BLOG STARTUPS, VENTURE AND THE TECH BUSINESS

January 31 2012
by Todd Hixon

My Three Biggest Tablet Computer Surprises Of 2011

Las Vegas recently hosted the 2012 Consumer Electronics Show (“CES”). At CES 2011, “The Year Of The Tablet” was proclaimed, but that struck me as the hyperbole of bloggers hungry for a tag line. Nine months in to the tablet era, Apple was off to a great start, and lots of other vendors had announced products, but they had little traction: prototypes from RIM, Motorola, and Samsung plus a bunch of no-name Android tablets. A lot has happened since, much of which was anticipated. Here are three important developments that I did not predict.

Sources: Gartner, IHS

1.  Tablets are a business tool

It’s been clear from the start that tablets are a great platform for media consumption and games, but I doubted their usefulness for business (link): no keyboard, no file system, hard to print. The lust to lighten the bag (and to have some fun stuff in it?) is so great that business users have worked around this: learned to type on a window pane, adapted DropBox as a file system, etc. Built-in 3G is a big draw, too; I notice that most business users have it (and most personal users don’t).

And, tablets are getting traction in corporate applications. MIT’s Sloan School developed a tablet-based system for its application readers. It replaces the thick folders they formerly carried around and forwards comments to the admission director immediately. This spun out in a start-up company named Matchbox. Apperian, a business app development company spun out of Apple several years ago, just raised $9.5 million from well-known west coast VCs. It claims that Newsday, RueLaLa, and Clinique are among its customers.

2.  Decent tablets emerged below $250

The iPad sells for about $600 on average. The big name personal electronics companies, using Google’s Android 3.x/Honeycomb tablet OS, came right at Apple with similar products at a similar price point; mostly they have failed. Dell and HP have left the field to bind their wounds; RIM may well be next. Samsung labored mightily to sell 3-4 million units in 2011, versus Apple’s 39 million. The top Taiwanese companies have done their usual fast-follow, producing similar products for ~$150 less; the most successful, Asus, sold 2-2.5 million units.

The big surprise is the success of the less expensive products: in total they sold 10+ million units, ~50% or more of the Android tablet market. These products fall in two groups: Android-based eBook readers from Amazon and Barnes & Noble, ~6.5 million units a price of ~$200, and the many products from Chinese ODMs marketed by second tier brands: ~5 million units.

The major brands that went head-to-head with Apple are facing a tough fight: Apple has a fine product, great content, great brand value, and probably a great cost position: it’s high-value components (screen, CPU, memory) are shared across the iOS product line, giving it higher volume than any tablet except Samsung. I’m betting none of this group but Apple makes money.

The brands that took the low road are having a good run, however. Margins are thin, but I hear they make money, except for Amazon and (probably) B&N, who break even and use the reader to make money on their content. The volume is big, and with Android 4.0 (Ice Cream Sandwich) and several new, powerful, low-cost CPUs hitting the market, some of these products will be quite good in 2012.

3. Android share reached 40%

It’s said that Internet companies live dog years: life passes seven times faster for a dog than a human. On that basis tablet companies are more like fruit flies, which have a generation span of a few months: things change very fast. Way back in September, 2011, Gartner predicted tablet operating system market shares through 2015 (see chart above). Gartner thought that Android’s market share would be about 15% for 2011. Four months later, it turned out to be about 34% for the year and 40% in Q4.

So, the Android market has emerged strongly, buoyed by the unexpected strength of the low end segment, and the business tablet market is emerging too.

What, you might ask, are my predictions for 2012? I am a disciple of the great Yogi, which makes me reluctant to make predictions, especially about the future, however:

1. The low-end Android tablet market will double, treble, or more in size.

2.  Tablets for business apps will shift towards Android: it offers easier customization and less expensive hardware.

3.  Congress will disgrace itself, again [this is my lay-up prediction].

This post first appeared on my Forbes.com blog: blogs.forbes.com/toddhixon.

Comments are closed.

Top of the page