Best Buy’s CEO says most people don’t upgrade their tablets

“The tablet is dead!” the Internet said, shortly after news broke that iPad sales had dropped 9 percent. All of a sudden former BlackBerry CEO Thorsten Heins’ claim that “tablets are not a good business model” and that they will die off in five year’s time sounded reasonable. At least once a year, reports crop up saying that the tablet market is in a tail spin from which it will never recover.

So far, that doesn’t seem to be true, at least, the IDC doesn’t think so. Although tablet growth has slowed and in some cases dropped by a few percentage points, the IDC found that tablet sales actually grew 11 percent over the course of a year. Still, it’s clear that tablet market growth is slowing.

“The tablets boomed and now are crashing. The volume has really gone down in the last several months.”

Best Buy’s CEO Hubert Joly told Re/Code that he thinks the tablet market is “crashing” mainly because people don’t upgrade their tablets as often as their smartphones. He says that tablet manufacturers haven’t given consumers any incentive to get the newest model, so retention rates are high and buying rates are slow. In response to the interviewer’s question about tablet sales, Joly admitted, ” 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,” he added. “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.”

For example, generation after generation of the iPad has offered minor updates in terms of display resolution, processing power, and portability. Otherwise, it’s remained somewhat static. The biggest alteration so far between iPad models occurred recently with the iPad Air, which features a revamped design and other serious improvements. Nonetheless, Joly’s point still stands. after all, if your tablet is working fine, why do you need to buy a new one?

“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,” Joly said. “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.”

The other issue tablets face is that they offer somewhat limited functionality. Many of the people who buy a tablet and expect it to replace their laptop find that it doesn’t meet all their needs.

“The tablets boomed and now are crashing,” he said. “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.”

Joly said that he thinks 2-in-1’s, the Surface Pro 3, and other Windows 8 devices may be able to reawaken the PC market — at the expense of tablets of course. It will be interesting to see if tablets continue to decline, get a sudden boost, or simply stagnate as time goes on.

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