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Why operators will find it hard to sell tablets

On the eve of iPad 2.0, it’s time to think again about this curious new computer. My intuition tells me that this product category will behave very differently from the iPhone and will not be subject to the same sales ramp.

The iPad has been on the market for less than a year but it’s still a puzzle for many. It’s a product that’s often seen as an iPhone product line extension. From a hardware point of view, it certainly seems to be. It has an almost identical internal architecture and uses almost the same software. An engineer would look at it and reasonably say it’s the same thing.

However, from the way it’s used and the way it’s sold, it has very little in common with its smaller cousin. There are plenty of experts who can detail how the products are used differently, but I would highlight the portability of the iPhone makes it suitable for a completely different set of tasks than the less portable but more immersive iPad.

But what I want to dwell on here is how differently the products are sold.

Where is the Windows Phone Tablet?

The Windows Phone platform currently has hardware specifications that imply a cellular phone device. What is interesting in light of the new WebOS TouchPad, the newly announced Android tablets, the RIM Playbook and the iPad is that this supposed “third horse” of Windows Phone has no hint of present or future presence in the tablet form factor.

That might have something to do with the plans to move Windows to the tablet form factor. Perhaps Microsoft thinks that pocket size devices deserve a separate operating system, platform and ecosystem than portable mobile computers. Perhaps Microsoft plans to have two separate interfaces for these tablets (slates vs. tablets?) Then again, Ballmer held up a Windows Phone and said “This is Windows too.”

Gartner: as a Media Tablet, iPad deserves to be ignored in PC rankings

“Media tablet hype around devices such as the iPad has also affected consumer notebook growth by delaying some PC purchases, especially in the U.S. consumer market. Media tablets don’t replace primary PCs, but they affect PC purchases in many ways,” Ms. Kitagawa said. “At this stage, hype around media tablets has led consumers and the channels to take a ‘wait and see’ approach to buying a new device.”

Gartner Says Worldwide PC Shipments Grew 7.6 Percent in Third Quarter of 2010.

Fascinating. I’d love to hear more about the non-iPad “media tablets” that delayed PC purchases last quarter. Maybe I don’t get out enough.

But more to the point, let’s combine the data from Gartner and the forecast for iPad.

I show below the impact of the iPad on PC vendor sales. I’m using my own estimates of world-wide PC sales (you can see other estimates here (Apple 2.0))

The world-wide PC units shipped without and with iPad:

Hewlett-Packard is bundling a tablet with a $399 printer

The bottom line: HP’s decision to bundle a tablet computer with its new $399 printer could make trouble for competitors.

HP’s New Tablet Could Be an iPad Spoiler – BusinessWeek

HP took the control panel display from a printer and made it detachable. The idea, according to the manager in charge, is that this will encourage printing. Printing is a good business for HP because they manage to charge $7500 per gallon of ink.

I suppose there can be some sense to this idea but I don’t use inkjet printers so I can’t judge how popular this can be. But the headline suggestion that the new display panel cum web pad is “an iPad Spoiler” calls into question the author’s motivations. Maybe he did it for a bet.

But the real gem is a quote from Richard Shim an IDC PC analyst who says “Everyone is trying to figure out the opportunity for these types of devices, how to position media tablets in a way that they don’t cannibalize other businesses.”

That’s an interesting comment coming from a PC analyst. It says that the vendors in the industry are already feeling that the iPad is substituting regular PCs (and hence the need for a response that is sustaining not disruptive).

This acknowledgment means it’s only a matter of time before the idea of iPad as PC morphs from crazy talk to conventional wisdom.

Android tablets without apps

Android is an open platform. We saw at IFA 2010 all sorts of devices running Android, so it already running on tablets. But the way Android Market works is it’s not going to be available on devices that don’t allow applications to run correctly. Which devices do, and which don’t will be unit specific, but Froyo is not optimised for use on tablets. If you want Android market on that platform, the apps just wouldn’t run, [Froyo] is just not designed for that form factor.

via Google’s Hugo Barra: Android 2.2 ‘not optimized for tablets’ – Google 24/7 – Fortune Tech.

How appealing are tablets that don’t run any apps? Or content?

It still amazes me that a Google exec would say that it’s acceptable that consumers are led to make purchasing mistakes with his product.  Apparently any malfeasance is excusable in the name of openness.

Microsoft OEM VP on tablets: wait and see, could flop like netbooks

Giving Android the green light:

In addition, for the time being, Microsoft will not offer new Windows versions to support non-Intel architectures that are targeting tablet PC development, noted Guggenheimer.

