Microsoft yet to find a toehold in 150 million/ $64 billion Tablet industry with the Surface!

ABi research reports that the tablet market will grow this year by 38% to 150 million units. But the Microsofts and Blackberrys will contiunue missing the boat! With 3% of the current Tablet markets globally, Microsoft, Blackberry and other unidentified OS implementations don’t show signs of significant growth.

The ABI Research report says that an estimated 150 million tablets will ship in 2013, worth an estimated $64 billion.The total number of tablets will grow by a projected 38% over 2012, and the total revenue will grow a projected 28%. Last year, according to ABI, 60% of tablet used iOS, 37% used Android, and the remaining 3% was made up of “others”.

App publisher Animoca recently calculated the top 12 Android tablets, based on app usage, and it found that five of the top six are 7-inchers- and with iPad Mini touting the 7″+ form factor – Tablet markets in the foreseeable future could look to stabilize at 7″ form factor.

Theoretically, that could bode well for Microsoft, because the company is said to be at work on a 7-inch Surface tablet. Surface tablets haven’t sold well, but perhaps a less-expensive and smaller form factor would help. A possible winner would be a 7-inch Windows tablet that takes advantage of Microsoft’s partnership with Barnes and Noble and taps into B&N’s vast book repository and growing video offerings, as well as into Microsoft’s successful Xbox-based gaming ecosystem.

Still, if ABI Research numbers are right, Microsoft so far hasn’t been able to tap into people’s growing desire for tablets, and won’t in the foreseeable future.

Tablets – Why Marketers need to move out of the “Tablet – a Fad” Perspective!

For many of the marketers out there – there is not a great case for Tablets and Smartphones together. Most of them view tablets as a passing fad. This equation is perhaps complicated by the announcement of Phablets as a hybrid form and use factor! However, is Tablet really a fad?

A recent report published by the Adobe Digital Index is an eye opener. For February 2013, Tablets are attributed to be driving more traffic to websites than smartphones. The report is based on 100 billion visits to more than 1,000 websites worldwide over the last year – hence this isnt a fluke that you had blow over. Adobe attributes this shift in web browsing patterns primarily to the device’s form factor, which lends itself to leisurely (and more comfortable) browsing than smaller touch devices.

Listing down a key points on how and why Tablets are not a fad. They are here for good-
1. Frankly, with both WiFi Tablets and Entry-level Smartphones penetrating the $50 price point – the screen size is a big enabler for tablets.
2. As WiFi hotspot roll outs gather momentum – Tablets will push more and more of data.
3. So while Smartphone gathers numbers in the low end – it is the larger screen size devices (3.5″ – 4.0″ – 5″ – 7″- 9.7″) which will posssibly drive higher data consumption.
4. The customer at the economy end of connected devices ($50-$100) tends to use his device as a media machine – again for the $50-70 price – a tablet provides greater value than a 2.8″-3.5″ smartphone given the profusion of pirated content.
5. Tablets are also driving penetration across segments such as education, insurance for the large screen internet access advantage
6. For the Phablet space – this is a sub-category branching out into becoming a category by itself – but its numbers will take some building up – and the pricing still is $200 & above.
7. With tablet growth rates still well above smartphone growth rates, expect this gap to widen
8. Traditionally because of the higher screen size the engagement time on tablets has been higher than the smartphones as well.

Interestingly enough, in mature economies, Tablets have found yet another niche. Tablets are increasingly being used shopping activities.Adobe found that 13.5% of all online sales were transacted via tablets during the recent holiday season. Furthermore, as of January 2012, researchers found that consumers using tablets spent 54 percent more time per online order than their counterparts on smartphones, and 19 percent more than desktop/laptop users.

Thus the key take away from the Adobe report is this – tablets and smartphones are two different animals. Based on consumer use cases, one does not replace the other because mobile device owners are using tablets and smartphones to accomplish different tasks. This has implications on the way e-commerce companies as well as media companies and online content distributors would play up to serve the user. So this really gets into single device – multi use cases scenarios – all of is still building.

Thus i come back to my initial point – Marketers who are apprehensive of the scale and scope of tablets and are unable to fix “proper” answers to tablets, need to understand, there is no single answer… and the answers too are evolving at a fast clip! The risk that they run in trying to perfect the business cases and create understanding is that they could be left out of the markets. Proposition here is possibly not a case of inspiration but of evolution!

