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On the Impact of Paul Otellini’s CEO Years at Intel
Intel’s CEO Paul Otellini is retiring in May 2013. His 40-year career at Intel now ending, it’s a timely opportunity to look at his impact on Intel.
Intel As Otellini Took Over
In September 2004 when it was announced that Paul Otellini would take over as CEO, Intel was #46 on the Fortune 100 list, and had ramped production to 1 million Pentium 4’s a week (today over a million processors a day). The year ended with revenues of $34.2 billion. Otellini, who joined Intel with a new MBA in 1974, had 30 years of experience at Intel.
The immediate challenges the company faced fell into four areas: technology, growth, competition, and finance:
Technology: Intel processor architecture had pushed more transistors clocking faster, generating more heat. The solution was to use the benefits of Moore’s Law to put more cores on each chip and run them at controllable — and eventually much reduced — voltages.
Growth: The PC market was 80% desktops and 20% notebooks in 2004 with the North America and Europe markets already mature. Intel had chip-making plants (aka fabs) coming online that were scaled to a continuing 20%-plus volume growth rate. Intel needed new markets.
Competition: AMD was ascendant, and a growing menace. As Otellini was taking over, a market research firm reported AMD had over 52% market share at U.S. retail, and Intel had fallen to #2. Clearly, Intel needed to win with better products.
Finance: Revenue in 2004 recovered to beat 2000, the Internet bubble peak. Margins were in the low 50% range — good but inadequate to fund both robust growth and high returns to shareholders.
Where Intel Evolved Under Paul Otellini
Addressing these challenges, Otellini changed the Intel culture, setting higher expectations, and moving in many new directions to take the company and the industry forward. Let’s look at major changes at Intel in the past eight years in the four areas: technology, growth, competition, and finance:
Technology
Design for Manufacturing: Intel’s process technology in 2004 was at 90nm. To reliably achieve a new process node and architecture every two years, Intel introduced the Tick-Tock model, where odd years deliver a new architecture and even years deliver a new, smaller process node. The engineering and manufacturing fab teams work together to design microprocessors that can be manufactured in high volume with few defects. Other key accomplishments include High-K Metal Gate transistors at 45nm, 32nm products, 3D tri-gate transistors at 22nm, and a 50% reduction in wafer production time.
Multi-core technology: The multi-core Intel PC was born in 2006 in the Core 2 Duo. Now, Intel uses Intel Architecture (IA) as a technology lever for computing across small and tiny (Atom), average (Core and Xeon), and massive (Phi) workloads. There is a deliberate continuum across computing needs, all supported by a common IA and an industry of IA-compatible software tools and applications.
Performance per Watt: Otellini led Intel’s transformational technology initiative to deliver 10X more power-efficient processors. Lower processor power requirements allow innovative form factors in tablets and notebooks and are a home run in the data center. The power-efficiency initiative comes to maturity with the launch of the fourth generation of Core processors, codename Haswell, later this quarter. Power efficiency is critical to growth in mobile, discussed below.
Growth
When Otellini took over, the company focused on the chips it made, leaving the rest of the PC business to its ecosystem partners. Recent unit growth in these mature markets comes from greater focus on a broader range of customer’s computing needs, and in bringing leading technology to market rapidly and consistently. In so doing, the company gained market share in all the PC and data center product categories.
The company shifted marketing emphasis from the mature North America and Europe to emerging geographies, notably the BRIC countries — Brazil, Russia, India, and China. That formula accounted for a significant fraction of revenue growth over the past five years.
Intel’s future growth requires developing new opportunities for microprocessors:
Mobile: The early Atom processors introduced in late 2008 were designed for low-cost netbooks and nettops, not phones and tablets. Mobile was a market where the company had to reorganize, dig in, and catch up. The energy-efficiency that benefits Haswell, the communications silicon from the 2010 Infineon acquisition, and the forthcoming 14nm process in 2014 will finally allow the company to stand toe-to-toe with competitors Qualcomm, nVidia, and Samsung using the Atom brand. Mobile is a huge growth opportunity.
