The tablet market is tapped out. We saw signs of this when Apple reported that its iPad sales were down year-on-year and we're seeing a similar message from retailers. Re/code's Walt Mossberg recently talked to Best Buy CEO Hubert Joly, who said that tablet sales had "crashed."

Global tablet sales are still rising—though less quickly than they once were—but in developed markets the tablet boom may be over. As Apple CFO Luca Maestri said in the company's earnings call, iPad sales were still growing in developing markets. The slowdown is all in the developed world. Samsung also reports that profits are down after tablet demand fell.

Moreover, Joly reported that PC sales—which the tablet was supposed to kill—have picked up. He attributed that resurgence partially to the end of support of Windows XP.

The computer industry has to face an uncomfortable truth. Tablets aren't the next smartphone. They're the next PC.

Smartphones—particularly those produced by Apple and Samsung—have some nice characteristics that have made them tremendously profitable. In many markets, their price is heavily subsidized by mobile network operators. Devices that should be cripplingly expensive for most people—who really has $600 to spend every 18 to 24 months on a phone?—are made to appear deceptively cheap.

Even when not subsidized, their usage model makes semi-regular replacement a necessary evil. Because you take your phone with you wherever you go, lost, dropped, toileted, or otherwise damaged smartphones are a fact of life. Combine that with batteries that lose their charge capacity over time and you're left with devices that need to be replaced. If not on the two-year cycle that manufacturers would like, then at least on a three-year cycle.

With their initial explosive growth, tablets were welcomed by manufacturers as the next smartphone: nice expensive gadgets that you could sell to people every couple of years. And for a short time, that's what they looked like. While prices weren't smartphone high, they weren't bad for devices that were simple enough to design and build.

And then...

We were discussing at the Orbiting HQ what it would take to prompt our tablet owners to upgrade or replace their tablets, generally a mix of the last couple of generations of iPad. The consensus was "a lot." Screen resolution, at least on existing "retina" devices, is as good as it needs to be. Battery life is at the level of "good enough." Shaving a bit of weight off is nice, especially for the non-Air owners, but not so nice as to justify buying a whole new tablet. It's not like any of them are heavy. Fast processors? What for?

The low-hanging fruit of easy incremental improvements seems to be tapped out. Short of an unpredictable revolutionary new feature, our staff felt that they'd stick with their tablets until they broke, their batteries became useless, or they ceased to receive software updates.

A tune we've heard before

There's a big technology market that has already seen this pattern play out with PCs. Once upon a time, PCs were replaced fairly frequently, perhaps every three years, because new ones were so substantially better thanks to Moore's Law and the rapid progress in single-threaded processor design.

But for many use cases, that progress more or less stopped in the mid-2000s. Single-threaded performance still gets better, but not in leaps and bounds the way it did before. As a result, the rapid performance scaling that PC users had become accustomed to, wherein existing software was made faster just by upgrading the processor, became much less significant. And that problem didn't matter anyway, because software itself was good enough.

So people stopped buying PCs. They didn't stop using them—all those good enough Windows XP machines that are still out there are still serving some kind of a purpose—but replacements were driven by necessity rather than any sense that the new machines would be better than the old ones.

Unable to win sales by making PCs substantially better, the OEMs slashed prices. Netbooks epitomized this; they cut dozens of corners in screen quality, keyboard size and quality, thickness, and even performance. But they sure were cheap. Slashing prices propped up PC demand, at least for a while. Then PC OEM profitability slid, causing trouble for the likes of Dell and Sony, the latter leaving the market entirely.

When tablets were new, they were regarded as a kind of new netbook—cheaper to build than old netbooks, but comparably priced. Salvation for the OEMs, a way to prop up their profitability and win a load of new sales. That hasn't really happened.

It took PC OEMs the better part of 30 years to slash prices to the knuckle and suck all the profit out of the market, dooming their long-term prospects. It took four years for tablet OEMs to do the same. The race to the bottom was fast, and it was furious, and you can get a Windows or Android tablet for $100 or less. Meanwhile, the companies trying to compete with slightly more expensive, higher-quality hardware—companies like Apple and Samsung—are seeing their sales decline.

It turns out that tablets aren't the new smartphone and they're not going to provide regular sales at high price points. They're the new PC; if you've already got one, there's not much reason to buy a new one. Their makers are all out of ideas and they can't make them better. They can only make them cheaper.

On top of all that, tablets are getting squeezed in a way that PCs weren't. Small screen tablets have to compete with large-screen phones. The tablet is cheaper, but much of this is hidden by the widespread subsidies attached to new phone sales. Further, the smartphone is essential in a way that the tablet isn't. A large screen smartphone can do all the things a smartphone does (including important things like fit in your pocket and make phone calls) and it can do all the things a tablet can do... just with a slightly smaller screen. And among large screen devices, the laptop always has the edge as the richer, more capable device.

Who needs tablets?