Anytime I think of the decision by Hewlett-Packard Co. (NYSE: HPQ) to exit the tablet PC market, I recall the story of the disappointed gold prospector who sold his concession only to find he would have struck the mother lode had he dug just three feet farther.
A similar situation may be developing in the tablet market. Many OEMs have crowded into the market, eager to replicate the wild success Apple Inc. (Nasdaq: AAPL) experienced with its iPad. Countless companies like HP, Research in Motion, Motorola Mobility, Samsung Electronics, HTC, and Barnes & Noble are hawking tablets but have not made a dent in Apple's marketshare. The only company that has experienced surging demand for its tablet is Amazon.com Inc. (Nasdaq: AMZN), which will become the No. 2 seller by the end of this quarter, according to iSuppli Corp.
What's the secret sauce? I can think of two lessons companies can draw from the story of our disappointed gold miner. First, many of the OEMs in the tablet market lack an understanding of the sector, having plunged in only because a competitor redefined the sector and ignited huge growth. It's easy to forget that Apple didn't create the tablet PC -- it offered a vibrant ecosystem in conjunction with application developers to support the product. But Apple wasn't the first to introduce a smartphone or tablet. Both products existed long before Apple rolled out the iPhone and the iPad. What Apple did was offer products that got consumers and enterprises excited.
Further evidence of Apple's impact on the tablet market emerged in a report that IDC released today. The research firm said businesses in Europe are eager to deploy tablets for enterprise use. IDC forecasts sales in the EMEA area will surge to more than 20 million this year. Tablet sales in the first nine months of the year rose to about 12 million units, and consumers and businesses will buy more than 8 million in the last quarter of the year, the report said.
IDC's explanation of why enterprises are "keen to deploy tablets" is very illuminating about the impact Apple has had on the sector:
More than 22% of businesses think that the present generation of tablets defined by Apple iPad are more suitable to their needs (for example, meter reading, inventory management) rather than their present equipment, such as traditional tablet devices or vertical application devices...
Tablets are perceived as perfectly well suited for several key vertical applications such as:
Equipment maintenance, meter-reading (water, gas, electricity), proof-of-service in the field service category.
Asset and inventory management, telematics and direct store delivery in the storage and logistics, travel, and distribution verticals.
Basically, businesses believe the current generation of tablets is more utilitarian than the predecessors. Apple obviously blazed the trail, but many of the products introduced later by competitors have been disappointing. IDC questioned offerings from Apple competitors: "Do vendors have a clear business strategy, robust products and solutions, competitive pricing, and a focused vision to target and address commercial needs?"
From all I have seen so far, the answer is a qualified yes for some and a jangling no for others. Amazon is doing fine, but the performance of other players stretches from subpar to mildly hopeful. Motorola Mobility and Samsung are still in the game, though both are locked in patent wars with Apple. HP has crashed out of the market, and RIM is an example of the walking wounded. (The company's BlackBerry PlayBook crashed, and it recently took a hefty $360 million after-tax writedown on its tablet inventory.)
Which brings me to the second lesson companies can get from the experience of our failed miner. It's good to know when to cut losses, but giving up without fully exploring all possibilities or supporting a product with the right resources is a worse strategy. A mining engineer contracted by the new miner to review the "failed" mine reportedly suggested a little more digging. And that was all it took to turn the site into one of the more profitable finds of the year.
Were HP's TouchPad and RIM's BlackBerry PlayBook doomed to fail? What could the two companies have done to turn these tablets into winning products? Suggestions are welcome.
I think RIM can do well. It is just a matter of having innovative and business driven leaders who can make the company to shoot out within a short time.... It boiled that strategic approach
@anadvy, I think rejecting Amazon's offer is a wise move. Although at some point, RIM will need to seek an alternative options. Either to merge with other similar technology company or come up with an innovative idea that will propel the company from its current position. I will like to see the company progress from its current position. What's your opinion?
@mario8a, I hope it is not RIM's last for all it's worth. Can the company survive another year? Well it's wait and see game. I think it can survive another year or so doing badly, if no solution is reached quickly. What's your view?
@Anna, RIM recently rejected overtures from online seller Amazon.com to acquire the company. Do you think this was right move by RIM to reject the offer from Amazon ?
@tirlapur, coming out with a new service strategy in today's competitive smartphone market without tangle into patent infringements allegation, chance seems very low. 2011, we have had many cases of patent court fights/infringements on IPs, why? Simple, everyone's battling to hold on to its market share potion.
Latest patent infringements fight, report according to BBC, BT has accused Google infringed on its IP. Especially with high fly brand and famous names in phone business. Am slightly differ on this - RIM's running out of idea --- the market seems very tight, i think.
Take a look at Nokia's Window OS phone - has it made any significant difference in market so far? Just that majority of electronics consumers like to join on the bandwagon, and it can take a while to change people's mind.
@tirlapur, true, it appears RIM is running out of ideas. this is a real dilemma and disappointing outcome. I seriously hope the company's decision and strategy works.
I believe RIM can certainly turn things around itself with appropriate strategy.
@Anna, unfortunately RIM doesn't have appropriate strategy. RIM has pushed back new smartphones designed on its next-generation BlackBerry 10 software until the latter half of 2012 and this delay will create a huge opportunity for the competitiors. Many analysts now believe that even Windows Phone should now be a concern for RIM now.
@Barbara, I agree, a single point of failure for RIM is its systems outage related issue. This has continued to plague RIM. I'm sure the company is working hard to build more data centres to avoid future occurrence. As for HP, the name and its past glory its is saving grace. ( I hope it recovers from recent bad management errors, this is highly crucial for the company's future successes)
The new government rules and regulations may prove to be a double-edged sword: achieving some positive goals but costing organizations a great amount of money and work and, perhaps, lost sales as well.
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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.
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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.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
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.
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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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