Software: The company acquired Wind River Systems, a specialist in real-time software in 2009, and McAfee in 2010. These added to Intel’s own developer tools business. Software services business accelerates customer time to market with new, Intel-based products. The company stepped up efforts in consumer device software, optimizing the operating systems for Google (Android), Microsoft (Windows), and Samsung (Tizen). Why? Consumer devices sell best when an integrated hardware/software/ecosystem like Apple’s iPhone exists.
Intelligent Systems: Specialized Atom systems on a chip (SoCs) with Wind River software and Infineon mobile communications radios are increasingly being designed into medical devices, factory machines, automobiles, and new product categories such as digital signage. While the global “embedded systems” market lacks the pizzazz of mobile, it is well north of $20 billion in size.
Competition
AMD today is a considerably reduced competitive threat, and Intel has gained back #1 market share in PCs, notebooks, and data center.
Growth into the mobile markets is opening a new set of competitors which all use the ARM chip architecture. Intel’s first hero products for mobile arrive later this year, and the battle will be on.
Financial
Intel has delivered solid, improved financial results to stakeholders under Otellini. With ever more efficient fabs, the company has improved gross margins. Free cash flow supports a dividend above 4%, a $5B stock buyback program, and a multi-year capital expense program targeted at building industry-leading fabs.
The changes in financial results are summarized in the table below, showing the year before Otellini took over as CEO through the end of 2012.
| GAAP | 2004 | 2012 | Change |
| Revenue | 34.2B | 53.3B | 55.8% |
| Operating Income | 10.1B | 14.6B | 44.6% |
| Net Income | 7.5B | 11B | 46.7% |
| EPS | $1.16 | $2.13 | 83.6% |
The Paul Otellini Legacy
There will be books written about Paul Otellini and his eight years at the helm of Intel. A leader should be measured by the institution he or she leaves behind. I conclude those books will describe Intel in 2013 as excelling in managed innovation, systematic growth, and shrewd risk-taking:
Managed Innovation: Intel and other tech companies always are innovative. But Intel manages innovation among the best, on a repeatable schedule and with very high quality. That’s uncommon and exceedingly difficult to do with consistency. For example, the Tick-Tock model is a business school case study: churning out ground-breaking transistor technology, processors, and high-quality leading-edge manufacturing at a predictable, steady pace of engineering to volume manufacturing. This repeatable process is Intel’s crown jewel, and is a national asset.
Systematic Growth: Under Otellini, Intel made multi-billion dollar investments in each of the mobile, software, and intelligent systems markets. Most of the payback growth will come in the future, and will be worth tens of billions in ROI.
The company looks at the Total Addressable Market (TAM) for digital processors, decides what segments are most profitable now and in the near future, and develops capacity and go-to-market plans to capture top-three market share. TAM models are very common in the tech industry. But Intel is the only company constantly looking at the entire global TAM for processors and related silicon. With an IA computing continuum of products in place, plans to achieve more growth in all segments are realistic.
Shrewd Risk-Taking: The company is investing $35 billion in capital expenses for new chip-making plants and equipment, creating manufacturing flexibility, foundry opportunities, and demonstrating a commitment to keep at the forefront of chip-making technology. By winning the battle for cheaper and faster transistors, Intel ensures itself a large share of a growing pie while keeping competitors playing catch-up.
History and not analysts will grade the legacy of Paul Otellini as CEO at Intel. I am comfortable in predicting he will be well regarded.
The New Era of “Good Enough” Computing
A few weeks back I was one of the first to write about Windows Blue and in this column I discussed how Windows Blue could be used on tablets in the 7” to 10” range as well as in clamshell’s up to 11.6 inches.
We are now hearing that this particular version of Windows Blue will be priced aggressively to OEMs and could go to them for about $30 compared to the $75-$125 OEMs pay for Windows 8 on mainstream PCs.
But to use this low cost version of Windows Blue, we understand there are some important caveats that go with it. For this pricing, it can only be used on Intel’s Atom or AMD’s low-voltage processors. These chips were designed especially for use in tablets and as I pointed out in the article I mentioned above, this would give Microsoft a real opportunity to get Windows 8 tablets into the market that could go head-to-head with Apple’s iPad Mini and most mid level 7”-8” Android tablets as well.
