What are the Implications of Increased 7” Tablet Popularity?

by Patrick Moorhead   |   March 27th, 2013

Last month, DisplaySearch published an analysis, entitled, “Smaller Tablet PCs to Take Over in 2013?”  The report essentially laid outipad-mini-nexus-7 the volume decrease of 9.7-10” displays and the increase of 7.X” displays in January of 2013.  While this isn’t the freshest of data, it’s still valid and certainly makes sense, given the popularity of the iPad mini, Kindle Fe HD, Nexus 7 and the long tail of “white tablets.”  If we are indeed in a volume shift from larger displays to smaller display tablets, there are two key implications which I think are very important as they impact the entire tech ecosystem.

Let me start by taking a brief look back at tablets a mere 9 months ago as it’s important to know where we came from to appreciate where we are going.

Until the Nexus 7 tablet was launched, Android tablets were literally dead in the water and the “tablet market” was really the “iPad market”.  This makes sense even today as 10” Android tablets lack the app ecosystem that Apple provides.  Why would a consumer pay $399-499 for a tablet that has maybe 5,000 optimized tablet apps?  They didn’t and still won’t.  Google attempted to compensate by “stretching” phone apps to 10” displays, but the experience is still lacking. Stretched phone apps still look and operate horribly on a 10” tablet.  7” Android tablets like the Nexus 7 were different in that they can effectively leverage Android’s large phone app ecosystem.  The rest is history as volumes rise for 7″ tablets.

Let me dive into the implications.

The first implication of 7” tablet popularity is the creation of a new ecosystem. Let me focus on hardware.  The iPad hardware ecosystem is large, but not diversified, particularly in hardware, as it is essentially Apple, Foxconn, and Apple’s chosen IHVs.  On the OEM side, I believe companies with subsidized business models will be the most likely OEM winners in 7” tablets.  These are companies like Amazon, Google, and Microsoft.  They can accept lower hardware margins as they drive their corporate profits from e-tailing, advertising, operating systems and application software.  Other winners will be OEMs with strong consumer brands or huge marketing budgets like Apple and Samsung. Less clear are the 7” opportunities for PC giants HP, Dell, Asus, Lenovo and Acer.  With a new crop of OEMs come new ODMs like Quanta, Pegatron, and the long tail of “white tablet” manufacturers.  With new OEMs and ODMs come the component manufacturers.

To get the full appreciation of just how many different component suppliers are involved, you just need to go over to iFixit’s iPad 4 teardown and see the myriad of companies involved. The challenge before was that if you weren’t in the 9.7″ iPad, you were out of luck, because Apple rarely second sources components and they owned the tablet market.  On the SOC side, now Nvidia, Qualcomm, Intel, Mediatek, Hi-Silicon (Huawei), and even relative unknowns like Rockchip (in the HP Slate 7) will have opportunities.  Needless to say, all this new competition will lead to lower prices and hopefully more innovation. I say “hopefully” because with the lower prices, it’s not a foregone conclusion there’s money left over to invest in a lot of innovation.

The final implication of the increased popularity of 7” tablets has nothing to do with tablets at all, but with personal computers.

10” tablets, more than 7” tablets, had the ability to augment or replace certain PC usage models.  Like many, I used the iPad for years as my primary (% time spent) productivity device when paired with a ZAGG/Logitech Bluetooth keyboard. My personal iPad usage model was probably ahead of the curve, but a 9.7” iPad worked well for email, calendar, research via the web or news apps, reviewing presentations and documents, and even writing reports and research.  I would never never finalize a document on the iPad as I would do this on a notebook, but the initial research and text entry worked well.

Usage models are different on a 7” tablet versus a 10″ tablet.  7″ tablets are more appropriate as content consumption devices, driven primarily by the screen size and input methods.  If you have ever had to type out a lengthy email on a 7” tablet, you know what I mean.  Typing on a tablet entails some very uncomfortable typing where half the display is covered by the on-screen keyboard. 7” tablets are great, however, for reading and deleting emails, watching videos, reading e-books, and browsing simple web sites.

With all of this considered, I believe this means that those with the 7” tablets have a greater need for a modern notebook more than those with a 10” tablet.  This is not to say that I expect the market for MacBooks and PC notebooks to explode immediately with amazing growth, but I do believe it will lead to increased notebook sales. When you consider the aging installed base of low battery life, thick and chunky Windows XP and Vista-based notebooks, my thesis gets stronger.

