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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.
April 25, 2007
Microsoft’s Gambit Strengthens Intel’s Hand
Bill Gates’ splashy announcement last week in Beijing that Microsoft will begin to offer a $3 software package called the “Student Innovation Suite” to emerging market schools put the low-cost PC ball in the manufacturers’ court.
The terms of the deal – governments can only get it by providing free computers to students – suggest Microsoft is trying to compete with One-Laptop-per-Child’s $100 laptop, which runs on a version of Linux. Vital Wave Consulting notes, however, that Mr. Gates wasn’t sharing the stage with PC manufacturers, so Microsoft’s strategy may not be to compete directly with OLPC, but to stunt its growth by removing Windows as a barrier to offering low-cost PCs.
Microsoft’s announcement, together with a production delay for OLPC’s first shipment, presents an opportunity for local manufacturers and global PC companies. Chinese or Indian PC makers are working hard to market ultra low-cost PCs, but they will have trouble scaling outside their own countries. HP, Dell, Toshiba or Acer may eventually capture this market, but the real near-term beneficiary is Intel, whose Classmate PC can run on Windows or Linux. How long will it be before Intel announces the marriage (and resulting cost savings) of their Classmate PC and Microsoft’s Student Innovation Suite?
Also in the news this week