Netbook 2.0?
As for clamshells, they too need to use these processors from Intel and AMD to get this pricing for Windows 8 (Blue). What’s interesting about these clamshells is that we understand that they will be fully touched based laptops with very aggressive pricing. In some ways, these clamshells with these lower end processors could be looked at as Netbook 2.0, but for all intent and purposes, these will be full Windows 8 touch laptops only with processors that are not as powerful as the ones using Intel’s core i3, i5 or i7 chips or similar ones from AMD. They will also be thin and light and could easily be categorized as Ultrabooks as well.
Windows 8 Blue is one way to get Windows 8 into more products and make it the defacto Windows OS standard across all types of devices, especially the 7” to 8” tablet segment that we predict will be as much as 65% of all tablets sold by 2014. We also hear that Windows Blue RT version will also take aim at 7”-8” tablets, which means that the ARM camp will have a play in this market as well. However, its use in an x86 clamshell could have a dramatic impact on the laptop market and have unintended consequences for OEMs and chip companies as well.
The ramifications could come from a major trend in which tablets are becoming the primary digital tool for most users. The smaller tablets are used more for consumption but the 10” versions can handle both consumption and productivity in many cases. This translates into the fact that tablets are now handling about 80% of the tasks people use to do on a laptop or PC. That means that traditional laptops or PCs now only handle only 20% of the needs of these users, which are mostly used now for media management, handling personal finances, writing long documents or long emails.
New Price Segments
When we ask consumers that have tablets about their future laptop or PC purchases we are told that for many, if the laptop is only used for 20% of their digital needs, then they will either keep what they have longer or if they do buy a new laptop or PC, it will be a relatively cheap one. Consumers, who are not interested in Macs, tell us that the top amount they want to spend on these products is $599. This suggests two key things for the PC industry that could be quite disruptive. The first is that there would be a bifurcation of the laptop and PC market into distinct sectors. One focused on the consumer where all PC products have to be under $599. The other is what we call the premium market for laptops and PCs which are willing to pay $999-$1499 for their computing tools because of more advanced computing needs. This premium segment is mostly tied to enterprise and the upper end of the SMB market. In fact, the price for PC products in this upper premium price range has proven to be quite resilient.
The second key thing means that the mid level priced laptops and PCs could end up in a no mans’ land. PC products in the $699-$899 could take a pretty big hit while demand for products $599 and under could skyrocket. We believe that this trend would usher in an era we call “Good Enough” computing; a term we became intimately acquainted with during the first Netbook phase. To some degree, the robust sales of Chromebooks already suggest this era has already started. But it would pick up if users could get full touch-based clamshells that look like Ultrabooks and are priced well under $599. We are actually hearing that when these come out in time for back to school they will be priced from $499-$549 and the target price would be to get them around $399 by early next year.
At Creative Strategies we are in the early stages of analyzing the potential impact of these Windows Blue low-cost clamshells but our early take is that they could be huge hits and have a serious impact on demand for laptops or PCs in the mid range, which has been a very important segment for the OEMs and CPU companies in the past. If this happens, the OEMs would need to bulk up on their premium products since these have solid margins and actually bring them significant profit. It also means they need to be creative and innovative in products under $599 and find ways to squeeze profit out of these types of laptops as well.
This does not mean that OEMs will stop offering value notebooks that are bulkier and in some cases use processors more powerful then Atom or low-volt chip from AMD. However, if their Netbook 2.0 like clamshells are thin, light and touch enabled, it could even cause demand for these low end bulkier laptops to dry up too. It will be very important to watch the development of this market over the next 6 months. If our assessment is correct, we could see a rather significant bifurcation of the PC market this fall, something that could have a real impact on all the players in the PC world.
Putting Together The Pieces of the Personal Computing Puzzle
As I read other’s thoughts on personal computing, I am sometimes struck by the fact that we tend to view the world the way it was rather than the way it is. Not only are we not good at seeing the future of personal computing, we’re not even very good at seeing its present.
