Tablets vs Phablets: Strong Phablet Sales Will Cut into Demand for 7

Growing interest in phones with screens over 5 inches is going to reduce sales of small tablets. It won't noticeably cut into the market for larger tablets, however.

In recent years, the size of phone screens has grown dramatically. The average smartphone display measured 2.6 inches in 2007, and is now 4.9 inches. Partially driving this has been a steady decrease in the time spent making voice calls - a typical person spent 720 minutes a month talking on a cell phone in 2011, but 673 in 2013. As people come to use these devices as portable computers more than simple mobile phones, larger screens have become more valuable.

This trend has reached the point that handsets large enough to rival tablets made up about 40% of the global smartphone market in the first quarter of 2014, according to market-research company Canalys.

Small tablets are typically sold to people who want a light-duty computer with a display that's larger than the one on their phone but is more portable than a laptop. The growing numbers of people who get a phone with a screen over 5 inches in size will see little need for a device with a screen that's barely any bigger than their phone.

For example, the iPhone 6 Plus has a 5.5-inch display that will inevitably reduce demand for the iPad mini which has 7.9-inch screen because their functionality overlaps. If you're just checking email and social networks, what would be the point in buying both?

Demand Has Changed, Not Stopped

Increasing interest in larger phones won't kill off all demand for small tablets. After all, many people won't want to carry a phablet and will still see a need for a larger tablet at home or office.

Families may also keep small tablets from dying out completely. Many parents buy small, inexpensive tablets without service plans for their children. Parents are also more willing to give a sub-$200 tablet to a child than a phone, many of which cost over $500 to replace.

No matter what happens to small tablets, many market watchers do not expect demand for full-size models like the iPad Air to be affected by growing sales of phablets. IDC 'expects more consumers to shift back toward larger-sized tablets with their next purchase.' Meanwhile, the Motley Fool wrote that the release of the iPhone 6 Plus 'could ultimately drive mix up from the lower-cost iPad mini models and toward the full-sized iPads.'

While there are some tasks that can be performed equally as well on a 5- to 6-inch screen as on a 9- to 13-inch one, there are many others that require more real estate. As examples, while someone could use a 5.7-inch Samsung Galaxy Note 4 or a 10.1-inch Galaxy Tab 4 to order a pizza or Google an actress' filmography and have the same experience, but the full-size tablet offers significantly better functionality for watching a movie or writing a report.

The line that people have drawn between phones and tablets is blurring, and maybe even fading. While screen size certainly varies over a wide range, both types of devices are small, slate-shaped computers without physical keyboards. One of the few remaining differences is that one type can make phone calls and the other can't, but with FaceTime and Google Hangouts, does that really matter these days?

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