Adobe Brings (More) Bad News for Tablets

By Markets Fool.com

Samsung expanded its high-end phablet offerings by introducing the Galaxy S6 Edge + last year. That appears to be a smart move. Source: Samsung.

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According to Adobe Digital Index, or ADI, mobile usage is exploding. According to the report compiled from aggregated data from more than 5,000 companies, "the top seven countries in EMEA [an acronym meaning Europe, Middle East, and Asia] saw at least 11% growth year-over-year (YoY) in mobile visits. But, despite that growth in mobile, tablet traffic, specifically, is decreasing."

The information regarding a shift to mobile is pretty impressive, and should be watched among advertisers. But for device manufacturers, with all due respect to Adobe, there's nothing groundbreaking in this data. A semi-thorough look through Apple's device sales figures would tell you the tablet market has struggled, while the iPhone market has powered higher in wake of a larger screen.

Screen expansion; tablet sales compression
When the initial iPad was unveiled in 2010, the current-generation iPhone was the iPhone 3GS. The differences between the 9.7-inch first-gen iPad and the 3.5-inch iPhone was pretty large, and both devices were packaged as distinct products. The introduction of the iPhone 5 pushed the screen to four inches, followed by the iPhone 6 and iPhone 6 Plus' increase to 4.7-inches and 5.5-inches, respectively.

The newest-gen iPad Air 2 has kept its 9.7-inch screen size, and Apple has introduced a 7.9-inch iPad Mini, as well. In doing so, the difference between the largest iPhone and smallest iPad narrowed from 6.2 diagonal inches to a mere 2.4 inches.

The narrowing of screen sizes presents cannibalization amid device redundancy. According to ADI's principal Tamara Gaffney, "now instead of buying both a smartphone and a tablet, people are opting for 'phablets' and relying on this one device." Apple's unit shipments seems to confirm this is taking place with its iPad model.

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Unit Sales FY '15 YoY Growth FY '14 YoY Growth FY '13
iPhone 231.2 37% 169.2 13% 150.3
iPad 54.9 (19%) 68.0 (4%) 71.0

Source: Apple's annual report. Unit figures in millions.

In last year's second fiscal quarter, Apple CEO Tim Cook addressed this on the conference call: "Have we had cannibalization? The answer is yes."

Later, addressing Apple's iPad sales drop: "It will play out and at some point it will stabilize. I can't say exactly when, but I'm pretty confident it will." Since that quarter, Apple's iPad-related revenue has continued to struggle on a year-over-year growth basis.

Source: Apple's quarterly reports. Revenue figures in millions.

But it's not just Apple: IDC estimates the worldwide tablet market contracted 10.1% last year. IDC reports high-end Galaxy tablet manufacturer Samsung shipped 16% fewer tablets last year. The South Korean conglomerate expects "single-digit growth of smartphone and tablet demand" in its 2016 outlook; but that may be wishful thinking in its tablet business in light of ADI's and IDC's studies.

IDC brings better news for Samsung's smartphone business by reporting a small 2.1% gain in shipments during 2015. The company added a new high-end phablet form factor to its offering last year by bringing the Galaxy S6 Edge + and its massive 5.7-inch display, to market alongside the newest iteration of the company's Galaxy Note series.

Moving forward, especially in the developing markets of EMEA, it seems both companies should focus less on selling tablets, and more on putting larger-screen smartphones in the hands of new consumers.

The article Adobe Brings (More) Bad News for Tablets originally appeared on Fool.com.

Jamal Carnette owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Adobe Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.