With that in mind, I thought I’d take a look at some of the new pieces of the personal computing puzzle – smartphones, tablets, hybrids and phablets – in order to speculate on how those pieces might be fitting together in new and changing configurations.
Zero Computers
Hard as it may be for us to believe, most of the world – residents of third world countries, children, seniors and those who simply have no interest in computing – still don’t own even a single computing device. (Believe it or not, my thirty-something next-door neighbors do not own a computer.) But this is all rapidly changing.
The smartphone is allowing millions upon millions of former non-users to put the power of the computer in their pocket. The smartphone is small, relatively inexpensive and more powerful than the computers that were used to land men on the moon. Further, the introduction of the touch user interface has made computing more accessible to the young, the old, the computer illiterate and the computer phobic.
“In the fourth quarter of 2012, mobile PC shipments decreased 11 percent while desktop PC shipments declined 6 percent year-on-year,” said Isabelle Durand, principal research analyst at Gartner.
We are inundated with stories of how computer sales are declining. But those are desktop and laptop sales. Sales of personal computing devices – phones and tablets – are booming.
Takeaway #1: Personal computing is growing and growing rapidly.
One Computer
Yesterday, if you only had one computer, that computer was likely to be a desktop. Or possibly a laptop.
Today, if you only have one computer, that computer is likely to be a smartphone. The power of the internet, email, texting, phoning, etc. – all in your pocket, all for a relatively reasonable price. People from the remotest portions of the globe are using smartphones to conduct business and enhance their personal lives.
Tomorrow, if you only have one computer, that computer may be a tablet. A tablet with a dumb phone (data free, no monthly payment) is a powerful combination. The tablet is less portable than the phone but its added battery life and screen size makes it a formidable stand-alone computer.
Takeaway #2: The first computer that most people will own is likely going to be a phone or a tablet, not a laptop or desktop.
Two Computers
In the past, many of us used to own both a desktop and a laptop computer. As laptops came down in price and increased in power and portability, most moved away from desktops and toward laptops as their one and only computing device.
Today, the laptop and smartphone combination is extremely popular – the laptop for our heavy duty computing and the smartphone for computing on the go.
In the future, the two-computer combination of choice will be the smartphone and the tablet. Both the phone and the tablet have the same touch operating system so the learning curve is almost nonexistent and data transfer is a breeze.
Hard as this may be for geeks like us to fathom, the tablet is all the high-end computer that most people need. Spreadsheets like Excel and heavy-duty word processing programs like Word might be de ri·gueur in the Enterprise, but they are anathema to the average computer user. Asking most computer users to buy a laptop or desktop is like asking a gardener to buy a backhoe in order to do their gardening. A backhoe is indispensable for professional construction workers – but most of us aren’t professional construction workers and most of us aren’t professional accountants, programmers or page layout designers either. We don’t need professional computers to do the work we most often do. We just need what works.
As an aside, I am intrigued by the idea of a computer watch and tablet combination. The watch would serve the purpose of making and taking calls, texts, short emails, etc, notifying us of incoming and upcoming events, allowing us to see small snippets of text, graphics and videos, allow us to use voice input when voice input is appropriate and allow us to rapidly reference programs that rely on geofencing and geolocation.
No one is even proposing such a device at this time. I only mention it because I can easily see how such a watch would take care of our low end, on-the-go, computing needs while our tablets would handle the rest of our computing tasks. Whatever the computer watch turns out to be, if anything, I’m sure that it will be as different from what I envision as the long-expected iPod phone differed from the iPhone that Apple finally provided us.
Takeaway #3: The phone and the tablet may be all the computing power that many will ever need.
Three Or More Computers
For those of us capable of purchasing three or more computing devices, the most obvious solution is some combination of smartphone, tablet and laptop or desktop.
If you had told me in 2005 that people would be buying three or more computing devices, each costing $500 and up, I would have argued against it. First, it would be cost prohibitive. Second, it would be counter-intuitive. People want convenience, not complexity. Why buy several devices when one will do?
Yet today we’re moving more and more toward a multi-screen world and – I would argue – more and more away from multi-purpose hybrids. We’re moving toward several computing tools that do specific things well rather than a single tool that tries to do everything well. How can this be?
