Analyst: Cellular-enabled tablet sales to drop through 2016

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The share of tablets with built-in cellular connectivity will decline over the next four years despite the expected proliferation of multi-device data plans designed to encourage their adoption, according to a new forecast from research firm CCS Insight.

The report, which looks broadly at the tablet market and not just cellular connectivity, found that 48 percent of tablet shipments in 2011 were cellular-enabled. The firm expects the share of cellular-enabled tablets will slowly diminish to 37 percent in 2016.

According to CCS Insight, "most users do not regard cellular connectivity in tablets as a must-have, especially given the current price of tablets and mobile data subscriptions." In 2011, sales of tablets with cellular modems were driven mainly by supply, according to the firm, and about half of owners of cellular-enabled tablets did not activate the service with a carrier.

"In the future, the share of cellular-enabled tablets will be determined by three factors: the availability and attractiveness of multi-device tariffs from mobile operators; the availability of public Wi-Fi networks; and the difference between the retail prices of cellular and Wi-Fi-only tablets," the firm found.

CCS Insight is more bullish on how well cellular-enabled tablets have done in the market than other research firms. An April report from ABI Research found that during 2011, around one-third of all the tablets sold across the globe featured a built-in cellular modem. ABI said that, of the 65 million tablets shipped last year, around 27 percent--17.6 million--featured support for 3G and 4G networks.

Analyst reports have consistently found that the cost of cellular service has dampened the market for cellular-capable tablets. Multi-device data plans, such as Verizon Wireless' (NYSE:VZ) Share Everything plans, are designed to ease this concern by making it easier and less expensive for customers to add tablets to their data packages.

"The strategic thrust of these plans is to encourage device adoption and stimulate usage," Verizon Communications CFO Fran Shammo said during the company's second-quarter conference call, according to a transcript of his remarks. "Our plans are designed to make the decision to upgrade to a smartphone or add a tablet much easier. By allowing up to 10 devices to share data, these plans also provide for the creation and adoption of all kinds of new connected devices."

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