Net-net, the popularity of 7” tablets make notebooks look more attractive and I believe will give a boost to MacBooks and Windows notebooks.

Summary

Until the Nexus 7 and Kindle Fire HD arrived, the “tablet” market was really the “iPad” market.  While not providing the best experience, 7″ Android tablets provide a good enough consumer experience at a very low entry price.  The iPad mini launch validated the 7-8″” tablet market and, based on DisplaySearch figures, the mass of volume appears to be headed to the 7” form factor.  This shift brings with it two key implications.

Android will becomes a player in the tablet market and with it, brings much more competition across OEMs, ODMs and even component suppliers.  This increased competition will drive lower prices and hopefully more innovation.  There is a case to be made that only those with subsidized business models or a stellar brand will survive, but we will have to wait and see on that.  Finally, I think notebooks will get a boost from the popularity of 7” tablets driven by the usage model differentiation between the two devices, which is absolutely the most ironic implication.

Who thought a display size change was boring?

Tags:

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.
  • Glaurung-Quena

    “the most likely OEM winners in 7” tablets. These are companies like Amazon, Google, and Microsoft.”

    Except that Microsoft does not have a 7″ tablet. Given the absurdly long time it took them to come to market with a 10″ tablet to compete against the original Ipad, I very much doubt their 7″ tablet will be in time to have much of an impact on the 7″ tablet market, either.

    Even if they simply stick 7″ compatibility* into a refresh of Windows 8 and let other OEMs build the tablets, I really very much doubt that they will be able to make even that happen in time for them to gain any meaningful toehold in the market.

    * IIRC, Windows 8 requires a rather high minimum screen resolution which kind of precludes it from being used in a 7″ form factor unless you carry a loupe with you to see which icon is which.

    • benbajarin

      by the end of the year you will see 7″ MSFT slates running the new Blue update. That doesn’t mean they will succeed just that they will have them.

      From what I see from Microsoft right now I’m not optimistic they turn this around.

      I also agree with Pat that some flavors of Android will have success in 7″ but keeping Google Android from fork Android separate is key to this market analysis.

      • http://twitter.com/shameermulji Shameer Mulji

        If anything, I see the opposite. I think MS has a very good chance at being successful with 7″ to 8″ tablets since Metro UI is optimized for touch-screens & there’s already a decent selection of Metro apps in the MS App Store.

        • http://twitter.com/snookasnoo Idon’t Know

          Except nobody is buying, and plenty are returning, their existing tablets so there is zero reason to think anyone will buy their smaller tablets. Less likelihood in fact. This is obvious unless you have some vested interest in Microsoft.

    • steve_wildstrom

      I don’t know much about the track record of this site, but WinSource reports that Blue drops the minimum resolution for full Windows 8 support form 1366×768 to 1024×768. I’m a bit puzzled by this because it implies a change in aspect ratio from 16:9 to 4:3. 1024×768 is the resolution of the iPad mini, but of course everyone expects a retina display by fall.

      • Walt French

        I think Patrick’s observations of the use cases being different for 7″ tablets is right on the mark. I likewise think that those use cases — mostly e-books and videos — are ones where Microsoft is remarkably weak, not from hardware offerings, but from being so far away from their core competency in the Enterprise, where complex setups and integration are necessary, and the cost/labor of getting plugged in is well worth the effort.

        The obvious example: the estimated $80 cost for a Win8 license is absolutely prohibitive in comparison to $199 for a capable 7″ tablet. You can’t compete for low-end consumer business at a 40% premium, while ALSO offering a more limited ecosystem, etc. Microsoft’s intentions here are unfathomable and will remain so until we see many other pieces fall into place.

        The puzzle for me is why Microsoft would be making it harder for ALL developers (whose work on Win8 apps is in short supply), just to go after a market that Microsoft will be unlikely to profit from any time soon. Seems like a distraction, at best; a sign of confusion/desperation at worst.

  • mhikl

    Interesting perspective, Patrick. I wonder if when the iPad is made lighter, will that add an interesting element to the mix? The seven inch tablet fits well the hand for the general purposes you have outlined, but a fully functional and light weight larger tablet might challenge the path. Maybe this is what Apple needs to figure out asap. Add the perfect cover with a built in killer keyboard and the laptop might be, again, in dire straits and the seven inch tablet relegated to the minor role.