The formation of a market segment for a new product category necessitates the existence of a supporting ecosystem made up of a complete industry supply chain, Guggenheimer emphasized. He cited the netbook market as an example; units were selling well initially and people believed that the market was going to be established as a new segment, but recently market growth has slowed down considerably, Guggenheimer pointed out.

via Whether tablet PCs can become market segment is still uncertain, says Microsoft VP.

I remember when Microsoft used to be paranoid.

Ballmer: No plans for WP7 in tablets

We’re focused on putting Windows Phone 7 in phones, no plans for tablets.

Ballmer: No plans for WP7 in tablets? | WMExperts.

Keep pining for those fjords.

HP WebOS tablets, netbooks

“During a conference call about HP’s acquisition of Palm Wednesday, Todd Bradley, executive VP of HP’s Personal Systems Group, said that there are “a lot of opportunities” with the purchase. Namely, he said, HP could use the WebOS mobile operating system as a touchscreen interface for new hardware such as a tablet or netbook.

Palm CEO Jon Rubinstein and Brian Humphries, HP’s senior VP of Strategy and Corporate Development revealed that HP plans to “double down on WebOS,” which is considered the “prized asset” of the acquisition. The two reportedly mentioned the scalability of WebOS, implying that HP plans to bring the platform to multiple hardware form factors. HP even said it has already tested WebOS for its scalability.”

http://www.appleinsider.com/articles/10/04/28/hps_purchase_of_palm_could_lead_to_webos_tablets_netbooks.html

Oh, and someone from HP also said they will still do business with Microsoft.

Let’s see…HP is adding its own mobile OS, HTC was hunting for its own mobile OS but is living on skinning, Palm made its own mobile OS and managed to escape oblivion, Samsung launched its own mobile OS, Apple has its own mobile OS, RIM has its own mobile OS and bought the kernel of another, Microsoft has its own mobile OS–really more than one, Nokia has its own mobile OS(s), and Google has its own mobile OS (plus Chrome). Chances are that Amazon is building its own OS as well.

Only Microsoft and Google are still betting that licensing is going to be the way forward but each is hedging its bets: Microsoft with Kin and Google with Nexus One.

Can anyone seriously suggest that the mobile computing industry is rapidly moving toward horizontal modularity or even consolidating like the Operators are hoping?

Before you answer, consider also other horizontal players that are no longer with us: PalmSource, Symbian (and, give it a year, Windows Mobile).

Nokia Tablet?

“Getting a strong Intel backing here could be an important advantage,” says MKM Partners analyst Tero Kuittinen, who sees the Nokia tablet as part of an array of mobile computers.

via Nokia Aims a Tablet at Apple: Exclusive | Technology | Financial Articles & Investing News | TheStreet.com.

No doubt Nokia’s tablet plans preceded the launch of the iPad–product cycles being what they are.  And the relationship with Intel is certainly a big part of this push (vs. on the handset side where Intel has no cards to play).

However, the elephant in the room is what software will run on this Tablet.  Any discussion on competitive potential of iPad competitors must include a view on the software/platform and ecosystem that tablet will rest on.

This is not a hardware business.  In fact, the hardware is designed to get out of the way.

The hardware is so understated — it’s just a screen, really — and because you manipulate objects and interface elements so smoothly and directly on the screen, the fact that you’re using an iPad falls away. You’re using the app, whatever it may be, and while you’re doing so, the iPad is that app. Switch to another app and the iPad becomes that app. If that’s not magic, I don’t know what is.

source: http://db.tidbits.com/article/11152

Open always wins

ABI Research estimates that AOSP (or forked Android) is the fastest growing mobile operating system with a total share of units shipped of about 20%. This is not surprising considering that most Chinese vendors don’t include standard Android into their products. Indeed the current leader in China, Xiaomi has its own take on Android and includes a unique UI and set of services. This is also not a new pattern, Amazon’s fork of Android has been in development for many years and powers the second most used tablet in the US.

If one looks at the volumes of smartphones shipped by vendor, the most rapidly growing (Huawei, Lenovo, Xiaomi, ZTE, Coolpad and “others”) are likely to be using forked versions of Android.

Screen Shot 2014-08-07 at 7.06.09 PM

The reasons for this are many: a reluctance to deal with Google’s obligations,  Microsoft’s IP licensing costs[1] , potential litigation, politics (including bans on Google services in certain markets), etc. But the most likely reason is flexibility. Vendors competing on price and localization are looking to move quickly against each other and can’t wait for blessings from above. Belonging to some “Alliance” and all that it entails is just too much to ask for companies that are, so to say, delicate.

Notes:
  1. which even Samsung seems to be eschewing []