Australian tablet sales dropped by 20 per cent in 2014, impacted by increased demand for the iPhone 6, larger screen Android smartphones and wearable devices such as the Fitbit, said analyst firm Telsyte.

At the end of 2014, around 13 million Australians, or more than half the population, had access to a tablet with Facebook, interactive games, news and video content the most frequently accessed applications on these devices.

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Apple reclaimed the top spot in the tablet market in the second half of 2014, making up nearly half of all unit sales from July 1 to December 31. But Windows-only tablets saw an increase in year-on-year unit sales.

Telsyte senior analyst, Alvin Lee, said low cost tablets purchased as gifts have lost their appeal and more consumers are looking towards wearable devices as presents, or to meet their gadget buying urges.

"The average cost of a smart fitness band is similar to an entry-level tablet, making it a popular alternative purchase for those who already own a tablet," he said.

Wearable devices such as Microsoft HoloLens and Samsung's Gear VR are expected to challenge the role of tablets in a connected-home environment.

"In the coming years, we are likely to see more connected-home apps being developed for wearable devices such as virtual or augmented reality headsets," Lee said.

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Despite the drop, Telsyte is predicting that the tablet market will come back this year as Windows-based PC users look to upgrade to convertible or hybrid devise that enable them to run PC applications on a tablet.

But computers remain the preferred device for creating documents and media editing, said Telsyte MD, Foad Fadaghi.

"Telsyte believes there will be a strong demand for convertibles or 2-in-1 devices, as mainstream business and consumer users look to update to Windows 10 later this year," he said.

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