    • Glaurung-Quena

      I definitely think a lighter full size ipad will change the dynamic. The full size Ipad is already too small a screen for me to use many websites comfortably with Safari (since there’s no setting for increasing the default font size). With the “Perfect Browser” app, I typically set the default font size to 130-140%. There’s nothing unusual about my 45 year old eyes — and there’s no way I could see myself trying to surf with the Ipad mini. And yet at the same time, the full size Ipad would be so much more comfortable to use if it was lighter.

      The other day I was in an office store and looked at their selection of tablets. The three or four different 7″ tablets they had for sale were all basically just as thick as the full sized tablets… except for the Mini, which looked like it came from an entirely different planet, it was so thin and far, far lighter than anything else in the same category. If Apple can apply whatever miniturization tricks they used for the Mini to the regular Ipad, I think they’ll have added a very compelling selling point.

      • http://twitter.com/snookasnoo Idon’t Know

        Agree, the iPad Mini is nice but I want the larger screen.

    • arrow2010

      The only companies in “dire straits” are not named Apple.

      • mhikl

        So true, arrow, and yet it seems Apple is the beleaguered wallflower at the prom. Here is an interesting read that puts everything into perspective. Right or all right or mostly right, it unblocks thoughts the weary Apple fellow and many journalists find overwhelming.

        At the very least, Daniel Eran Dilger has no fear to call a spade a spade, something so many Apple sites have been browbeaten off the tract of truth: “Google’s Android powered by remarkable new “flexibly adaptive logic” or Flawgic in detail.

        http://www.roughlydrafted.com/2013/03/09/googles-android-powered-by-remarkable-new-flexibly-adaptive-logic/

        • steve_wildstrom

          Dilger’s rant is clever, but far from fair.

          Regarding Overture, I would ask the same question Aaron Sorkin has Mark Zuckerberg ask in “The Social Network”: “If you had invented AdWords, you would have invented AdWords.” Yes, Overture had a similar idea, but Google made it work. Similarly, the PageRank algorithm built on the work of others, notably Jon Kleinberg and the folks who created CLEVER at IBM, but PageRank was practical for near real-time indexing.

          The Android section is way off the mark. Java is a programming language. Android is an operating system. The litigation concerned whether Google failed to license Java for the Dalvik virtual machine at the heart of Android. But it never claimed that Android was just an implementation of Java.

          • mhikl

            Of course one should never just accept everything in an article one reads without question. However to put down something as a rant on a few off coarse bits doesn’t do any more justice. But what I have noticed over the years are clever assails on tech sites that smear Apple discussions with lies, rants and twisted logic that go on to become accepted as truth. Yes, I would like to see DED clean up his piece and then repost it and not leave himself open to lazy reporters and responders. I can also see how a busy journalist can read an article in a hurry and miss read the subtleties of language, an especially easy mishap in English, but to dismiss without further thought? Disingenuous in the least, I suspect.

            M Dilger still has some good points, especially his thoughts on Google Flawgic which are important to the discussion, which I believe was the original purpose of an article from the heart that may have gotten out of hand. However, I reiterate the point that many tech sites, especially ones more devoted to Apple interests, have come under the gun of the Anti-Apple crowd and over time have become apologetic, recklessly bending over backwards to appease the relentless assailants then all too often becoming irrelevant in their quest for fair journalism in their attempts to prove the un-proveable. The MacObserver was, for example, a fairly good site to visit until the attacks by one gentleman who’s influence has made most articles painfully so objective it is hard to find a positive point in Apple’s favour that isn’t waylaid with caveats. Such is not honest journalism, it’s journalism in fear. Often taking the road of ‘high and mighty objectivity’ can render information loopy and poorly written to the point that viewers leave in droves, or at the least quit entering into discussion.

            Regardless, the man did what a man at times has to do; he took a stand, he didn’t mince words but made some excellent points that stirred some thought. And that is rare in these times and needs recognition. What’s not so rare, sadly, are the quick to point fingers and even quicker to dismiss. The masses of Apple haters on AppleInsider also had a heyday with the article there. Typical dumb-think, just negative minds made up without even finishing the first paragraph. May we all be saved from stepping over that precipice.

  • FiveAcres

    From my own experience, I am guessing that the desktop will be more popular than a notebook. I hadn’t had my iPad 2 for more than a week when I decided I would not have to replace my aging notebook. For travel, errands, and moving around the house, the iPad 2 or a mini-pad is much more convenient than a notebook. Both my husband and I have affordable desktops for other applications.