Laptops set to follow the way of the Dodo? (Counter arguements)

Worldwide PC shipments totaled 76.3 million units in the first quarter of 2013 (1Q13), down -13.9% compared to the same quarter in 2012 and worse than the forecast decline of -7.7%, according to the International Data Corporation. This is one of the steepest declines in this segment over the last 19 years.

IDC further states: ” Despite some mild improvement in the economic environment, and some new PC models offering Windows 8, PC shipments were down significantly across all regions compared to a year ago. Fading mini notebook shipments have taken a big chunk out of the low end market while tablets and smartphones continue to divert consumer spending. PC Industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weal reception for Windows8. The PC industry is struggling to identify innovations that differentiate PCs from other products and inspire conssumers to buy, and instead is meeting significant resistance to changes perceieved as cumbersome or costly”.

Unlike the consumer PC market, the enterprise PC market has seen growth, driven by continuing PC refreshes. The professional market makes up about half of all shipments.

Gartner corroborates the sentiment measuring an 11.2 percent decline quarter over quarter and quarterly shipments of 79.2 million units, a bit higher than IDC’s numbers — and therefore the lowest levels since the second quarter of 2009, per its estimates.

And hence comes the much debated oft enquired questions – Is the PC/Laptop segment going the way of the Dodo??

And the way i see it – and the way i believe it – PCs are not dead. Sidelined – Yes! Dead – No! Steve Jobs would have been correct in a lot of other things – but as far as Post PC era is concerned, i am not the most convinced. To me it always is a PC+ Era – PC + Tablet + Smartphone + Tablet + Watch + Glass + what ever else.

Two principle reasons to support my arguement -

1. PC will be the enterprise hero – it will be the data generator – as opposed to a smartphone, Glass, tablet or watch which will essentially be data consumers and data. There is a point that most of the data will be in Video -but there will still need to be memos and accounts in office parlance. I hardly see any other device doing that as efficiently as the age old PC/Laptop

2. Supporting my numbers for Point 1 – the data generated and conducted through a laptop through 2017 will still be sizeable compared to a lot of other computing machines such as smartphones. The numbers from CISCO VNI on the data per unit machine forecasts through 2011 – 2017 has a point in favour of the Laptop PC.

Source: CISCO VNI

Even though Laptop contribution to the global data traffic will be around 14%, it would still be the second largest device in terms of data traffic share beyond the ubiquitous smartphone!

Source: CISCO VNI

Adding the facts and numbers so presented, Laptop category is far from dead – it will be an important member of the convergence and computing econ-system. One that is key to niche computing in enterprises.

Whats your point of view on the future of the laptop?

Post PC or PC Plus?

IDC in its most recent report indicates that Tablets will surpass Desktops globally by 2013 and notebooks by 2014. IDC indicates, global shipments of smart connected devices to have increased about 30% in 2012, surpassing last year’s 1 billion units shipped with $576.9 billion generated. Tablets pushed the growth rates with a scorching 78% YoY growth (2013 versus 2012).

IDC also notes shipments of desktop PCs will continue dipping, another 4.3 percent, in 2013
Notebooks will see a marginal growth of 0.9 percent.
Tablets, are predicted to register a new high of 190 million units shipped in 2013 with year-over-year growth of more than 48 percent.
IDC says smartphones will also grow another 27 percent, posting 918.5 million units shipments this year.

In terms of OEMs, Apple significantly closes the gap with market leader Samsung in the last quarter of 2012 with the combination of the iPhone 5 and iPad Mini bringing the company up to 20.3 percent unit shipment share as compared to 21.2 percent for Samsung.

Interestingly enough then, PC majors such as HP and Dell would increasingly get outmoded by the likes of Amazon – the antithesis of device majors.

So then, does this mean the end of the PC era? The Post PC era? … as Steve Jobs had crystal gazed. Well, it looks a certainity with these numbers and yet i would claim it as dawn of the PC plus era! Its a contrarian view given the convergence scenario – but i do believe that we will see a mobile stack of 4-5 devices going forward – Smartphone, Tablet, Notebook, Smart Watch or Google Glass and more (Smart TV, Smart Car and Smart Refridgerator not counted).

