The tablet category is quickly becoming a tricky one to analyze. As in the early stages of any technology category we are seeing the tablet market segment or splinter into separate markets.
While I like to point out how large the tablet category is, one can’t accurately analyze the tablet category without peeling back the layers of its onion.
As I, and others have continued to point out, the tablet market is really two separate categories. In fact, it may actually be more than that. The challenge that we have is that the generic term ‘tablet’ is actually a term that means many different things to different segments of the market. For example, a tablet that is purchased only to mount in a retail store is lumped into the tablet sales estimates with products like the iPad, Nexus, Kindle Fire, Samsung tabs, etc. So while point of sale tablets will be counted among tablets that get sold to end users and are used, we have to wrestle wit the question of whether they should or not. ((The other question we have to deal with is whether the dedicated kids tablets should be counted as tablets, or the white box ones primarily being used as TVs))
The same is true with the many low-cost tablets that are flooding the market but not showing up on anyone’s radar. These devices, to the best of our knowledge, are really more appliances and dedicated-use tablets that have low-specs, low-res, screen, cheap casing, and are primarily being used in emerging markets to just watch movies. These tablets do not go online, don’t connect to anyone’s services, don’t download apps, etc., so should they be counted in the same numbers as iPads, Samsung tablets, Kindle Fires, etc?
This is the challenge we are faced with in understanding the tablet market. When you study it as I do, you see what is happening in the market but also know it is somewhat disingenuous to make a bold claim of how big the tablet market is or how many tablets we are selling when not all tablets are created equally or being used equally.
This even complicates things even more with the tablets are replacing PCs narrative. For example, here is my chart including historical sales, current estimates and our forecasts for PCs and tablets the next few years.
When you look at this picture, it looks very bleak for the PC. And there is some truth to this. However not all these tablets are being used to replace the PC. I believe a percentage are but not all of them. In many cases, the bulk of tablets sold are being used to compliment PCs. Then there are those being used in markets by people who do not own a PC, and these devices are not being used in PC like ways at all. More importantly, they couldn’t even if the person wanted to use it more like a PC. In this light, and for the moment, comparing tablet sales to PCs is more inaccurate than it is accurate.
Now while there is some truth to the critique that sometimes people buy PCs and don’t use them to do PC things either, the counter point is that those same consumers are using a machine which is capable of compute even if they are not using it. The low-cost tablets which I am pointing out do nothing but watch movies, are not capable of doing much more due to their low-cost underpowered CPU and are not capable of much computing.
In this regard, I propose we look at low-cost tablets in a similar light as Netbooks. If you recall, a Netbook was in essence a truncated PC. It looked like a PC but failed miserably when someone bought it and tried to use it like a PC. Hence the astronomical return rates we saw in the early Netbook days. Netbooks were treated as second-class citizens to PCs by everyone who made them and by retailers. The term itself was invented to try and call these devices out separately as to not confuse consumers into thinking they were PCs.
The same issue now exists with these low-cost tablets. Consumers who have bought them and tried to use them like higher priced tablets were disappointed. These devices are simply weak tablets in the same ways the Netbook was a weak PC. Both barely sufficed at a few tasks and were extremely limited in their use cases.
Now, while there is a place for these devices which are dedicated consumption devices primarily, we can not confuse them with the big shift of computing from notebooks to tablets capable of more computing like the iPad Air or the Surface Pro or any number of more powerful larger screen tablets coming from the Windows ecosystem.
As you can tell from some of the reviews of these tablets, like this one from Walt Mossberg, you see that these devices are being described very similar to Netbooks. People need to understand the difference between a budget tablet and the ones that are capable of more things. For some who just want to use a tablet in very simple ways, perhaps a budget tablet is the way to go. But in this regard they are being bought for a specific purpose. Where other tablets are capable of being more general purpose computing devices.
For those of us who track and count these things, the tablet market is more complex and filled with variety than many other segments we have tracked before. The key to understanding the tablet market is its layers. And it has more layers right now than any other.
