The Tablet Market Will Reach New Heights Thanks To Falling Prices, Mini Tablets, And Holiday Sales

Analysts have gone from trumpeting the tablet market's upward trajectory to wringing their hands over what appears to be a too-soon slowdown in growth.

But we think the tablet market is doing just fine. Tablets are a very different market from smartphones. The crucial difference is that they are not subsidized by wireless carriers, so consumers have to pay full price out-of-pocket. That means that like most consumer electronics, the tablet market is very seasonal. There will be a huge spike in sales during the holidays.

In a new report from BI Intelligence, we break down the three-year-old tablet market and look at the latest trends in adoption and market growth, finding that tablet uptake will continue rising at a robust pace. The most significant misreading of the tablet market has been to forget that tablets had the fastest ramp-up of any computing device in history, so a slight pullback was all but inevitable. As more tablets from more manufacturers gain traction with audiences at all income levels, there's no question tablet penetration will keep rising.

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Here are some of the most important facts about how the tablet market is shaping up:

• We think the overall tablet market will grow 74% in 2013 and forecast close to 500 million tablets shipments in 2016. Our numbers are more optimistic than that of other research firms.
• The overall tablet market grew 75% year-over-year in the second quarter of 2013 after 121% growth in the same period during 2012. That's a natural slowdown for an all-new product category, and still a considerable growth rate for a product that saw the fastest initial uptake of any computing device.
• Tablets are a seasonal market, for now, so sales are very dependent on holiday shopping and gift-giving. Remember, tablets aren't subsidized by carriers.
• High-profile tablet debuts this quarter from Microsoft, Nokia, Amazon, and others put Apple in a fiercely competitive market.
• Since the first quarter of 2012, Apple has ceded about 40 percentage points of market share to Android, Amazon, and Windows and demand for seven-inch tablets forced Apple to create the iPad Mini last November.
• Apple's iPad is no longer indicative of tablet market trends. The tablet market still grew significantly as Apple's iPad sales slumped.

The report is full of easily downloadable charts and data showing the nuances of growth in the tablet market and how competition is changing market share.

In full, the report:

• Explains why the tablet market follows a unique selling pattern that has resulted in uneven growth in nonholiday quarters.
• Puts the new iPad launches in context and considers how these devices will fare during the holiday shopping season.
• Sizes the tablet market and predicts growth in the coming years, laying out why we believe predictions of slowdowns and 'tablet fatigue' are overblown.
• Breaks down the various tablet alternatives and puts in context how quickly they have overtaken Apple, highlighting how premium iPad pricing is hurting market share.
• Considers how phablets and wearables could be the X-factor that might actually put the brakes on tablet growth.
• Compares U.S. versus international tablet adoption trends and forecasts growth in the underrepresented enterprise segment.

To access BI Intelligence's full report on How Fears Of A Tablet Slowdown Are Overblown, sign up for a free trial subscription here. Subscribers also gain access to over 100 in-depth reports on social and mobile, and hundreds of charts and datasets.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.