The Terrible Tablet Tsunami and the Future of Computing

by John Kirk   |   June 18th, 2012

IDC just issued a press release updating their expectations for tablet shipments. Here are their numbers, year by year:

2010: 19.5 million tablet shipments.
2011: 69.6 million tablet shipments.
2012: 107.4 million estimated tablet shipments.
2016: 222.1 million estimated tablet shipments.

When looking at the above numbers, you need to keep two things in mind:

1) These numbers DO NOT include the anticipated shipments of Windows RT and Windows 8 tablets. If Microsoft has its way, that’s a lot of missing tablets. Further, IDC expects the coming Windows tablet shipments to be ADDITIVE to their existing tablet estimates.

2) IDC has consistently UNDERESTIMATED the number of tablet shipments in each of its previous forecasts. By a lot.

For example, in March 2012 – just three months ago – IDC increased their estimates of tablet shipments in 2012 by 21% from 87.7 million units to the 106.1 million units. That still wasn’t enough of an upward adjustment and three months later IDC had to tweak their totals from 106.1 million to 107.4 million.

Further, if you look at the current growth in tablet shipments and compare it with IDC’s predicted 222.1 tablet shipments in 2016, you can see that their estimated growth rates are far below current levels and conservative in the extreme.

What does this all mean? It means that if desktop shipments continue to stay flat or modestly decline as they have for the past several years, then tablet shipments will be on a par with desktop shipments within the next 4 years.

The implications are industry shattering.

First, he who makes the most tablets makes the most growth.

Second, only platforms that are able to sustain significant market share in tablets will remain viable in personal computing in the long run. The first implication is self-explanatory. The second may require some justification.

Three Categories of Computing. Today, there are three distinct categories of computing: smart phones, tablets and desktops (including notebooks). Some consumers own devices in only one category, some own devices in two categories and some consumers own devices in all three. The trend is definitely toward multi-category computing ownership.

If you’re going to buy devices that span multiple categories, it only makes sense to buy devices that run on the same or a compatible platform. In other words, if your platform doesn’t support phones, tablets and desktops, then your platform is going to become marginalized.

I don’t hear analysts, pundits or commentators talking about this much and I don’t know why. Platforms are “sticky” – they have high retention rates. Multiple device platforms are like glue. Once you own two or more devices on one platform you’re very unlikely to every leave that platform. The company or companies that work well across all three computing categories will dominate personal computing for the next five to ten years.

APPLE: Right now, only Apple has a multi-category solution in place. Apple’s mobile operating system (iOS) runs on both its phones and its tablets and Apple is working hard to make the transition between their mobile OS and their desktop OS (OS X) as familiar and as comfortable as is possible.

Apple not only has a lead in creating solutions for all three computing categories but they are working hard to extend that lead as well. Last Fall, Apple announced that they would synchronize their mobile and their desktop operating system updates and put them on an annual schedule. This commitment to parallel development makes it much easier for Apple to move their two operating systems in lock step.

With iCloud binding their phones, tablets and desktops together in a seamless whole, Apple is well positioned for the multi-category computing market that lies ahead.

MICROSOFT: Currently, Microsoft has a big problem and an even bigger proposed solution. Right now, Microsoft dominates the desktop, has minuscule share in phones and no share at all in tablets. That’s a big problem.

Their big solution? This Fall Microsoft intends to introduce Windows RT tablets, Windows 8 tablets and, perhaps, even an ebook reader. Microsoft is currently well behind Apple but they intend to provide a solution that spans and ties together all three computing categories. And they plan to do it in a hurry.

Can they make it happen? Unknown. We’ll have to wait and see. If they don’t, they are in deep, deep trouble, at least so far as personal computing goes. If Microsoft’s tablet solutions are only as popular as their phone solutions have been thus far, then those who seek a multi-category computing solution will soon learn to look elsewhere.