19 thoughts on “Low-Cost Tablets are the Netbooks of the Tablet Category”
Just wondering where Chromebooks fit here. Looking at both the US and UK Amazon sites, Chromebooks have been consistently outselling every brand of laptop for over a year now (even before Windows 8 appeared). Almost all at previously Netbook price points.
Not so much into the consumers hands though. Most have been education, even small business. But again that is a form factor point, where basically the Chromebook is what the Netbook should have been all along.
Volumes are admirable and we are tracking them but as I said we see more of the volume going to verticals than pure consumers.
I suppose a good question is when these low-cost tablets become better agents for things similar to Chromebooks, will they eat into the Chromebook market? I also think Google should make a Chome tablet that is very low cost but just good at web browsing, web apps, etc..
Hmmm – Amazon are not on any of the Educational Buying Frameworks here (sorry – i’m in the UK), so their Chromebook volume (that exceeds all models of Windows PC they sell) must be all consumer. Whether Amazon’s share of the PC market is enough to register on the richter scales for your graphs is probably another matter though!
As I said, is the form factor of the Chromebook that is its limitation. People are buying it for many same reasons they purchased netbooks. Very simple tasks. This may evolve over time but my conviction is that the clamshell form factor is no longer a mass market form factor. That shifts to tabs.
HTML 5 is good to watch. Still a long way to go but the web as the platform is where I think things are headed even though it will take a while to get there.
But a key difference is that Chromebooks do those simple tasks much better. Running Microsoft Word on a Netbook was painful, even for simple documents. Google Docs works great. Education is a key market for Chromebooks.
Also, no admin. I stil lget to connect to my parents’ PC weekly because something blew up.
Steve, I’ll disagree.
I ran Microsoft Word, Excel and Powerpoint regularly on my netbook when traveling and it was not painful. Was it more difficult than only 15″ Macbook Pro, Sure. But it was clearly superior to my iPad and Google Docs, especially when I was somewhere at 30 thousand feet in an airplane with no WiFi. At that point the Google docs was useless.
(and as I said, when my Dell Mini 10 was running MacOS and the same version of office as my Macbook it was quite good)
Neh, people around me bought netbooks for their price and size and ability to be a real PC. Even the simplest task is much better done on a regular laptop/desktop; but when you want to travel light and be able to compute in a pinch if needs arises, $250 seems a bearable expense.
I still got mine, and still use it a handful of times a months, even though I got a regular 13 incher too. Can’t beat the size (works on airplane/train trays), the storage (upgraded to 1TB) and the Windows software (remember, that stuff before apps ^^)
As a former owner of a netbook, I think that you’re dissing the category a bit. i traveled A LOT in the time when netbooks came out and owned both a Dell Mini9 and a Mini10, the latter purchased because I couldn’t deal with the keyboard layout on the mini9 for anything but a short time. This while I owned a full-size MacBook Pro and an iPad. Why? the netbook was about half the size and weight of my MacBook, could do pretty much what it could do and could do a lot more than the iPad was capable of doing, especially if I had any serious “creating” to do. (eventually I was able to install MacOS X on my netbook to make it more compatible with my day-to-day system at home)
As for Chromebooks, I’m still not convinced that there is a category there for anything other than putting computing on people’s desks at work for low cost. But for my use, having to have access to a network to use it makes it mostly useless. (again due to the amount of travel that I’ve done)
Hmm… at least netbooks were slightly more portable than their big-brother Laptops right? What advantages do these junky tablets have other than price?
The advantage is in their limitation. Because of the low-expectations the price justifies that all one will do with it is very limited things. Portability was the value of the netbook but people bought these not to replace PCs but to be more portable.
Similarly these low-cost tablets will not be bought to replace PCs but will be bought for dedicated things. Minimum use cases, etc.
My point about how to think about netbooks is at a philosophical level as they related to the PC. The low-cost tablet in philosophy is the same to the more computing capable tablet.
