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Are Tablets Doomed to Suffer Netbooks’ Fate?

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 {complink 7014|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, {complink 2376|Hewlett-Packard Co.} has announced it would halt production of its TouchPad tablet, and reports indicate the BlackBerry PlayBook from {complink 4644|Research In Motion Ltd. (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 {complink 379|Apple Inc.} is making money in the tablet market today, and recent news developments indicate the company may be running into some headwinds. On Monday, a {complink 7018|JPMorgan Chase} 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?

21 comments on “Are Tablets Doomed to Suffer Netbooks’ Fate?

  1. FLYINGSCOT
    September 27, 2011

    I believe tablets are niche because they are too big to be used as a portable PDA/phone type device and the user interface (for serious data entry) is too cumbersome compared to laptops and desktops.  However they are great for casual web surfing but not as a mainstream tool. 

  2. umbrarchist
    September 27, 2011

    Once the Apple Corps gets over its hyperactivity the tablets will go into decline.

    I would not be surprised if netbooks rise again.  The design is just too logical and more than powerful enough.  The media talking about email and browsing is just full of rubbish.

    Our problem is with Operating Systems.  The software is wasting processing power and these websites have too much fancy junk that wastes processing power too.  Leave a tab open and it just sucks up CPU power even when you are not looking at it.  Like advertisers take for grated that they have the right to waste CPU power and drain your battery.

    We need better browsers to block this crap.

    But the real point is users knowing enough to make use of the CPU power.  Who cares about the computer market or stock prices.  What can the technology do for me?  They are all von Neumann machines.

    http://www.youtube.com/watch?v=7dg96tefnEU

     

  3. AnalyzeThis
    September 27, 2011

    I have been posting somewhat anti-tablet messages for quite a long time. At one point I even thought tablets were near useless, but I have since softened my stance on that: I agree that tablets are a useful form factor in certain situations for many home users. The iPad is indeed pretty fun.

    However, I've consistently had these two core opinions:

    1) Tablet use within most corporate settings make little sense. There are very few situations where a tablet is the cheapest, easiest-to-use, and most practical device to accomplish a certain task at this point. There are also numerous issues in regard to deployment, security, and durability. For me, the tablet is strictly a consumer-only device at this point.

    2) There are far too many companies churning out Android-based tablets. Not only are many of these products mediocre, but not many people really want them: iPad's are much cooler and enjoy better app support. And I'm going to guess Amazon's upcoming tablet will be much cheaper. Plus, the Amazon integration will differentiate them from all these generic slabs. There simply isn't enough demand for all the non-iPad tablets currently being released. And it's a really bad sign that it's not even truly holiday season yet and we've already seen fire sales.

    I think the iPad will continue to enjoy success. Apple is indeed “fine.” But for all these other players (outside of Amazon)… eventually the hype will die down and much of their product will remain unsold. At the very least, the results will not be what they had hoped for.

    I certainly think HP won't be the first company to abandon ship on the market. I believe many others will soon follow in their awkward footsteps.

  4. _hm
    September 27, 2011

    Apple may be in process of introducing novel device like Tablet with TV and other more novel features. This may be reason to reduce order by 25%.

     

  5. Himanshugupta
    September 27, 2011

    @DennisQ, i have the same opinions as you have. I strongly believe that until 1) we find a better use of tablet rather than just another gadget and 2) the prices are under 200 USD, tablets will find it hard to make a long lasting impression in the consumer segment. Creating space between smartphone and laptop is more of a marketing stunt.

  6. Ms. Daisy
    September 27, 2011

    @Flyingscot, do you feel the cost of the ipad merits it use as you stated “they are great for casual web surfing”? Will the netbook which is cheaper not serve the same purpose. 

  7. Parser
    September 28, 2011

    They have to evolve just like any other product to stay popular.

    With progress in technology tables have to change. For example let say a paper thin display would become as good as present displays it would change the look of a tablet dramatically. Maybe a new transparent, but palpable keyboard could be put over the display so gestures and key strokes could be applied right there. If anyone puts a tablet computer on the market it has to have something unique to appeal. A copycat of functionalities will not make it. 

    So far Apple is pushing technology in the right directions. I think that Amazon is situated well to differentiate and keep top technology advances but different from Apple. 

  8. jbond
    September 28, 2011

    I don't believe the tablets are doomed like the netbooks, but I do think they will level off on hype and sales. When this occurs, there will be many companies exiting the business. Tablets have many advantages over the netbooks, but lack some of the lap top qualities like faster speeds, more memory and much more data storage. Not to mention a dvd/cd player, which you need an external unit to plug into your tablet for this feature.

  9. JRHami
    September 28, 2011

    I'm a fan of history, but the tablet experience as defined by iPad(2) is dramatically different from that of the netbook.  About a year ago I bought an Acer netbook for my son and within 1 day he was so disapointed with the user experience that he asked that I return it.  The display was a pain, never showing documents correctly, the responsiveness slow, and the software useless.  From my sons perspective it was a small horribly performing laptop.  The battery life was great but the user experience was miserable.

    Enter the iPad2 6 month later.  The user experience was completely different – no mini keyboard, incredible battery life, thin enough to carry anywhere, and large enough screen to share with others.  But by far the most remarkable aspect were the apps.  With more than 500,000 apps available and many developed for the unique features of the iPad, the iPad can be quickly customized to the unique needs of the user.

    Netbooks died because the failed to deliver a fantastic user experience.  Tablet will thrive as long as the continue to serve a unique user need.

  10. Eldredge
    September 28, 2011

    I agree – the tablet has more versatility than the netbook, and does provide a better user experience, expanding both utility and consumer acceptance over the netbook.

  11. elctrnx_lyf
    September 28, 2011

    I think the tablets can not be striked off that soon. They play a huge role in the future, particularly for the kids entertainment and as ebook for students. But this is surely may not be a professional device since there is always a smart phone which is as good as a tablet with smaller screen.

  12. electronics862
    September 28, 2011

    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..

  13. Taimoor Zubar
    September 28, 2011

    “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?

  14. bolaji ojo
    September 29, 2011

    @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.

  15. bolaji ojo
    September 29, 2011

    @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.

  16. bolaji ojo
    September 29, 2011

    @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.

  17. bolaji ojo
    September 29, 2011

    @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.

  18. Tim Votapka
    September 30, 2011

    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.

  19. Ashu001
    September 30, 2011

    Bolaji,

    This post was a honest and most realistic portrayal of the roles that Notebooks play in our professional lives.

    Without them its very tough for most professionals to do half the stuff they do.

    Its very true that writing a long email would have been a massive pain on a tablet.

    Regards

    Ashish.

  20. jpcarvalhinho
    October 4, 2011

    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.

    Great reading.

  21. hwong
    October 5, 2011

    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.

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