What Devices Will Tablets Cannibalize?

Tablets are among the fastest adopted consumer devices ever. The only other device that might rival tablets are smart phones. But one wonders: with global economic conditions difficult, are consumers shifting their spending from one device category to another? And are consumers shifting spending from non-technology categories to devices?

The evidence is probably ambiguous at this point. Perhaps the clearest evidence is that users are shifting spending from “high end” to lower-priced value PCs. But if that is true, one also wonders whether tablets might not start to cannibalize the “value PC” category in turn.

PC cannibalization has been the big issue so far. But it stands to reason that that opportunity costs exist in consumer electronics as in any other field of life. In other words, funds spent for one product necessarily cannot be spent for another product.

Gartner analysts have estimated that consumer spending on technology goods will increase to as much as $2.7 trillion by 2016, driving demand for everything from mobile devices to app store products.

In 2012, about $2.1 trillion€” will have been spent on mobile phones, tablets and smart devices to the services that enables these devices to connect to networks, €”a jump of $114 billion over what consumers spent in 2011.

Other changes might be happening, though. One might argue that a consumer structural shift is happening. A growing number of individuals, across all regions, may be placing more emphasis on purchasing, owning and enjoying technology than ever before.

At one time, the rite of passage for becoming an adult may have been buying a car and then a house. However, in 2012 the rising cost of running a car and buying a house may well cause priorities to be reset.

Renting may become more acceptable, and taking public transportation, taxis and renting cars may become preferable to owning them, particularly in cities with highly congested roads, Deloitte analysts argue. Spending less on housing and transportation enables more money to be spent on technology devices.


Consumers continue to favor lower-end desktop PCs and notebook computers over high-performance models, with the top-end systems accounting for only six percent of the market in 2012, according to an IHS iSuppli Compute Platforms Topical Report.

This year, for instance, the mainstream desktop PC category tied with the value PC category in the share of the global desktop PC market, with each segment projected to claim an evenly matched 46.9 percent by year-end. In comparison, performance PCs will be left far behind in third place, with a meager 6.2 percent.

Meanwhile in the notebook computer space, the value notebook segment will take 46.8 percent, compared to 44.0 for mainstream laptops and 9.2 percent for performance models, IHS argues.

The upshot is that it isn’t entirely clear whether demand for tablets is coming at the expense of some other category of PCs, some other category of devices, or whether some other part of consumer spending is being affected. 

But opportunity costs still apply, always. What people are spending on tablets and smart phones prevents spending on other goods and services.