Tablets will occupy a unique place. PCs will occupy a unique place – Physical keyboards are actually really important. Both devices will co-exist with more and more convertibility and ability to work together. The convergence eco-systems will also work on platform portability across the range of converged devices.

Hence it is not so much as “passover” of the PC as the emergence of new computing devices which only add to the PC to further the case of always on ubiquitous computing.

Infographic: India Tablet Market (CY 2012)

The infographic below captures the market dynamics of the India Tablet markets in 2012. Tablets Zoomed, Phablets emerged as a segment and there was a change in leadership ranking order in offing. (Click to enlarge the Infographic)

Source: CMR

Canalys: World Wide PC shipments (Q4, 2012)

Worldwide PC shipments increased 12% year-on-year in Q4 2012 to reach 134.0 million units, with pads accounting for over a third. Tablet segment grew by 75% in Q4, 2012 to 46.2 million units with full year shipments totaling 114.6 million units.

Apple continues to lead the PC market, shipping 27.0 million units and taking its share over 20% for the first time. Apple’s growth in the pad segment was driven by strong demand for the iPad mini. Its overall shipments, however, were hampered by supply issues. Canalys estimates that the mini made up over half of Apple’s total pad shipments, with its attractive price point and compact design leading to significant cannibalization in the iPad range and wider PC market. Despite record shipments, Q4 saw Apple’s pad share dip to 49%, becoming the first quarter it has not controlled over half the market. Without the iPad Mini, Apple would surely have lost more ground to its competitors

HP shipped 15.0 million PCs, beating Lenovo by 200,000 units to regain second place, with both vendors taking an 11% share.

Samsung, buoyed by strong tablet shipments, had its first quarter in the top five, shipping 11.7 million PCs, giving it a 9% share and fourth place ahead of Dell. Samsung shipped 7.6 million pads in Q4, an increase of 226%, driven by its ability to push products down into lower price bands.

Dell clocked in 9.7million units, a 19% decline over its 2011 numbers. With the planned buyout of Dell to go through- it will give the company time to rethink its strategy and refocus, away from the demands of Wall Street and shareholders. Microsoft’s involvement in the Dell buyout raises eyebrows in the light of its recent aspirations to become a hardware vendor. But it is not likely to solve Dell’s problems as even Microsoft struggles with pads

Amazon’s worldwide shipments grew 18% to 4.6 million units, as it expanded the Kindle Fire range and launched in markets outside the United States.

Google’s own Nexus 7 and Nexus 10 products performed relatively well, with combined shipments of 2.6 million taking 2% of the global PC market share.

Steve Jobs was right – Its a world of Tablets with Laptops only a niche!

NPD predicts that 2013 will see the first time that worldwide sales of tablets will surpass sales of laptops. NPD expects 240 million tablets to ship, but only 207 million laptops. That’s just the tip of the iceberg. By 2017, laptops are on track to shrink to just 27% of the mobile PC market.

In a market that has been dominated by Apple, shifting market dynamics are creating the opportunity for a greater variety of choices and screens, which will drive shipment growth in 2013 to 64% Y-o-Y (against 2012). In 2013, 7- and 8-inch tablets are expected to ship 108 million units. That’s a whopping 45% of the market. The 9.7-inch screen size of the traditional iPad is set to shrink to only 17% of the market. Undoubtedly, the huge surge in the 7inch devices is thanks to last year’s launch of the iPad Mini. While Apple is still facing stiff competition in the coming years, it will continue to do well in the market thanks to its brand awareness and high-quality ecosystem.

North America and China, the top two tablet markets, already saw tablets surpass laptop shipments last year. North America will remain the largest market with a 35% share (85 million units) in 2013. Having passed EMEA in 2012 to become the second-largest market for tablet PC shipments, China will have 27% of the global tablet market in 2013 with shipments of 65 million units, driven by small local brands. As the variety and demand for new screen sizes increases, so will market growth in emerging markets. As countries like China and India continue to modernize while growing their middle class, the demand for tablets will continue to grow at an amazing rate. The cost-to-utility ratio of tablets is clearly a winning formula for PC companies and consumers alike.