    • mhikl

      FiveA, my Macbook’s OS took a dive so I took Ben’s suggestion and replaced it with the mini and along with my iPad and iPt, I am quite contented. I will eventually see if I can revive the MB’s hd but I am in no hurry. I am quite pleased with the cloud and how it handles my files between devices but for travel, the MB may come in handy. Wherever will we be in a few years certainly stirs the imagination.

  • http://www.slideshare.net/samirsshah Samir Shah

    7″ popularity is “less weight” popularity.

  • David Olson

    I think issues discussed in depth in other TP articles are still very significant. Amazon and Google have greatly harmed the tablet market by selling their tablets at cost. Increased demand and lower componnet prices don’t end up helping when all the profit is sucked out of the Android space. The smaller form factor, while currently more popular, does not resolve this problem. Still, I think you make a good point, Patrick, the smaller tablet leaves more room for a notebook or desktop computer. Perhaps this is the way Google and Amazon end up benefitting other computer manufacturers and technology in general.

    • http://twitter.com/snookasnoo Idon’t Know

      They have left very little on the table for other Android manufactures by selling both the Nexus 7 and Nexus 10 at cost. But they are desperate to get someone, anyone, to buy an Android tablet.
      The Nexus 7 is nice but the Nexus 10 is a mess with all sorts of quality control issues and few apps that work well on it’s screen. Thats what Google gets for letting Samsung make their flagship large screen tablet.

  • Mark Jones

    I wouldn’t read too much into one report. First, in that report, every significant size, larger and smaller, increased except for 9.7″, which is almost all iPad. Second, the metric is display shipments, not actual tablet sales. We’ve already seen several large quantities of shipped tablets go into the $99 fire sale bin.

    So it’s really just one company, Apple, making a large downward supply adjustment, for which, as Tim Cook has already said, there could be many reasons.

  • arrow2010

    The ipad Mini is 7.85″ which proves 7″ is too small since it’s sold 15 million+ already in 5 months.

    • http://twitter.com/snookasnoo Idon’t Know

      Except it has 30% more viewing area than other small tablets like the Nexus 7 and much better color and contrast with real tablet apps.
      The Nexus 7 is a nice device, I use iPads only but have bought two Nexus 7′s as gifts. But it wouldn’t be nearly as popular if Google wasn’t selling it at cost.

  • http://twitter.com/M_Gauche James King

    The 7″ form factor is going the way of the dodo. The 7″ reference is a canard for analysts who swore at the viability of the form factor when the reality is that 7″ tablets, including the Nexus 7, still have not sold very well relative to the market. Apple once again took the lead on form factor innovation and showed that anything significantly under 8″ compromised the web browsing experience. Someone once asked me if 1″ really made that big a difference. The answer is a resounding “yes.”

    In a couple of years, the 7″ tablet probably won’t even exist. The sweet spot is roughly in the 8″ range. I wouldn’t be surprised to see 10″ tablets make a significant resurgence once the bezels are minimized and the weight comes down. But 7″ tablets are done.

    I was myself a fan of the 7″ form factor until I actually bought one. Then I just went back to using a laptop to surf the web.

    Bottom line: there will be no 7″ tablets in a couple of years. It’s going the way of the 3.5″ smartphone.

  • http://mobiledeals.unlockscodes.com/ Mobile Deals

    i prefer the iPads myself, then again the Samsung notepads are pretty smart

    • http://twitter.com/snookasnoo Idon’t Know

      Smart in that they are cheap and plasticky with next to no support? Even some Android sites have said so like Android police.

  • Neil

    I disagree with your assessment of 8-inch tablets (which I assume you include in your 7-inch remarks). I write more on my iPad mini than on any other device. Since buying my iPad minis (one for the office, one for home), I’ve hardly touched my MacBook Air. I still use my two Mac minis a lot (my main computers — again, one at home, one in the office). The iPad Mini’s keyboard is a dream for fast thumb typists like me — and thumb typing on glass is way more ergonomic than touch typing on a plastic keyboard. I’m just one person so my story is anecdotal but you provide no data to support your conclusion that people don’t use smaller tablets for writing and other “creation.” And yes, I’m writing this comment on an iPad mini.

  • david

    Love how some things are assumed in the whole text. For example, assuming 7″ does not provide the best experience.

    Says who? To whom? Based on what? The iPad sales? Do I even need to explain. The lack of logic?

  • djokovic

    the next generation of tablet will launch the fashion of 8″ because the next ipad mini 2 will have have 7,9″