Is the tablet PC market promising much more than it can deliver? I began wondering about this many weeks ago, but the question has become even more pertinent now as many manufacturers struggle to gain traction, despite the analyst projections of lofty sales. Even in developing economies, researchers say tablet sales will rise at a strong rate for the foreseeable future.
For instance, the research firm IDC said in a recent report that second-quarter media tablet shipments in Europe, Middle East, and Africa (EMEA) rose 394 percent from a year earlier and 82 percent from the first quarter, beating forecasts.
"IDC expects the EMEA media tablet market to continue to enjoy robust expansion, with shipments forecast to reach close to 22 million units, representing 9.1 billion euros in value in 2011," Eszter Morvay, research manager for IDC's personal computing group, said in a statement. "The second half of the year will see a further expansion of product availability, which will lead to accelerating competition and more aggressive price points. The Christmas season in particular is expected to be very buoyant with vendors positioning their products as the perfect Christmas gift."
Those numbers paint a rather rosy picture that diverges sharply from the experience of most manufacturers. In recent weeks, Hewlett-Packard Co. (NYSE: HPQ) has announced it would halt production of its TouchPad tablet, and reports indicate the BlackBerry PlayBook from BlackBerry (Nasdaq: RIMM; Toronto: RIM) is struggling to gain market acceptance. In fact, retailers have slashed the price of the PlayBook by as much as $200, according to reports.
All indications are that only Apple Inc. (Nasdaq: AAPL) is making money in the tablet market today, and recent news developments indicate the company may be running into some headwinds. On Monday, a JPMorganChase analyst in Taiwan said supply chain partners have indicated Apple slashed orders for iPad components about 25 percent recently. The news hurt Apple's stock price, pushing it down as much as 3 percent.
Does this mean iPad shipments will be softer in the fourth quarter? It's possible sales may not be as robust as the year comes to an end. But analysts themselves are not speaking with one voice. A JPMorgan Chase analyst in the United States took issues with the report filed by his Asia-based colleague and argued that "Apple is fine."
Sure, Apple is fine. It is the leader in tablets, with a market share of more than 70 percent, so it will continue to post stronger sales than competitors, even if the market swoons. However, if the first JPMorgan Chase report is true -- and it may well be, since the analyst credited his conclusion to shipments from suppliers -- then the tablet market may become more challenging than anyone assumes now. How? Remember netbooks? The small notebooks were once the rage of the electronics market, but shipments have since fallen off.
Is it possible that tablets are also the fad of the moment? I don't think this is necessarily the case, because of the wider range of applications for which tablets are being groomed and also because of Apple's presence in the sector. However, with prices dropping precipitously for other manufacturers, and with the electronics industry support base cranking up component sales, distribution, manufacturing, and logistics services for the tablet sector, executives need to take a short break to consider lessons learned from the dwindling netbook market.
Motorola Mobility, RIM, HP, and many other OEMs have jumped into the tablet market, but their sales have been dismal. We've all assumed this is because of Apple's better product and more devoted following, but what if tablets aren't all they're cracked up to be? What if demand is hot now but will eventually cool down to a more reasonable level? And what if they are just another niche product in an industry chock full of niche gadgets?
If you really compare netbooks and tablets, netbooks are more like low low price version of laptop but tablets(I really mean Ipadx) is just like a brand new computing platform full of software enbled features which make people feel good about it. It's like another symbol of your life. Probably the fate will be positively different.
For this product to really take off and replace the many gadgets we have, a "paradigm shift" will have to occur.
Maybe tonight with "Apple''s Assistant" software we will witness one. If you can interact perfectly with your device just by talking to it... forget keyboards/laptops for work/digital life.
Well presented experience from the train. I for one am a diehard laptop user and I have to say it provides just about everything I need. My trusty sidekick is the iPod Touch though which complements the toolset I need.
@Himanshugupta, Tablets will grow even faster if manufacturers can find a way to dramatically reduce prices. At $500 many will think twice before buying a tablet but at $99 to $199, millions will purchase one, even if only as a secondary device for home use or business application.
