Boosted by iPad, tablet sales expected to soar

Worldwide tablet sales are expected to nearly double in 2012 from last year's tally as consumers' interest expands in mobile devices from smartphones to tablet computers such as Apple Inc.'s (AAPL) iPad, according to new predictions from Gartner Inc. (IT). Consumers and companies are expected to buy 118.9 million tablets next year, Gartner said, nearly double the 60 million tablets that were sold last year. That number will more than double again by 2016, reaching 369.3 million units sold by then, the research firm predicted. Apple's tablet is expected to continue to lead the market for at least the next four years, Gartner said. The company's annual unit shipments are expected to quadruple from 2011 levels to 169.7 million by 2016, even as Apple's market share declines from more than 66% to 46% as rivals expand sales. Gartner predicted an eight-fold increase in sales of devices that use Google's (GOOG) Android operating system over the same period, reaching 137.7 million units. Android's share of the market will rise from nearly 29% to 37% during that period, the firm said. Carolina Milanesi, an analyst for Gartner, said that a key force behind Android tablet sales will be the customers who have Android-based smartphones. She said customers who choose one ecosystem for mobile devices tend to stick with it for their tablets as well. "There's much more interdependency today," she said. Android's sales are also boosted by Asian customers, she said, who often buy cheaper devices from more generic manufacturers. Comparatively, in Western markets, Milanesi said Android hasn't been able to replicate the momentum it had with smartphones in part because it doesn't have enough applications and content to woo customers. In order to bolster market share, Milanesi said Android's strongest manufacturing partners, such as Samsung Electronics Co. (005930.SE, SSNHY) and Amazon.com Inc. (AMZN), need to increase the number of applications available, as well as content offerings. One way that could be done, she said, would be for manufacturers to subsidize application development, something Microsoft Corp. (MSFT) has been doing for its Windows Phone 7 smartphones. "You need to have developers focusing on dedicated apps," she said. "Companies like Samsung need to start paying for apps." The strength of Apple's and Google's ecosystems also underscores the lost market share for Research In Motion Ltd.'s (RIMM) BlackBerry. Gartner said it expects nearly 18 million tablets running RIM's software to be sold by 2016, representing a little under 5% of the total market. Milanesi said that much of the sales would likely be to consumers and companies who don't want to manage two different platforms together, such as an iPhone and a BlackBerry PlayBook. Despite growing interest in tablets, Milanesi said inventories of unsold devices built up in 2011 as vendors struggled to compete on prices and differentiate their hardware. That hasn't improved in 2012, Milanesi said, as "the arrival of the new iPad has reset the benchmark for the product to beat." Apple has said it sold 3 million of its new iPads in the weekend since the model was introduced. The company saw earnings double in its fiscal first quarter on record revenue, bolstered by the iPad. One trend that may help Microsoft's prospects, Gartner said, is the decision among many companies' tech departments to encourage employees to buy their own devices, rather than be given one by the company. Familiarity with Windows could prove helpful with winning over corporate customers, Gartner said. However, Milanesi warned, Microsoft's marketing in particular will need to educate customers about the company's Windows 8 operating system, which is expected to be released later this year. She said Microsoft's Metro user interface -- an array of boxes on the screen that regularly update with relevant information -- works well on tablets. But Microsoft's insistence on offering the option for customers to use the traditional Windows desktop, similar to that of a standard PC, could hurt its prospects. Milanese said Microsoft initially approached the tablet market as an extension of the PC market, and believed it could simply replicate its strategy. That didn't work. She noted that the traditional Windows desktop has not been well received by tablet customers so far. "They need to be careful not to make the same mistake." Microsoft tablets are expected to account for 4% of tablet sales this year, and growing to nearly 12% of sales by 2016.