Tablet shipments post first year-over-year decline, analyst firm says

May 28, 2014: 5:35 PM ET

Are higher prices next for shrinking tablet market?

Tablet shipments dropped for the first time

Tablet shipments dropped for the first time

FORTUNE--Worldwide tablet shipments dropped 4.6% in the first quarter from a year ago, according to NPD DisplaySearch, though the report's author says that pocket of the tech sector see improved profits as average prices are expected to climb.

NPD DisplaySearch reported tablet shipments totaled 56.3 million units in the first quarter, down from 59 million a year ago. The slowdown threatens to drag lower the overall mobile PC market, with many major brands including Apple Inc. (AAPL), Google Inc. (GOOG), and Amazon.com Inc. (AMZN) reporting fewer tablet shipments. Samsung Electronics Co. (SSNLF) only posted a 2% increase.

It was the first year-over-year decline DisplaySearch has reported since it began tracking such figures in 2011. The decline leads some to wonder: what's next? Some tech observers had hoped the much-hyped wearable category would be the next pocket of scorching growth though NPD earlier this month predicted that market would begin to slow down quickly.

MORE: Mary Meeker: Internet user growth is slowing

Richard Shim, senior analyst for DisplaySearch, told Fortune that while tablet sales fell in the first quarter, the overall consumption of hardware devices continues to increase.

"What we are witnessing is a shift in the personalization of mobile devices," Shim said. "We are moving more toward a convenience-based consumer experience. The device is becoming more intertwined with the user."

With tablet sales slowing, Shim expects manufacturers will focus less on volumes and more on margins and revenue. He expects average selling prices will pick up. Shim also sees greater diversity of screen sizes and improved resolution--both trends that could inspire greater consumer interest and loftier selling prices.

That trend can put the tablet industry on a path toward improved profitability. Shim expects those higher quality devices--with larger screens and greater resolution--will mainly be sold in mature markets, as the industry's players continue to roll out low-cost devices in emerging markets.

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