Microsoft has its work cut out for it but if they can gain acceptable market share numbers in the tablet sector (which will presumably translate over to the phone sector, as well) then they are well positioned to create the type of ecosystem that makes multi-category computing such a joy. Microsoft has flaws like any company, but ecosystem is not one of them. If Microsoft can just get back in the game, they can play the multi-category computing game as well, or better, than anyone.

ANDROID: So wither Android? Right now Android dominates overall smart phone sales. But just as Microsoft is currently stranded on the desktop, Android is currently stranded on phones. Their struggles with tablets have been well documented and they’re not even trying to provide an Android solution on Desktops (Chrome, yes. Android, no.) If you want a single platform to support your multiple category devices, Android is currently the last place you’re likely to turn.

Can Android turn things around? Of course they can. Google has committed to putting more resources into Google Play (I still don’t understand why they re-branded Google Marketplace as Google play – Google Play is an awful name) and they’ve promised us a tablet “of the highest quality” this summer. But promises are only promises, nothing more. Just as Microsoft has to prove that they can field a successful tablet product, Google has to do the same. And while Microsoft has a proven track record in building strong and vibrant ecosystems, Google seems to struggle in this oh-so-crucial facet of the multi-category computing game.

Conclusion: Right now, Windows dominates desktops, Android dominates smart phone sales and Apple dominates the cross-category solutions. But rapidly growing tablet sales may not only be the key to computing growth, it may also be the key to the future of all three categories of personal computing.

As tablet sales grow, not only will Apple’s share of the computing market grow but the current positions of the big three operating systems will necessarily shift as well. Like a monstrous game of Jenga, as the pieces move in and out of place, there will be a titanic shift in power as someone, or several someones, find themselves unable to satisfy the desires of a demanding consumer base.

Apple’s place in the new world order seems assured. But as Google and Microsoft fight to gain tablet share, the one who fails to become relevant where they are weakest, will also risk becoming irrelevant where they are currently strongest, as well.

The future is uncertain, but one thing is for certain. If you like tech, the next 18 months are going to fascinating to watch.

John Kirk

John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?
  • melci

    You forget that Media Players and the iPod touch are a 4th leg to Apple’s platform.

    With between 6-11 million iPod touches sold each quarter, this little mini-tablet is a respectable number and not that far behind the 11-15 million iPads sold each quarter and runs just about all the same apps as the iPhone.

    Add in the 4-9 million iPods which share the same dock connectors, Airplay devices, media and content stores, iTunes accounts and the several million AppleTVs and Apple’s ecosystem is larger than Android (365 million vs 300 million in March 2012), varied and incredibly sticky.

    • http://www.facebook.com/profile.php?id=644846198 Ron Smith

      That number for iPod Touch is too high, I believe

      • melci

        Apple indicates that the iPod touch makes up mre than 50% of ipods sold. Now Apple sold 15.4 million and then 7.7 million iPods over the last 2 quarters so my figures might be a bit high but still in the ballpark.

    • John Kirk

      You make an excellent point. The iPod Touch is Apple’s stealth weapon. With virtually no competition, it allows Apple to introduce millions upon millions of new users (mostly children) to the operating system. Further, it extends the reach of Apple’s developers to an extremely attractive demographic.

      However, having an iPod Touch like device, while advantageous, is not essential to the survival of the platform. It is, as you alluded to in your comment, the fourth leg of the stool. The three legs that are essential for the continuance of today’s modern platforms are phones, tablets and desktops (including notebooks).

    • AppleFUD

      hmmmmm. . . where have I seen this comment before. . . .

      too frickin funny. . . just cut and paste. . . shill on!

      • melci

        And as usual no intelligent retort. Tch tch MrFUD.

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  • Jon T

    Not going to be any tablet tsunami…

    There is already, and will continue to be, an iPad tsunami.

    If after all this time no-one has successfully copied the combined ease and functionality of iOS, there is nothing to believe they are going to miraculously achieve it in the coming three years, after which the game will have been lost to Apple anyway.

