There is an unquestionable trend emerging — tablets are evolving into notebooks. This does not mean all tablet/notebook combinations will replace PCs. However, it does validate the opinion that there is a segment for these devices and our conviction is that the segment is quite large.
In my view, what Apple has done with the iPad Pro has legitimized the Surface form factor. Our data and analysis of overall PC shipments continues to highlight that 2-in-1 tablet and notebook hybrid sales have remained relatively small as a percentage of the mix of pure notebook and desktops. But it does feel like this is about to change.
Our firm has long been predicting these worlds would converge and all notebooks — at least, the vast majority of them — would converge around this form factor. There is a place for the pure notebook form factor. Think of it as a portable desktop. But the issue remains that the market for a portable desktop is very small. The market for a 2-in-1 PC is actually quite large, especially when you lump in consumer market sales, which is nearly half of the ~300 million ~ desktops, notebooks, and 2-in-1 form factors shipped today.
The iPad Pro validates the 2-in-1 form factor, albeit with a very different philosophy which I will discuss shortly. It is likely to help fuel the sales of these products in the market and is likely to help Surface in its enterprise adoption specifically because these are markets where a “Desktop OS” is still necessary. For example, one thing the Surface can do the iPad Pro can’t is run two Excel documents side by side. There is a place for a desktop OS in enterprise environments and I still believe Windows based 2-in-1 PCs fill this space.
Certainly, the iPad Pro will have its enterprise deployments. However, its opportunity there as well as its opportunity with creative professionals is simply smaller than the broader opportunity for consumers.
Tim Cook said, in a very calculated statement, “The iPad is the clearest expression of our vision of the future of personal computing.” This statement has implications and needs some unpacking.
First, we must establish the point the iPad Pro contains desktop class capabilities but runs a mobile OS, not a desktop OS. Although we can argue the specific version of iOS built for iPad is maturing to be more desktop-like with the simplicity of a mobile first experience. Second, and not to take anything away from Macs as they have their place in Apple’s lineup, this statement means Apple believes the future of computing runs on ARM not x86 (perhaps a thought nugget for those who believe Apple will bring ARM-based chips to its Mac lineup).
The Future of Personal Computing Running on ARM
This statement makes quite a bit of sense. Platforms running on ARM dominate the mobile landscape today. These platforms are Android and iOS. All the mobile first, consumer-centric developers are already writing for ARM. But when it comes to the tablet’s ability to take on notebooks (not desktops), Apple’s philosophy of leveraging the developers of the mobile ecosystem is central. I’ll make the point this way. If you were betting on developers that could carry the future of computing forward, would you bet on Windows developers or iOS developers? Hopefully, this question is easy to answer. This is where the philosophical difference between Windows 2-in-1 devices diverge from that of the iPad Pro.
Microsoft has corporate developers, this is certain.
ARM/iOS/Android has consumer developers and much more global ones at that. One market and one developer ecosystem, is significantly larger than the other. This is why it makes sense for Apple to bet on iOS developers from the viewpoint that Apple is broadening computing hardware capabilities for their developers to start thinking about the future of computing beyond pocketable screens.
It is within this vein of thinking Tim’s article about Android on “PC like” form factors makes sense. As the founder of the Remix OS said to Christopher Mims of the Wall St Journal in this excellent article on tablets:
“If two-thirds of the population of the world has not gone online yet, and if they do go online using and Android-based cellphone, then when they want to move into the productivity space, chances are they will want to use a familiar operating system.”
This was essentially what I proposed in this report on tablets. As consumers graduate to and have a desire to move up in this mobile-only world, it makes sense they stay with a mobile-first OS. Hence, our strong recommendation of late-to-PC OEMs to look at Android for the 2-in-1 form factor as a variant OS for their hardware.
The iPad Pro helps to further my conviction that Windows will remain a niche operating system in the personal computing market.
Creativity vs. Productivity
One last point. I’m continually frustrated by the commentary that states “real work” is defined by productivity. In my mind, for consumers, tools that let us create are just as important as those which help us produce. Making a home movie is more fun than creating a budget. But both sets of tools are necessary. My point is the idea of proclivity is not exclusive to Word documents and Excel spreadsheets. It also consists of making films, art, and creating things worth sharing with friends and family. This is why I’ve often been stunned Windows has never come bundled with software like the iLife suite (iMovie, iPhoto, etc.). Steve Jobs may have said it best, “iLife would do for creativity what Office did for productivity.” Consumers value the ability to create at a deeper, more emotional level. This angle is another one I’m intrigued by the upside potential of the iPad Pro, not just in vertical markets, but for the broader consumer market as well. It is up to Apple’s developers to take it there.