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Is MTK set to disrupt the India/SE Asia Tablet markets?

Posted in Industry updates by Manas Ganguly on June 2, 2013

Mediatek (MTK) is a Taiwaneese semi conductor maker with revenues worth $3.4bln in 2012. In the semiconductor industry, that number is a modest one, and MTK’s market share is only 1.1% of the global semiconductor sales (Source- iSuppli).

mediatek_chip_pcb

However, MTK has a few disruptions to its credit. Starting 2007 onwards, MTK’s chipsets engendered billions of low cost mobile devices at around half the price of the existing industry standards at that point of time. This provided a significant fillip the telecom industry as it lowered the cost of entry and initial cost of hardware acquisition for a first time buyer. It also was instrumental in replacement sales where in feature categories were available at lower price points thereby getting people to migrate from their existing handsets to a better feature set at a price equal or lower to the existing price of the handsets. It spawned companies such as Micromax, Lava and Karbonn.

In 2012, yet another Taiwanese chipset maker – Allwinner disrupted the tablet market by providing chipsets for WiFi enabled Tablets. This enabled a spate of low end tablets for the first time tablet buyer. Tablet category was till then defined by the likes of Apple and Samsung. Allwinner with Android truely liberated the category of tablets for the first time buyer. What resulted was a major market disruption where in the markets shifted from the majors to low cost- value oriented minors. At the last count, such tablets sold 2.2mln units – out of the 3mln tablet market in India.

In 2013, MTK now endeavours to disrupt the low end tablet space with low cost 3G chipsets – at a differential of $2-3 over the Allwinner WiFi chipsets. That would translate to Rs.150-200 difference in end consumer price for a 3G tablet over the WiFi tablet. One can expect that with the pricing gap squeezed to Rs.150/200, buyers of WiFi tablets could make the jump to the 3G tablets for the inherent advantage – Portability. There – thats the disruption that i am talking about. A Rs.5000-6000 3G tablet. Introduction of low-end 3G tablets and smart devices and the natural price decline curve – will shift demand, supporting uptake among new, less affluent customer segments

What could that do? The way i look at it – there are a few sectors in India that could immediately benefit from low cost 3G tablets – Education, Insurance, Healthcare, G2C payments, UIDAI based transactions and Financial Inclusion, Enterprise and Businesses. Slowly but surely, a lot of drivers are getting together to push the tipping point for tablets and smart devices.
1. Pricing Advantage (Will fuel 60% acquisitions)
2. Affordability in 3G Mobility
3. Business and Bring Your Own Device (BYOD) (Will fuel 4% adoption)
4. Platform maturity and Applications
5. Vernacular matures as a platform
6. Government push on Tablets as a segment to connect the unconnected- Election Year!

While initial estimates point at 6 mln units sales of tablets in India in 2013 – the number might have a groundswell driven by the numerous government programmes – and the MTK advantage would be key to deliver services remotely on these devices.

Tablets: Growth charted from 2012 thru 2016

Posted in Industry updates by Manas Ganguly on December 6, 2012

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).

IDC Tablet Forecast - Volumes

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.

IDC Tablet Forecast - OS Market Share

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.

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