  • Gregg Thurman

    I wholeheartedly agree. MSFT finds itself struggling to remain relevant because leadership was overly protective of its initial success, unlike Apple that would rather eat its young, than have someone else do it. The result has been over reliance on an antiquated platform which is unsuitable for mobile platforms. Doing so they have positioned themselves 6 years behind the leader in cross platform development.

    Google is just clueless. There is no master plan (that I can see), and it’s efforts to monetize its initial product have utterly failed. John, you have correctly identified the future of stationary and mobile computing. Personally, I think you could have dwelled more on the difficulty (impossible?) task of catching, not to even mention surpassing, Apple.

    • FalKirk

      ” I think you could have dwelled more on the difficulty (impossible?) task of catching, not to even mention surpassing, Apple.”-Gregg Thurman

      With Microsoft having announced their “Surface” tablet only last night, I think the issue you posed, above, has just taken front stage and center.

  • Roman Rubinstein

    Great analysis, and succinctly articulated.
    I agree with your thinking, but would like to see more analysis (perhaps in future pieces?) on the following topics:
    1) While I believe Apple’s platform strategy will dominate, there *is* a possibility of the platform layer migrating from devices more into the software/cloud layer via HTML5 and browsers. It is rumored that Google is working on Chrome for iPad. When they started a few years back, I had a hard time imagining they will wrestle share away from IE on the dektop, but they have done so. Ostensibly, Google can then offer a unified experience on multiple mobile OS platforms (Android and iOS) and hardware devices.
    2) I think Amazon should be added to the list of platform companies. They are building the platform around content, and it is based on a completely different set of incentives and cost structure, but I wouldn’t write it off just yet (valuation notwithstanding — I do think the company is highly mispriced).
    3) I’m not sure what to make of Facebook, but from a social angle they clearly got the network (of people) ready. Their strategy may just be to integrate with other platforms, rather than create their own — as seems to be the case with the iOS 6 integration.
    4) Carriers (both wireless and landline/cable) are a possibly interesting variable. Previously, they influenced dominance of particular hardware and software makers a lot, but I think they’ve stumbled with trying to stop the rush of platforms, iOS in particular. Still, I wonder if they will have a say in the platform war. I expect them to turn into utilities (perhaps even public goods) some time in the next decade or two.

    • benbajarin

      Thanks for the comment Roman. We have tackled a good number of those issues on our site in case you have missed them. Try the search bar in the upper right and see if you can nail down more of our analysis on those points. That being said we do continue to bring up those points so keep checking back and I am sure we will continue to flesh them out.

    • FalKirk

      Roman, you post some great issues. Your suggestion that Amazon should be considered as separate tablet operating system along with Apple, Microsoft and Google particularly intrigues me. Amazon is playing a different game than all the others and their subsidized model had deeply influenced the entire industry.

      Great food for thought that I am now digesting. :)

      • Roman

        John, to clarify: I suggest that Amazon be considered a separate *platform* but not necessarily a separate OS (let alone something as specific as tablet OS). Intriguing, right? :o) In fact, even Facebook might viewed from the platform angle.
        The germ of an idea here (though I don’t have any analysis ready) is an OS is only a part of a platform. Amazon poses a challenge in analysis because it can be viewed as a platform for distribution of goods, both tangible and media/content. It’s an odd case that I’m try to wrap my head around.

        • FalKirk

          Amazon’s Fire is an Android product in name only. It does need to be viewed as a separate entity. Facebook is a whole different animal altogether.

          You’ve broadened my vision, Roman. I thought this was a high level view of the tablet market but an even broader perspective is warranted.

  • JDSoCal

    Good points. Not sure I agree with your opinion of MSFT’s multi-category prowess, as I’ve always considered them largely irrelevant to mobile computing. I guess it’s just that Ballmer has been so epic fail, that I have overlooked MSFT and their potential. But if you say so, then I’ll keep an eye out on their (re) entry into the tablet sphere. Great John, another thing to keep me awake at night as an Apple stockholder. ;-)

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