The world's top PC manufacturers are trying very hard but failing woefully to gain a strong foothold in the tablet PC market, according to the latest sales and shipment numbers for the two industry segments from IDC.
In a report today, the research and consulting firm identified the top five sellers of tablet PCs in the 2012 fourth quarter as Apple, Samsung, Amazon.com, Asus, and Barnes and Noble, in that order. Earlier in January, IDC listed the top five PC sellers in the same period as HP, Lenovo, Dell, Acer, and Asus, also in that order. Do you notice anything peculiar about the lists? Only Asus made the two lists.
Why are the industry's biggest PC manufacturers failing to gain traction in the tablet PC market and is there a chance for them to turn this situation around soon? I bet the top executives at HP, Dell, Lenovo, and Acer are asking themselves the same question. Tablets are growing fast and while the total units shipped in the segment is still below PC sales (52.5 million tablets vs. 89.8 million PCs) tablets are growing at such a rapid clip the segment would most likely exceed PC shipments within the next couple of years or so.
Tom Mainelli, research director of tablets at IDC, said in the statement above:
We expected a very strong fourth quarter [for tablets], and the market didn't disappoint. New product launches from the category's top vendors, as well as new entrant Microsoft, led to a surge in consumer interest and very robust shipments totals during the holiday season. The record-breaking quarter stands in stark contrast to the PC market, which saw shipments decline during the quarter for the first time in more than five years.
No kidding. The tablet market grew a torrid 75.3 percent in the 2012 final quarter while PC shipment shrank 6.4 percent. Only Lenovo and Asus increased their shipment during the quarter, by 8.2 percent and 5.6 percent, respectively. Contrast that with the situation in the tablet market. Apple Inc. (Nasdaq: AAPL) led again, with a 48.1 percent jump in unit shipment, to 22.9 million units from 15.5 in the comparable 2011 quarter. Samsung Electronics Co. Ltd. (Korea: SEC) was next in total units shipped (7.9 million vs. 2.2 million) but its rate of expansion was a sweltering 263 percent.
It's unlikely Apple will lose that top position anytime soon. All the other players are growing rapidly on a percentage basis but from a much lower base and unlike in the smartphone sector where Samsung has taken the lead from its North American rival, Apple is well entrenched in tablets. Aside from Samsung's offerings, competing products offered by Microsoft Corp. (Nasdaq: MSFT) (Surface) and AsusTek Computer Inc. (Nexus 7) have not gotten the favorable reception the manufacturers expected. IDC believes pricing of competing devices would have to come down if they were to make a dent on Apple's market share.
Ryan Reith, program manager of mobile device trackers at IDC, said in the same report:
There is no question that Microsoft is in this tablet race to compete for the long haul. However, devices based upon its new Windows 8 and Windows RT operating systems failed to gain much ground during their launch quarter, and reaction to the company's Surface with Windows RT tablet was muted at best. We believe that Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices. In the long run, consumers may grow to believe that high-end computing tablets with desktop operating systems are worth a higher premium than other tablets, but until then ASPs [average selling prices] on Windows 8 and Windows RT devices need to come down to drive higher volumes.
Looking at the tablet shipment numbers and the players involved, it's understandable why Microsoft got into the market. Its traditional partners in the PC market have been less successful in the tablet market so the company is trying to shatter the illusion that Apple cannot be dislodged from the top of the segment. So far, though, Microsoft has only reinforced the impression PC vendors aren't well positioned to compete in the adjacent, faster-growing market.
This won't stop Microsoft from leading the battle, though. It cannot afford to yield because too much is at stake. Like Intel, the world's biggest PC microprocessor vendor, Microsoft has found itself in the unusual position of playing second fiddle in a market many feels its operating system should be dominating. It's going to be a long, bruising fight.