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There is little doubt that the PC industry is in decline. Recent quarterly reports by companies such as Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO) have highlighted the growing shift away from desktops to mobile devices. This holiday season, tablets are set to power sales more than ever amid a slew of new releases.
Although retailers have seen a decline in same-store sales post back-to-school shopping season, many expect consumers to dig deep for the holidays. The National Retail Federation, the world’s largest retail trade association, believes this holiday shopping season will be stronger than those in recent years. The organization predicts that holiday sales this year will grow 4.1 percent to $586.1 billion. The forecast is above the 10-year average holiday sales growth rate of 3.5 percent.
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High on shopping lists this year are new tablets from several major players. Amazon.com (NASDAQ:AMZN), the world’s largest online retailer, unveiled its second generation of the Kindle Fire with a 7-inch high definition screen in September. The unit retails for $199, and an 8.9-inch model costing $299 will be released on November 20 in the United States. Apple (NASDAQ:AAPL) recently unveiled the iPad Mini with a 7.9-inch screen and a price tag starting at $329, along with a fourth generation iPad containing a faster A6X chip. Samsung also released its Galaxy Note 10.1 tablet earlier this year, starting at $499. Meanwhile, Google (NASDAQ:GOOG) currently offers the Nexus 7. The company also unveiled the $399 Nexus 10 tablet on Monday, even though its press conference for the launch event was canceled due to hurricane Sandy. Microsoft is hoping to make a name in the tablet market with its Surface offering.
Tablets are relatively new for consumers, but they are already having a large impact. The first iPad was released in 2010 and Apple has already sold more than 100 million units of the entire iPad product line. Its iPad Mini white version sold out within 20 minutes, while the Black version was depleted within hours. Amazon became a serious competitor in the low-end tablet space when its Kindle Fire first launched last year.
“Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” said Jeff Bezos, founder and CEO of Amazon. “And our approach is working – the $199 Kindle Fire HD is the number one bestselling product across Amazon worldwide. Incredibly, this is true even as measured by unit sales. The next two bestselling products worldwide are our Kindle Paperwhite and our $69 Kindle. We’re selling more of each of these devices than the number four bestselling product, book three of the Fifty Shades of Grey series.”
The growing trend of tablets is causing concern for the traditional toy industry. Goldman Sachs (NYSE:GS) recently downgraded Hasbro (NYSE:HAS), one of the largest toy makers in the world. The firm explains, “We now more firmly believe that Games and Puzzles, HAS’s second-largest division at 25 percent of sales, is firmly in secular decline. We were previously too dismissive of this dynamic.” Goldman also lowered its price target on Hasbro.
While the toy industry will need to adapt to better utilize tablets, the overall retail sector is expected to receive a boost from shoppers on portable devices, as there are more tablet users everyday. Sucharita Mulpuru, vice president and principal analyst of ebusiness and retail at Forrester Research, explains, “I wouldn’t be surprised if the volume of revenue through tablets doubles this holiday season. “More people will certainly be shopping on tablets as now more people have tablets than they did a year ago.”
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