Amazon executives know this, hence the announcement Wednesday of a $199 kindle that is not quite an iPad but which comes close enough for many. The market will increase exponentially worldwide once prices come down enough. Of course, the margin will similarly be minuscule for manufacturers but that may be the price they'll have to pay to increase sales globally.
Suppliers can help advance this by finding ways to reduce component pricing and telecom services vendors can help too by subsidizing it for consumers.
@elctrnx_lyf, You nailed it. I want any office-based worker who has a tablet PC and a notebook to juxtapose the two devices and track which provides the most utility for them, which one they use more (for work) and which looks "cool" in a crowd. The answer won't surprise anyone.
Tablets are flashy, easier to carry around and useful for a wide range of activities, including playing games or reading news. They can also serve as a quick reference resource. Notebooks on the other hand are much more useful for business professionals in an office setting or even on the road when proprietary data may be needed for demonstrations or presentations.
Tablets have a role -- and, yes, so did netbooks. With a keyboard attachment or in wireless format, the utility of tablets will increase vastly but this addition basically transforms them into . . . you guess it . . notebooks.
The story on the manufacturing floor, of course, could be much different and this is where the extra-portability of tablets gives it a strong edge.
@JRHami, I accept the validity of your argument and your son's experience buttresses your point. I wish I could see tablets as the "wow" product many analysts believe it is but this is not the case for me. I am responding to your message on a train and will be spending the next five hours in the Amtrak coach. Since boarding I have written, edited and posted an article, responded to several emails and caught up on breaking news.A woman directly in front of me is hacking away on a notebook, writing emails and working on other desktop/laptop applications.
Across the aisle from me is a gentleman poking away at his iPad, another person in front of him played briefly with a smartphone positioned on top of a tablet PC (not an iPad). Neither of them, on the tablets or smartphone, could have completed as much work as I have done on my notebook. The lady in front of me is still banging hard on her notebok and I can hear her clattering sound as I write. As much as a tablet PC would have been cool for me to carry around, its utility for my work is limited. This applies to many other professionals.
This is one of the reasons why I believe tablets won't in a few years be as hot as many think they'll be. It's a nice device and may people will find it useful for various functions, including on the manufacturing floor, but I am glad I don't have to type this message on a tablet.
This doesn't mean the product won't continue to sell strongly, I just think they won't live up to the hype. As to the 500,000 apps available to iPad users, I liken these to the hundreds of channels on cable TV today; They are there but who watches them? The number of apps on iPad sounds cool but there's no way many of us are going to download more than 200 (ever?) -- and that may even be stretching it.
@jbond, There's a lot of hype built into tablet forecast despite all the talk of how much more versatile a product it is. I agree with you therefore sales will eventually level off and many of the current players will have to exit the market. Notwithstanding the current hoopla, tablets aren't any more fantastic than netbooks and regular notebooks.
I haven't heard of anything that a tablet can do that a netbook, installed with a similar operating system, cannot do. Apps can run on netbooks as well as they do on tablets and the small form factor is not a winning argument -- netbooks thrived initially on the fact that they are smaller than notebooks. I don't think tablets will dwindle in volume as much as netbooks but once all the hype is gone, they'll drop off in sales -- until the next evolutionary product comes along.
"The small notebooks were once the rage of the electronics market, but shipments have since fallen off."
I think this is a very interesting case. Tablets these days are becoming better in terms of their processing power, memory and the number of applications they support. Could it be that the decrease in the number of netbooks may actually be as a result of tablets? In other words, are people switching away from netbooks to tablets because they are getting the same convenience and features?
Netbooks are small sized with slow processors and a physical keyboard running onwindows or linux whereas the tablets are slimmer than the netbooks, lack a physical keyboard and runs on Apple iOS/Android Operating System. I feel tablets a must-have gadget as they can be used for entertainment as well as for work..
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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