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Keep taking the Tablets, the iPad is here to stay

Posted By TelecomTV One , 31 January 2012 | 0 Comments | (0)
Tags: mobile Devices tablets ipad Apple Research emerging markets PCs

Two new studies suggest that within five years, sales of tablets are expected to reach 400 million units annually with associated revenue of over $120 billion. It is clear that the iPad isn’t a novelty, and that tablets will be a major part of the future ICT market, but will telcos reap the rewards? Guy Daniels reports.

According to new research from Informa Telecoms & Media, the global tablet market will increase dramatically over the next five years, with retail revenues increasing from US$34.5 billion in 2011 to $121.5 billion in 2016. However, telcos may lose out in this lucrative sector to independent retailers, and see their market share of the revenue restricted to just 30 per cent.


One of the big problems faced by telcos is how to convince consumers to take out data plans with their new tablet purchases devices, with many users content to just have wifi connectivity. And if consumers do opt for a cellular-enabled device and buy a data plan, do they purchase the tablet from the telco or from a trusted general retailer like Amazon or a supermarket chain, or even direct from the manufacturer?


Julio Puschel, principal analyst at Informa, says that independent retailers are already increasing their share of smartphone retail revenues (up from 29 per cent in 2011 to 34 per cent to 2016), and this trend will continue with tablets:


“Tablets will drive significant changes to the current telecoms retail business model. New entrants, such as Amazon and other consumer electronics specialists which have already a very evolved online and multichannel strategy, will drive online tablet sales even faster than online smartphone sales, which will force operators to review their multichannel approach.”


As mobile devices develop and become more complex, demonstrating their features and benefits to consumers is more of a challenge for operators. According to Puschel, specialist retailers have proven to be better able to educate consumers by providing an enhanced, interactive shopping experience, and telcos now need to catch up:


“Telecoms operators will need to watch the independent retailers closely to see how they are transferring their retail expertise to the smartphone and tablet market. They need to be able to offer an outstanding shopping experience that can match or outperform the independent retailers – not simply pushing device sales, but also demonstrating the services, content and applications attached to these devices.”


There is far more growth scheduled to come for tablets.

According to new data today from NPD DisplaySearch, shipments of tablets are expected to grow from 72.7 million units in 2011 to 383.3 million units by 2017. Driving this demand will be the continued solid growth in mature markets, complemented by increasingly strong growth in emerging markets.


Richard Shim, senior analyst with NPD DisplaySearch, says that emerging markets are expected to account for up to 46 per cent of worldwide shipments by 2017, an increase from the 36 per cent share in 2011:


“The emerging market opportunity for tablets has been flying under the radar mainly because the device brands aren’t household names and there are concerns regarding the sustainability of the market. However, we are beginning to see investments by some of the better known brands in developing regions, and we expect this to not only continue but to flourish as competition improves.”


He cites new tablets from brands such as Aakash in India and established brands such as Dell in China, which are boosting competition and adoption. Then there are countries like Turkey, which is overhauling its entire education system and looking at introducing tablets into classrooms.


Jim McGregor, NPD In-Stat chief technology strategist, adds that as Brazil, India, Russia and other countries become bigger forces on the worldwide scene, prices will come down and distribution channels will expand:


“Growth in the emerging markets will be accompanied by competition at lower price points. This will result in significant opportunities for processors that can optimize power and performance while achieving device price points that are often under $100.”


But it’s not just new markets that will drive growth – it’s the continued evolution of the tablet itself. According to the NPD study, this will initially be through higher pixel densities, then later through higher performance to enable richer multimedia experiences.


Today, Apple leads the pack by a considerable distance. Android tablets are failing to catch the imagination and we wait to see if a serious Windows tablet will ever join the fight. So where is the iPad growth coming from? According to Apple CEO Tim Cook, whilst the company is seeing some cannibalization of its Mac product line by the iPad (which now sells about three times the volume of the desktop and laptop Mac line), Cook believes there is much more growth coming from Windows PC switchers:


“I truly believe, and many others in the company believe, that there will come a day that the tablet market in units is larger than the PC market. In fact, it’s interesting to note that in the US (from IDC’s recent data), tablets exceeded desktop PC sales last quarter.”


PC sales are down (excluding Macs, which despite the iPad are actually continuing their recent upwards growth), so this could well indeed account for a lot of the iPad’s success. Horace Dediu writes on his Asymco blog that new data shows that the iPad alone would be the largest PC vendor, and Apple with iPad and Mac combined is selling 5 million more units (or 30 per cent) than the top PC vendor.


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