Bigger phones, slower upgrade cycle forced first dip in tablet shipments

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Tablet shipments took a U-turn and headed downward for the first time, according to a report from research firm Canalys.

The data indicates a 12 percent decline from year-over-year, though there were still 67 million units sold in Q4 2014.

Of the five largest tablet makers (Apple, Samsung, Lenovo, Amazon, and Asus) only Lenovo saw a jump in tablet sales, at just over 9 percent. Researchers at IDC said Lenovo has an ideal tablet portfolio with multiple screen sizes for diverse buyer needs, instead of just relying on low price to move products.

Samsung had the sharpest dip, seeing a 24 percent drop in sales from the previous year. Amazon’s Fire line got clobbered, seeing a 70 percent dip during the last year. That may be tough to take when combined with the pitiful sales of the company's first Fire Phone.  

Among the speculation for the trend is that buyers are backing off from picking up a new tablet with smartphones getting bigger, like Motorola’s Nexus 6. A device of that size can make you less inclined to use a tablet that frequently.

Smartphones are also cheaper than tablets when you factor in carrier subsidies. You can pick up a new one every 18 to 24 months for a substantial discount, making it more appealing to upgrade a phone while being tepid about buying a new tablet that often.

It wasn't a very compelling year for new Android tablets anyway. Samsung putting out a few minor upgrades to its Galaxy S line and HTC jumping back in with its Nexus 9. Even Apple only introduced modest hardware improvements to its iPad Air 2.

Why this matters: All those bigger phones mean tablet makers may need to shift their focus to larger screens. When you have a 6-inch smartphone, there's nearly no reason to pick up a 7-inch tablet. To encourage buyers to still want to own three devices (phone, tablet, and computer) they're going to need some serious incentives to do so.

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