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.

Intel and Lenovo Target SMEs with a Simple “Open Sesame”

Intel and Alibaba.com, an English-language global trade website based in China, announced a partnership with Lenovo Group this week to launch a PC designed to make e-commerce easier for small and medium-sized enterprises (SMEs) in China. The desktop PCs, due out in September, will be preloaded with Alibaba.com’s e-commerce applications for SMEs. Intel and Alibaba.com announced their original partnership in May but have been searching for a manufacturing partner.

E-business is not yet widespread in China. With less than 1% of China’s 42 million SMEs conducting business online, there is still sizable room for growth. In emerging markets, an estimated 69% of the labor force works in micro-, small- or medium-sized businesses making SMEs a key market segment for ICT companies seeking growth opportunities. Intel and Lenovo’s focus on this market is a clear indicator of the industry’s effort to better pursue this still amorphous segment. To date, multinational corporations (MNCs) have made limited product modifications to target SMEs in developing countries. This three-way partnership strategy - embedding e-commerce applications into new hardware and pairing an MNC solution with local content and brands - may be a solid step towards tapping into China’s SME treasure.

For other MNCs seeking to crack the SME code, Lenovo’s new PC could help draw out a sub-segment of China’s market, the most technologically savvy SMEs interested in growing their business online. This small, forward-thinking group of companies makes a worthy beachhead target for nearly any technology firm interested in capturing China’s growing markets.

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