The consumer market is currently driving surging demand for tablet PCs, but the situation is about to change as enterprises, including manufacturers and services providers, increasingly adopt the device. As tablets go mainstream in schools and businesses, an intense fight for market share is brewing, and I expect many of the current suppliers will lose out to the handful of companies that have established instant name recognition in the segment.
In coming years, tablet PCs will be showing up in many segments of the economy: the financial services industry is already using it and so are realtors, retailers, restaurants, schools, manufacturers, etc. Tablets are replacing books and laptops in cockpits, in police patrol vehicles, on manufacturing floors, and in students' school bags. The adoption rate is so high, tablet shipment could be as high as for wireless handsets.
Of course, Apple Inc. (Nasdaq: AAPL) already has a significant head-start. In fact, Apple's lead is so enormous that its iPad is beginning to be seen as the generic brand name for the device, much as Aspirin, invented by Bayer, has become the industry nomenclature for the pain killer. When people talk nowadays about tablets, the visual image that comes to many minds -- at least in the consumer market -- is that of the iPad. Rivals are trying hard to combat this, knowing full well that the longer the iPad is associated with the line of product, the harder it will be for their offerings to gain market acceptance.
There's hope for them. Even though Apple currently controls a more than 70 percent market share in the sector, this is expected to decline slowly in coming quarters as products from companies like Motorola Mobility Inc. (NYSE: MMI) and Samsung Electronics Co. Ltd. (Korea: SEC) gain greater acceptance. In the enterprise sector, companies like Dell Inc. , which is actively promoting its product to businesses, will likely penetrate in the manufacturing sector, an area where functionality, pricing, and durability might be more important than the design elegance so critical to winning in the consumer market.
Apple is not absent in the enterprise market, though. In fact, the company is currently one of the strongest players in the market as Timothy Cook, Apple's CEO, pointed out during the company's recent quarterly conference call with analysts. The statistics cited by Cook clearly show how big the tablet market is likely to become in coming years. Shipment of tablets might even exceed the sale of traditional notebook and desktop computers, according to some reports. Here's an excerpt from Cook's statement:
It's been just 18 months since we introduced iPad and the pace at which businesses worldwide are adopting this technology is unprecedented. Today, 92 percent of the Fortune 500 are testing or deploying iPad within their enterprises, up from 86 percent last year. Internationally, 52 percent of the Global 500 are testing or deploying iPad, up from 47 percent last quarter.
Every day, we learn about innovative new ways our enterprise customers are using iPad. The airline industry is a great example of the momentum we're seeing. United Continental Holdings is putting iPads in every cockpit to replace heavy, paper-based flight bags. In Japan, All Nippon Airways is now using iPad in training programs for flight attendants. Sonic Automotive is using iPad for customer check-in at the service department and also to provide analytics to regional managers. Aflac, Biogen and General Mills have developed internal apps that their field sales teams leverage daily, and technicians of Siemens Energy are bringing iPads along when they do maintenance work at the top of their wind turbines.
Cook's comments about how businesses are adopting and finding innovative ways to use tablet PCs point to a future wave. Many school districts and even a few countries are offering students free tablets and replacing textbooks with iPads from Apple, according to news reports: IPads Will Outnumber Computers in US Schools in Near Future, South Korea Will Replace All Paper With Tablets in Schools by 2015, New Thai Government Embarks on Free WiFi & Tablets for Schools Program, and Motorola ET1 Enterprise Tablet Debuts in Asia.
Are you ready for the tablet invasion?