As to cost, well, we pay for what we value. Smartphones and tablets do some tasks much, much better than laptops and desktops do. It’s not a question of paying for three computing devices. It’s a question of paying for three tools that excel at performing three very differing tasks.
A gardener buys both a shovel and a trowel because they perform very different tasks. He doesn’t regret the fact that he is buying two shovels — one large and one small. He focuses on what he is trying to accomplish, not on how he can use a shovel as a trowel or a trowel as a shovel.
As for convenience, well, it’s perfectly reasonable to think that we should have one computer perform all of our computing tasks. It’s perfectly reasonable – and perfectly inaccurate.
Notebooks and laptops, like shovels and trowels, do very different things. Trying to get one computer to perform both purposes provides us with a compromise, not an acceptable solution. Swiss Army knives are very useful on a camping trip. But when we’re not camping, we use spoons, forks, knives, corkscrews, etc., not a Swiss army knife. Similarly, a hybrid is useful if we’re in a situation where we’re forced to use only one device. Only most of us are never in that situation anymore.
“Tablets have dramatically changed the device landscape for PCs, not so much by ‘cannibalizing’ PC sales, but by causing PC users to shift consumption to tablets rather than replacing older PCs,” said Mikako Kitagawa, principal analyst at Gartner. “Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC. There will be some individuals who retain both, but we believe they will be exception and not the norm. Therefore, we hypothesize that buyers will not replace secondary PCs in the household, instead allowing them to age out and shifting consumption to a tablet.”
This is a fascinating observation. Today, most view laptops and desktops as the one and only possible computing solution. There are even vicious fights on the internet in which commentators passionately deny that tablets are even personal computers at all.
But what about tomorrow? Tomorrow we’ll live in a world where tablets are our 1-on-1 devices and laptops and desktops are shared because of their cost and limited uses.
Takeaway #4: Our computing devices are diverging, not converging. We’re not looking for one tool to do it all, we’re looking to use the tool that best fits the task at hand.
Conclusion
None of this may seem controversial to you…or ALL of this may seem controversial to you. To me, the things I’ve stated are so obvious as to border on the trite. Yet I recognize that many – and probably most – do not share my views. Today we have many new personal computing pieces. How these pieces fit together will determine the future of computing. It’ll be fun to see what this puzzle looks like when it’s finally put together.
How 7-Inch Tablets Could Help Notebooks Make a Comeback
If you follow much of what I write you may be familiar with the solutions based thinking approach I frequently mention. The fundamental aspect of a solutions based approach to personal computing understands that multiple screens working seamlessly in conjunction together will equal personal computing. Personal computing does not mean a single personal computer any longer. In the post-PC era it means many personal computers working together in a whole.
I have used this philosophy when outlining how different screens in conjunction together pair well and equal a computing whole. For example when I wrote about the combination of desktops paired with tablets as a solution. I’ve even wrote about this with regards to 7″ tablets and their role with traditional notebooks–which is the focus of this column.
There is ample data surfacing from different parts of the industry to support the claim that the iPad has been disrupting traditional PC sales. This is true and it is happening for reasons which I outline here in my column on why I believe tablets are the future.
Yet there are segments of the market that still need and require a traditional notebook. To be entirely honest I am not sure which camp I am in yet, whether the tablet + desktop is the solution for me or 7″ tablet + notebook is the solution for me. Until I fully experience the latter the jury will be out.
This brings up a key point and it relates to how product segments mature. Traditional PCs are mature and consumers are so familiar with their needs, wants, and desires with traditional PCs that when they buy them do so extremely intentionally to meet the needs, wants, and desires they have established for themselves.
Tablets on the other hand are not a mature category yet with regards to the mass market and are therefore still maturing as a product segment. It will most likely take customers at least two generations of owning a tablet to fully establish their needs, wants, and desires for a tablet PC. This is where the 10″ v. 7″ tablet form factor will come into question.
If you are like me, upon using the iPad I began using my notebook less. Due to its size, convenience, battery life, robust and simple interface, etc., I found and still find the iPad to be extremely efficient in both my work flow and my non-work based personal computing tasks. Like fellow TIME columnist Harry McCracken, I reserve my notebook for specific tasks and use my iPad for everything else.