Meanwhile, desktops and laptops are continuing their fall to niche status. When the vast majority of everyday tasks are handled on cheap, sleek, and portable devices, the need for a traditional computer peters out for most people. Notebook PC shipments have been slowed by declining demand worldwide, reaching even emerging markets where low penetration rates could have stimulated demand. However, increasing tablet PC adoption is stymieing notebook PC growth. The second half of 2013 may provide a respite as new processors aim to bring more tablet PC-like features, such as instant on, all-day battery life, and sleek form factors, to notebook PCs. If the NPD numbers hold true, we can expect a number of players in the traditional PC market to jump ship, and switch to making tablet and smartphones exclusively in the coming years.

The tablet markets saw increasing investments in North America in the second half of 2012, from major brands that tested not only new screen sizes and price points, but also unconventional business models to support their efforts. The subsequent increase in shipments and demand underscored the benefits of segmentation in the market as it drove rapid market expansion. In 2013, further investments are expected worldwide, stoking demand to the point that tablet PC shipments will exceed those of notebook PCs.

Infographic: Indian Tablet Markets: Charting the growth curve

2012 has been a year of tablets! (indeed). The Indian tablet growth story is very much in line with the global growth in tablet and tablet based consumption. Here’s an infographic that relates to the growth of Tablets in India and the segment wise splits.

Tablets: Growth charted from 2012 thru 2016

IDC has upped the forecast for Tablet shipments by 2012-13 by a factor of 4% on average. In the 4 year horizon, IDC has upped growth estimates by 8% for 2016. In the same vein, IHS iSuppli forecasts growth of tablets from 120million units in 2012 to 340 million units in 2016. The CAGR for the category is about 18% (IDC) to 23% (iHS iSuppli).

The Apple iPad dominance on the tablet segment is carried through 2012-16 even though the shares have a gentle downward slope. Android powered by Samsung, Amazon and other Tablets maintains its shares where as Microsoft is seen as the biggest winner. (This is contrary to the current state of Windows tablet strategy which is in disarray – and shipmenet numbers have been lowered from 1 million units to 500-600K tablets). In the same vein IDC really does put the Tablet category as a three horse race with no room for any other OS in the market.

Contrast this with the death of eBook Readers- which have gone from the “next big thing” to “also ran”. Current forecasts show the eBook reader market as having already reached its peak of just over 20 million units shipping in 2011, with a decline to barely 7 million in the 2015-2016 timeframe. This epitomizes the attraction of the “multi-tasking” consumer gear at the expense of the single-function box—even when that one function is done supremely well (as in the case of ebook readers). PMP/MP3 players, GPS systems, low-end digital cameras. Companies hoping to make money on ebook reader hardware rather than as a channel for selling content—the Consumer Electronics version of razors and blades—are almost certain to have a difficult road ahead.

The flight of Tablets in India

Fall in Entry level pricing has been instrumental in driving tablet sales in India which peaked at 5.5 lakh units in the second quarter of 2012, growing 59% over Q1, 2012 as per CMR report. This is a 6 fold increase against the Q2, 2012 numbers and it is in line with my expectations of 2.5 million tablet units to be sold in india in CY 2012.

Micromax emerges as the surprise number.1 beating the fancied Samsung and Apple – Micromax cornered 18.4% of the market compared to Samsung’s 13.3% and Apple 12.3%. During 2Q 2012, 47.4 per cent of tablet sales were from new entrants in the market with a strong focus on addressing application areas in the Education and Entertainment segments. This trend demonstrates clearly that vendors are positioning their devices at India’s youth. Close to 90 vendors launched their tablets till 2Q 2012.The average selling value (ASV) of the tablets in 2Q 2012 has dropped to little above Rs 13,000 from Rs 26,000 in 1Q 2012, as a majority of vendors in early 2012 launched their products in the Rs 5,000-10,000 price range.

The major feature ternds include WiFi connectivity, 7″ form factor, Android OS as the de-fault, 1GHz processor speeds and 512MB RAM.

Indian tablet personal computer (PC) market will touch 7.3 million units by 2015-16 from around 1.7 million units in the current year (CMR Data). My estimates put tablet numbers in India to touch upwards of 2 million units in CY2012. The developing ecosystem of this device will also ensure adoption by many users.

In contrast to tablets, desktop sales grew only 11% and notebook sales grew 26% in last 12 months and will slow down given the cannibalization by tablets category. Also a lot of government effort is twards driving Tablet adoption based on use-case specific internet applications.