Tablets, Tablets Everywhere: Time to Stop and Think

Each day seems to bring the announcement of a new tablet product by a major computer or mobile handset maker. Recent weeks have seen the launch or planned launch of new tablets by Research in Motion, Toshiba, HP and Dell. Since Apple's iPad was launched, the tablet has become the hottest form factor in hardware. Tablets were once a product category considered by some observers as a niche area, but manufacturers are now feeling the pressure to offer compelling functionality and sleek looks so as not to fall behind the market leader. This trend is not confined to developed markets. Lenovo, China's leading PC maker, announced but then recently delayed a "hybrid" unit that combines the functionality of a laptop and a tablet. The government of India sponsored the prototype production of a new $35 tablet that drew inevitable comparisons to the OLPC laptop. It has pleasantly surprised some reviewers with its performance, although considerable skepticism remains.

The flurry of activity in the tablet space recalls the explosion of interest in the netbook category several years ago. Netbooks took off in 2007 after the release of the ASUS Eee and the OLPC XO-1 on the premise that they were ideally suited to low-end consumers (especially in emerging markets) because of their lower price point and emphasis on accessing Internet content rather than hard drive-based content. In early 2009, ABI Research predicted that almost 35 million netbooks would be sold globally, with the total rising to 139 million by 2013. A year later, however, the tablet phenomenon happened, and netbook sales are now falling globally, which many are attributing to the rise of tablets such as the iPad. 

Whether tablets (or other factors) are responsible for the slowdown in netbook sales, these events illustrate the dangers of making long-term predictions about the growth of products or product categories based on current sales data. This risk is particularly relevant in emerging markets, where young, urban consumers often want to be seen using the most cutting-edge devices. Sales projections based on current or historical trends can provide useful context for managers, but firms would be wise to supplement these numbers with a critical analysis of the broader ecosystem and underlying consumer needs in the markets in which they operate. Market intelligence that capitalizes on rich qualitative information can yield important insights on anticipated behavioral trends for key market segments.

Demand vs. supply-oriented forecasting

by Karen Coppock
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Apple has sold more than 2 million iPADs over the past sixty days. Who would have expected such uptake? Not many if historic, supply-oriented forecasting techniques were used.

Future technology sales are often based on recent sales levels (e.g., how many PCs were sold in the previous quarter), which are adjusted based on current industry and economic conditions. With new technology, such as the iPad, this approach falls short as there there is little (tablet PCs have not been a vibrant product category) or no sales history to use to inform the estimates. Therefore, industry players can be blindsided by new product categories or innovations.

One solution to this problem is to use demand-oriented forecasting. By understanding what features and functionalities consumers (as well as businesses and government clients) value and the trade offs they are willing to make between performance, features, functionality and price, firms will be better positioned to estimate the demand for innovative products and services.

Apple seems to be quite adept at launching category-changing  innovations...their forecasters must be looking at more than historical data to inform their business plans or else we may never have seen the iPad.