Worldwide tablet shipments are expected to reach 221 million units in 2013, up 54 percent on year, IDC forecasts. Next year, shipment growth is projected to slow to 22 percent on-year to a total of 271 million units.
And by 2017, annual market growth will slow to single-digit percentages, the research firm said.
A key reason for this is that consumers are opting for large smartphones over small tablets, said Tom Mainelli, research director, Tablets at IDC.
“In the U.S. where tablets have been shipping in large volumes since 2010 and are already well established, we’re less concerned about big phones cannibalizing shipments and more worried about market saturation,” he added.
Mini tablets lose appeal
While consumer preferences have trended towards small tablets over the past 24 months, the rise of large phones could push consumers back toward larger tablets, the research firm said.
(Read more: Asia tablet makers take a bite out of Apple)
“The difference between a 6-inch smartphone and a 7-inch tablet isn’t great enough to warrant purchasing both,” it said.
“Apple’s launch of the iPad Air, a much thinner and lighter version of its 9.7-inch product, could herald another market transition back toward larger screens, presuming consumers are willing to pay the higher costs associated with bigger screens,” it added.
A transition towards larger tablets could be a positive development for Windows tablets, which generally offer a larger screen.
(Read more: Taste for tablets offsets starved PC market: Study)
IDC forecasts Microsoft will grow its tablet market share to 10.2 percent by 2017, from 3.4 percent currently.
While Google’s Andriod and Apple’s iOS are set to remain leaders in the tablet space, their market share is expected to fall to 59 percent and 31 percent, respectively, by 2017, from 61 and 35 percent, currently.
—By CNBC’s Ansuya Harjani; Follow her on Twitter @Ansuya_H