Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
The tablet market is exploding, ignited by Apple Inc.’s iPad launch last April. By the end of 2010, 30 tablets were already on the market, and at this year’s International Consumer Electronics Show, scores of new tablets were announced to be in the works, with notable global companies like Panasonic Corp., Motorola Inc., and Lenovo joining the battle. The tally now stands at 102 tablets either for sale or in development by 64 makers. With so many players committing with such unprecedented speed, the tablet space has become a battlefront for a blend of new entrants, established computer and mobile phone makers, and their key global suppliers. A recent PRTM study reveals a strategic high-intensity battle for consumer electronics’ middle earth.
The front lines
Why have so many players entered so quickly? The short answer is that many simply have no choice. The 17 million tablets sold in 2010 established a new product category, with 200 million units forecasted to be sold annually by 2014. This level of growth, four times that of smart phones and five times that of PCs, establishes the tablet space as a mobile computing beachhead where tablet makers can attack both the mobile phone and laptop fronts.
The accelerated pace is also due to the fact that companies have been able to leverage proven capabilities from mobile phones, dramatically reducing the cost and time to market. Chipsets, operating systems, application platforms, touch screens, channels and business models are all being re-used. This has helped many aggressive, new companies to become front-runners. In fact, of the 30 tablets on sale in 2010, less than 30% were offered by global brands. This helps to explain the many announcements at CES by global companies: Clearly some have been caught dozing and will now struggle to catch up.
The suppliers’ battlefield
The tablet space is just as strategic for many suppliers. Of the 102 tablets announced to date, 57% have adopted processors powered by ARM Ltd. while 29% use Intel Corp. Both ARM and Intel view tablets as a new core business as well as a beachhead to other products. Meeting head-on, ARM is trading on its leadership in enabling mobile phone processors, Intel on its position in the PC market.
Similarly, the OS makers are slugging it out with Android. Currently, Google Inc.’s OS has been adopted by 55% of all tablets, proving its ability to leap between product categories. Microsoft Corp.’s Windows has been adopted by 29%, a level that it can only dream of for its Windows Phone 7 smart phone offering.
The app stores are also going head-to-head. The Android Market is posing a formidable challenge to Apple’s App Store. At last count, Android boasted 230,000 applications – with a growing percentage usable in tablets – to Apple’s 350,000.
A winning strategy
In as little as two years, the tablet market will likely splinter into a few differentiated solutions and many commodity offerings. This will pose some acute management challenges for all players:
–Front-runners, whether large or small, will need to exploit their lead with product/solution innovations to quickly create brand loyalty for consumers and barriers to competitors.
–All competitors will be subjected to intense and persistent price pressure and will need nimbleness and scale in sourcing, plus lean operations to deliver any returns.
–Some global companies that were late to commit are in a new market where size cannot compensate for speed. They will need to execute their programs both fast and flawlessly to catch up.
–All multi-category players will need multi-category platform strategies to provide alternatives as consumers make purchasing decisions based on the kind of seamless experience they prefer.
This year’s CES fired the starting gun for a major showdown. From these initial positions, the battle will be fought over meaningful volume. And it will be up to consumers and businesses to decide with their wallets which companies will prevail.
Huw Andrews is a partner at global management consulting firm PRTM and is based out of London.
