Longer upgrade cycles hit Australian tablet sales: Telsyte

Tablet sales in Australia fell by 28 percent in the first half of 2014, compared to the previous six-month period, and the culprit is longer upgrade cycles, according to the latest research by Telsyte, a business unit of Australian-listed IT services company UXC.

The fall in sales comes after three full years of growth in Australian tablet sales, with Telsyte's Australian Media Tablet Market Study 2014 finding that longer upgrade cycles by manufacturers are impacting new sales in the sector, along with the traditionally slower retail cycle in the first half of the year.

However, the research also found that the Australian population penetration of media tablets increased by 46 percent — or 10.8 million people — as of the end of June.

For the first time, more Google Android tablets were sold in Australia than Apple iOS tablets for the first-half six-month period, with 47 percent of tablets sold using the Android operating system edging out iOS tablet sales, which accounted for 46 percent.

Windows-based tablets made up 7 percent of the Australian sales in the six-month period.

Telsyte managing director Foad Fadaghi said that although Android tablets have marginally outsold Apple tablets for the first half, it is a trend that is unlikely to continue throughout the year.

"Apple should have a strong second half if it can bring upgraded models to market and benefit from a halo effect created by the iPhone 6 launch" said Fadaghi. "More than half of iPhone users already have an iPad, whether consumers upgrade both this year will be the question many will be asking."

Telsyte research has shown greater purchase intentions for iPads overall in the second half and higher repeat purchase intentions by existing iPad users than Android tablet users.

The company forecasts that 2.1 million tablets will be sold in the final six-month period of 2014, prompted by a strong smartphone purchasing cycle expected to kick off in October.

Telsyte suggests that new smartphone sales might delay purchases of new media tablets for many existing users until 2015 and beyond, with demand for smartphones in Australia is expected to be nearly three times more than media tablets for the second half of the year.

"A tablet upgrade cycle might not commence until current devices become more readily obsolete, either in terms of computational capability, operating system, application interoperability, graphics or connectivity," said Fadaghi.

Phablets — devices that sit somewhere between a phone and a tablet — will only have a marginal impact on tablet sales during the second half, according to Telsyte, with research showing that consumers were only 5 percent less likely to consider purchasing a new tablet if already using a phablet.

However, this finding could change following the impact of a larger screen iPhone 6.

In March, Telsyte released findings suggesting that, at the end of 2013, tablet sales in Australia were estimated to be worth AU$2.4 billion, with tablets being used by around 9.4 million Australians.