster to use get what you want with any other search engine than bing on windows phone. Why?

            Because you a second or more is wasted needlessly waiting for the cortana window to pop up before the search begins. After that, a click sends you back I.E.

            I use 520 as my main phone so I ain’t complaining out of bias – just plain irritation at the design choice.

  • xma1e

    The consumer electronics market has it’s head in the clouds thinking that people want to change their TVs, PCs, Tablets, every friggin 12 months!!!!! WTF

    • hushv

      You are right. They don’t but…
      Many people don’t want to own just a phone or tablet.

      They want to own the LATEST tablets and phones. This irrational reasoning is what Apple and the rest are banking on.

      • xma1e

        People that hang out in technology forums want the latest and greatest, but most people do not. I know more people with older iPhones than the current model.

        • hushv

          I agree with you – 100%
          One thing I’d love to add is this:

          When we have to save for months to buy a TV or any other gadget, we tend to be somewhat rational.

          With phones and tablets however, things are a little different. Why? CONTRACTS.

          With contracts the upgrade cycle for these two devices – tablets and phones are just crazy. I’m sure you would agree with me on this one.

      • xma1e

        When my 2 year old TV broke down the supplier expected me to automatically want to replace it with a new model. In reality people expect 5 to 10 years from a TV. This is part of the reason why 3D has not taken off yet because everyone recently brought a HD TV and are not going to be in the market for a new TV until a few years have passed.

  • Rod Iron

    The problem with tablets are they don’t do what you want them to do. They like smart phones are little more than mobile entertainment devices. Of course some use them for business but the majority are watching movies and surfing the web. And to do all that you need a data connection, most carriers block your phones hotspot abilities unless you pay extra of course 😉 So what’s the point of buying one? I’d buy a Surface in a hot second if they would add calling/texting capabilities but so far the only manufacturer to do it is ASUS and they use Android so I’ll pass.

    • LexicoRed

      They not do what YOU want them to do but many, many millions find they do exactly what THEY purchased them to do.

      It is important to understand everyone’s use cases are not the same and person uses cases may or may not mirror that of the greater market.