If I need a baby monitor, I won’t go out and buy an iPad for it, even though I can use my iPad to do it. This won’t replace my iPad, but I’ll go get a cheap tablet and plug it in to be a fixed video surveillance device. Many more examples like this.
This is useful research IMO because it moves the discussion past “winners and losers” and starts to present a more realistic scenario regarding the market opportunities of tablets and what the real impact will be on the PC market. “iPad” = “tablet” but “tablet” =/= “iPad.” I’ve maintained that much of the decline in PCs comes from factors that are correctable, not just a paradigm shift to a new form factor. That isn’t to say PCs will ever have the level of primacy they once did but the PC industry could at least have some hope of improving its health if some of the structural issues could be addressed. It’s too simple to say that the iPad is killing the PC, especially when many people happily live with both (counting Macs as “PCs” of course).
Agree that PC’s need to up their game by delivering a vastly improved user experience. The problem is that the vast majority of PC’s out there get their software from a single company, Microsoft, who seem totally incapable of delivering the goods.
i don’t see any difference in what is happening to tablets than what has happened to every product over time as the market grows. Initially you have a “one size fits all” product (i.e. the 10″ iPad) and as the market grows it start to fracture into other areas. this happened with PC as well, with low-cost things aimed at kids, retail PC’s, etc. Wasn’t as noticeable from a manufacturing standpoint since they all had “slots” in them that allowed VARS and other resellers to customize things without the manufacturer knowing what had happened. But in the end markets there was a lot of action in fracturing the PC market.
For tablets this is being pushed back to the manufacturers, so it’s much easier to see.
Bottom feeders united. Welcome to Dell Hell. Abandon all profitability and credibility, ye who enter here.
I think that we are going to see a similar shake-out in the tablet market that we saw in the PC market. Apple is taking the profitable, high-end sector, while there is going to be a race to the bottom in prices amongst the other manufacturers. This is already happening, as I bet these tablets from Dell have the same razor thin margins as the PCs that came before. This means only a few, high volume manufacturers will thrive, while those who use tablet to complement a profit driving business will also thrive (Amazon and Google). But, many will fall. And… once again, Apple will pull in far more than their share of the profits in the industry.
Tablet market will saturate soon as well. PCs and laptops will sell at a steady pace after reaching a true level. The demand for them will come mostly from corporate sector. This means one will see cyclical swings every couple of years when companies replace their PCs and laptops. Consumers will buy the tablets more. If the tablets deeply penetrate the education market, then printed books might see a huge fall. Free on-line courses will increase. Education market is the next big thing for tablets if it has to avoid saturating. Since they cost much less than PCs and tablets, their volume share in the market has to be higher in order to match the monetary gain of PCs and laptops. For the next couple of years we are going to see interesting trends. After that it will all be like LCD TVs – drop and drop and drop in price with paper thin margins.
” For example, a tablet that is purchased only to mount in a retail store is lumped into the tablet sales estimates with products like the iPad, Nexus, Kindle Fire, Samsung tabs, etc. So while point of sale tablets will be counted among tablets that get sold to end users and are used, we have to wrestle wit the question of whether they should or not.1″
Is this not also true of point of sale PCs? How is that addressed there?
I think you’ve got a key point there, and I’m kind of surprised at how much of the tech industry (not just the tech media) seems to be chasing after shiny objects without thinking. PC sales have slowed, but that doesn’t mean people are throwing away their PCs (technically all of these devices are PCs, but I’ll use the term anyway). Rather, they’re satisfied with what they have on the PC front, and their dollars are going into what they don’t have – smart phones and tablets. With the bad economy, choices have to be made. If your PC is working for you, you’re not going to replace it if money is tight.
Also, the technological advancement of PCs has slowed. With 64 bit operating systems, hardware has reached a point where almost no one needs more power. It used to be that you had to upgrade every few years just to run the latest software comfortably. I think that has leveled off. I’ve read the idea that Moore’s Law has shifted, where instead of increasing speed, we’re seeing rapidly decreasing size of computer components. That paves the way for full blown Windows onto mobile devices, and the eventual obsolescence of things like iOS and Android.