The number of tablets with mobile data subscriptions will basically double over the next few years to more than 200 million, according to a new report from research firm Strategy Analytics. The forecast comes as many U.S. carriers continue to rely on tablet subscriptions for growth, with a long runway of tablet subscriber additions potentially ahead of them.
According to the report, around the globe more than 100 million wireless connections on cellular-enabled tablets will be added through 2021. Despite that growth, by 2021 tablets will only account for 2 percent of total mobile subscriptions, and a 2.7 percent population penetration rate.
The report notes that in the U.S., three of the four top carriers have grown tablet connections to nearly 10 percent of their subscriber base, which the firm said is "a testament to their focus on tablet growth strategies and a contributor to lower churn."
Indeed Verizon Communications (NYSE: VZ) CFO Fran Shammo said this regarding tablets during the company's second-quarter earnings conference call earlier this month: "We also have a profitable growth opportunity with tablets as they provide good value through increased data consumption and lower churn rate at the account level. We ended the quarter with 9.6 million tablets in our postpaid connections base, so overall penetration is still under 10%."
In recent quarters Verizon Wireless, AT&T Mobility (NYSE: T) and Sprint (NYSE: S) have come to rely on tablet subscriptions for growth in the face of weak phone subscriber gains, or, more often, phone subscriber losses. Yet tablets also bring higher data consumption, which often leads to more revenues for carriers, and tend to be part of a family plan, which usually afford lower churn for carriers.
In the second quarter, Verizon said it added 852,000 postpaid tablet customers, accounting for 75 percent Verizon's 1.134 million total postpaid subscriber additions in the quarter. At AT&T, tablets accounted for all of the company's postpaid subscriber growth in the second quarter. AT&T said it added 600,000 postpaid tablets and computing device customers in the second quarter, but only added a total of 410,000 postpaid customers, thanks in part to losing 322,000 postpaid phone customers in the period.
T-Mobile US (NYSE:TMUS) said 760,000 of its 1 million postpaid additions in the second quarter were phone subscribers, so it has relied less heavily on tablets. Sprint has not yet reported its second-quarter earnings. However, Strategy Analytics notes that Sprint, which has achieved tablet penetration nearly on par with Verizon Wireless and AT&T, "is focusing on equipment installment plans (EIP) and leasing plans and offers all-in pricing bundling a tablet with a smartphone and service for both with a simple monthly price."
Strategy Analytics notes that T-Mobile CEO John Legere has called out other carriers on Twitter for relying on tablet net adds for growth, but said T-Mobile "would do well to amp up its tablet efforts and build on its innovative 'comes with free data' and zero-rated music options to increase tablet subscriptions among its growing smartphone user base."
- see this release
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