Sales of tablets will overtake notebooks by 2016, and Apple's dominance of the category will start dropping within two years. Those are some of the conclusions in a new report from NPD DisplaySearch.

The report, released Thursday, predicts that sales of tablets will grow from 81.6 million units last year to about 424 million by 2017. Key factors cited for the growth in demand include increasing diversity of operating systems, new features, and an increase in the capacity of component manufacturing.

'Opportunities to Break New Ground'

Richard Shim, NPD DisplaySearch senior analyst, said in a statement that, to date, the category has been dominated by Apple and "a number of competing products that are similarly configured to the iPad." But he added that the market is maturing and showing "opportunities to break new ground," thus providing more choices that are driving demand.

One such example of breaking new ground cited in the report is Amazon's Kindle Fire, a low-priced device whose appeal and business model is built on the availability of content from that massive online retailer.

Another area of differentiation noted in the report is operating systems, which now include Apple's iOS and Google's Android, and soon will include Microsoft's Windows 8 RT for ARM devices. Apple's platform, which has overwhelmingly dominated the picture, is expected to drop from 72.1 percent market share this year to just slightly above 50 percent by 2017.

One reason for the drop will be Android's continued rise, from 22.5 percent now to 40.5 percent. Windows 8 RT, released later this year, is expected to grow to 7.5 percent within five years. The report predicts that RT will greatly overshadow market share by Intel-based, Windows 8 tablets.

The NPD report comes on the heels of several other studies of the tablet market which offer different perspectives.

iPad as 'All-Purpose Tablet'

At the end of April, for instance, the Consumer Electronics Association found that one in five U.S. adults who go online owns a tablet, and that over two-thirds of online users expect to buy one in the future.

An IDC report released Thursday found a sharp drop for Android-based tablets in the first quarter of this year, compared with strong sales for the iPad. As a result, total tablet shipments dropped by 38.4 percent from the previous quarter's record-breaking sales. But the growth rate for Android units year-over-year is still 120 percent, compared with 7.9 million units in the first quarter of last year.

IDC attributed Apple's continued strong sales to its positioning of the iPad as "an all-purpose tablet, instead of just a content consumption device," plus the decision to keep a lower-priced iPad 2 after the release of the new iPad in March.

A big factor in the Android drop was a decline in Kindle Fire sales, with its market share falling from 16.8 percent in fourth quarter of last year to just over 4 percent in first quarter. Kindle's sales will not be helped by the announcement this week that Target will no longer carry the item. But IDC also saw that Android-based tablets from Samsung and Lenovo are beginning to get traction, and it expects the platform to rebound.

We asked Al Hilwa, program director for application development at IDC, about how the future looked for application development on the emerging Windows tablets.

He said that the Intel-based tablets "are going to have a lot of form factors, including convertibles," will ship earlier than the ARM-based ones, and will have "the richest application development" as they emerge. Hilwa pointed out that RT tablets will have a much slower ramp-up for application development, an evaluation which would seem to run counter to NPD's prediction for RT's growth.

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