Drop yourself in any world capital and it’s likely the majority of people there are glued to their smartphone. Smartphone penetration, powered by our insatiable appetite for apps — 48,000 apps are downloaded every minute — is predicted to hit 70% worldwide by 2017.

Tablets, on the other hand, have a more tenuous grasp on our daily screen time.  They are more of a nice-to-have than a must-have device, better suited for watching Netflix in bed than messaging with friends. With larger screen smartphones, or “phablets,” encroaching on tablets, it begs the question, is there a chance that the tablet as we know it could soon disappear?

The data is increasingly pointing towards consumers converging towards phablets as a best of both worlds solution. Tablets and smaller screen smartphones will still exist, albeit take a much smaller market share. It’s likely tablets and smaller screen smartphones will be relegated to more niche use cases. The tablet, for example, will continue to be a great business device for bricks-and-mortar retail sector such as a portable cash register or menu, and used by traveling service professionals.

However, apps are now driving engagement with our smartphones, and in order to fully benefit from the app experience, consumers are asking for larger, yet still portable, screens – enter the ‘phablet’.  As such, phablets are here to stay and in the future will likely rise to the top, outperforming traditional smartphone and tablet sales.

Tablet devices are on the decline

Tablets took off in 2010 when Apple released the first iPad. One year later, Apple released the iPad 2, which remains the most popular iPad on the market today with a 27% share of all iPads, despite the more recent releases of the iPad Air 2 and iPad mini 3.

Not to be outdone, a variety of tablets are also available on Google’s Android OS, most notably the Google Nexus and the Samsung Galaxy Tab series. These tablets, though not as popular as the iPad, still generate significant sales.

There’s recently been a lot of talk around the lack of new tablet innovation and the length of the tablet lifecycle. Despite strong sales over the past four years, even Tim Cook admitted iPads have hit a road bump.  And it’s not just iPads that have hit a road bump: both Android tablets and Apple iPads have declined over the past year, after peaking early in 2013.

Tablet marketshare

Despite Apple launching new iPads every year, and Android tablets coming out even more frequently, the total percentage of tablet devices has been on the decline since early 2013. Most recently in Q3 2014 (the same quarter Apple released the larger-screened iPhone 6), the share of tablets among all mobile devices has hit an all-time low of 17%.

Smartphones are getting larger

Coinciding with the decline of tablet usage has been a rise in the screen size of all smartphones.  Even among more traditional smartphones, the trend towards larger screen sizes is clear, with both Apple and Android devices converging around a 5.5-inch screen size.

Smartphone screen size

Since first debuting in 2010, the Samsung Galaxy S has grown in screen size by 28%. The iPhone, which remained static at 3.5 inches in its first few years, has grown by an even larger 57% since 2011.

When phones were used only for calling people, screen size was fairly unimportant. However, with the proliferation of apps, smartphones are no longer primarily used to make calls. Messaging, social networking, navigation, and gaming are only some of the key non-voice functions smartphones perform. As mobile app usage continues to overtake desktop internet usage, the primary focus of smartphone manufacturers is now to allow users to more meaningfully engage with the wide variety of apps available. And so, we’ll likely see smartphone form factors continue to evolve to suit this need — think larger screen sizes, different types of keypads, ergonomic features, compatibility with audiovisual devices, and different levels of touch screen sensitivity.

App engagement is stronger in larger screen devices

With traditional smartphones, one of the toughest challenges with app engagement has been how to fit a lot of information into a small screen. In fact, larger screen devices see an overall 34% more time in app, primarily in categories such as music, gaming, and photography. Consumer behaviors in these apps push the need for a larger screen, and it’s clear that manufacturers have responded.

Certain app categories show a higher lift for time in app in large screen devices.

Above: Certain app categories show a higher lift for time in app in large screen devices.

Where will this take us?

Apps are the future; they are the primary way people perform complex tasks on mobile devices, and ‘appification’ is also shaping the way we interact with desktop websites and how they are designed.  The dominance of apps has led to larger smartphone screen sizes, and as smartphones get bigger the data shows that tablets are on the decline. Consumers seem to want just one mobile device, but will phablets emerge as the winner?

Data on the recent iPhone release suggests that consumers are getting ready for a phablet-led world. Both the iPhone 6 and iPhone 6 Plus have larger screens, by 17.5% and 37.5% respectively, than their predecessor the iPhone 5s. The iPhone 6 has also doubled the market share of the 5s at this time last year. Even more telling, the larger screen iPhone 6 Plus is showing stronger user engagement than the iPhone 6, as measured by session length and app launches.

This is good news for app developers. It will, however, require that they adapt their mobile marketing strategies accordingly. In particular, app developers should start optimizing apps for larger screen devices and mobile marketers should refine their user engagement strategies to take advantage of people spending more time in apps and opening them more frequently.

As apps become even more sophisticated and solve more daily needs, there’s a strong case for the larger screen phablets winning the race between phones, phablets and tablets.

Dave Hoch is a business analyst for Localytics. A lover of data and racing, Dave identifies mobile trends in the high speed world of app analytics. Find him on twitter @thedavehoch.

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