On March 3, Gartner lowered its growth projection for worldwide shipments of PCs from 15.9 percent to 10.5 percent. A big reason for the reduction: “growing consumer enthusiasm for mobile-PC alternatives, such as the iPad and other media tablets,” said George Shiffler, Gartner’s research director, in a statement.
Growing Demand for Tablets
According to Strategy Analytics (Jan. 31), global tablet shipments grew 120 percent from the third quarter of 2010 to the fourth quarter, reaching 9.7 million units shipped. Apple commanded 75.3 of the market, followed by Google Android with 21.6 percent and others made up the remaining 3.1 percent.
IDC predicted (Jan. 18) the global tablet market will grow from around 45 million units in 2011 to 71 million in 2012.
Meanwhile, a Boston Consulting Group survey recently found (March 1) that 67 percent of U.S. consumers are familiar with tablets and e-readers (up from 54 percent last year) and half of these respondents (33.5 percent of all consumers polled) plan to buy a tablet or e-reader in the next year (up 3 percent from last year).
Manufacturers Pumping Out New Products
Last week, Apple unveiled the iPad 2, which features a dual-core microprocessor and two video cameras. It is also thinner and lighter than its predecessor. “The new version will start at $499, which is the same price as the original model,” wrote Ian Sherr of the Wall Street Journal (March 2). “It will be available in black and white colors and offered on both AT&T and Verizon Wireless. Mr. Jobs said it will begin shipping on March 11 in the U.S. and in more than two dozen other countries on March 25.”
The Trefis Team on Forbes.com wrote Monday (March 7) that while Apple currently dominates the tablet market, 2011 could bring meaningful competition from RIM (with its BlackBerry Playbook, rumored for an April release), Motorola (whose Android-powered Xoom tablet was released Feb. 24), Samsung, Dell and LG.
“Dozens of hardware manufacturers are scrambling to bring their own variations to market this year: Hewlett-Packard with the TouchPad, HTC with the Flyer, LG with the G-Slate and BlackBerry with the PlayBook,” wrote Jenna Wortham of the New York Times (March 6).
Apple Underselling the Competition
One advantage of the Apple iPad 2, Wortham noted, is its low price point. Apple has cut costs in a number of ways:
- Deep pockets: With $60 billion in cash reserves, Apple has formed strategic partnerships with suppliers, reducing manufacturing costs.
- Avoiding licensing fees: For the iPad, Apple designs its A4 and A5 processors in-house, through a company it acquired.
- Subsidizing costs: The Apple App Store generates over a billion dollars a year.
- Its own store chain: Apple avoids markup from a third party like Best Buy.
“Sarah Rotman Epps, an analyst with Forrester Research, predicted that pricing would become increasingly important in the tablet market because as more options appeared – particularly cheaper, no-name Android-powered tablets – shoppers would want to pay less,” Wortham wrote.
“Consumers expect that over time, electronics get cheaper,” said Epps. “They’re seeing all these other devices in the market and not necessarily distinguishing between processor speeds. There’s a huge variation in price and power but from a distance, they all look like 7-inch touch screens.”
Microsoft Tablet Delayed until 2012
On March 4, Bloomberg reported that Microsoft wouldn’t release tablet to compete with Apple, Google and RIM until the 2012 back-to-school season.
“Public testing of a new version of Windows will begin at the end of this year with partners and customers,” wrote Ian King and Dina Bass, quoting an anonymous source. “Microsoft is working to update its Windows 7 operating system with features more tailored to the touch screens, size and batter life of tablet computers to win a place in the surging market for the devices.”
“If 2011 is the year of the tablet wars, Microsoft will be awfully late suiting up for that battle,” said Gartner analyst Michael Gartenberg. “It’s not a good position to be in.”ta