However, Harry and I, along with many others who find this solution suitable, may only represent one segment of the market. We are served with this solution but perhaps others will not be. This is where 7″ tablets will make the discussion that much more interesting.
Upon getting the Nexus 7, I set my iPad aside and committed to using it as my primary tablet. Upon doing so, I found that I pulled my notebook out quite a bit more than when I used my iPad as my primary tablet. This was not a surprise for me since I had already had an assumption that 7″ tablets were not general purpose computing devices like 10″ tablets but instead are better suited for media and entertainment only. I still believe this is the case and will remain the case. If you have experienced the Kindle Fire or Fire HD you will probably feel similar. None of the products I just mentioned took much time away from my notebook like the iPad does. But this did re-enforce a point that I feel is important. Which is that 7″ tablets will help to rejuvenate the notebook market. At least in terms of notebook upgrades.
Part of the reason tablets have been disrupting PC sales is because for many segments of the market there are more questions than answers around tablets. They are not sure yet how far a tablet can take them in terms of personal computing. Consumers need to experience tablets to fully come to a conclusion as to whether they can replace some or all of their computing needs and what other products they may need as a part of a solution. Some may conclude they still need a traditional PC some may not. But the question around tablets and the fact that we have heard from many notebook intenders that they are delaying the purchase of a notebook because they want a tablet only re-enforces this point.
Many consumers are in the market for a tablet but are not quite out of the market for notebooks. As the tablet market matures and consumers come to conclusions about a tablet and the role a touch based computer will play in their personal computing ecosystem, it will allow them to make more informed decisions on the solutions they require. For many of those who have put off buying a new notebook perhaps once they realize they want a 7″ tablet but still need a notebook, they will then decide to upgrade. That being said, Notebook refresh cycles will no longer be the same with tablets and smartphones taking over the 2 year average life cycle.
Although, I expect the next few years to be rough waters for Windows PC makers, I feel it is key that those who desire to continue making notebooks, develop a strategy for 7″ tablets.
The Most Amazing Notebook Yet
It is possible that for many tech industry enthusiasts and followers that by my title alone you know what product I am talking about. In case you don’t know I am talking about Apple’s newest hardware innovation released today at their annual WWDC. This product is the MacBook Pro with Retina Display.
Apple pushed the envelope in engineering design for size and weight for a 15′ notebook. The new design alone would have been enough to impress but Apple didn’t stop there and added what is the best display on a notebook I have ever seen.
When I first saw the MacBook Pro with Retina Display, I had a similar experience to when I saw the Retina Display on the new iPad. I simply couldn’t stop looking at it. With the Retina Display on iPad, Apple set a new bar with the visual experience on a tablet. They have now done it again and set a new bar for a display on a notebook.
It is significant that this display innovation on a notebook comes to the MacBook pro line. Creative professionals are among the group that Apple has always had loyalty with. And it is with this group who tends to value performance more than mobility. The customer for the MacBook Pro wants performance in a portable package but doesn’t desire the tradeoffs in performance that need to be made for the ultra-portability offered in the MacBook Air.
Apple has delivered to this audience not only an extremely thin and light machine with all the performance for a creative professional but they added to it a display they will truly appreciate. Creative professionals look at things like graphics, animation, video, pictures, etc., all day and desire extremely high resolution monitors in order to do their work more efficiently. Many in this segment use a notebook or a desktop paired with an external monitor that is capable of higher resolution than can be offered on a notebook. With the MacBook Pro with Retina Display, creative professionals can now take that high resolution display that they need for their work with them.
I am confident that this new MacBook Pro with Retina Display will draw attention and turn heads. The whole notebook is an impressive piece of work. I am also confident that those in the market for a performance machine will seriously consider this new MacBook Pro. There is however, something perhaps even more interesting that may arise.
With the arrival of the Retina Display on iPhone and iPad, we saw a dearth of new software get created that took example of this new higher resolution display. I assume the same will happen now with the emergence of the MacBook Pro with Retina Display.
It is no coincidence that Apple released this new product at their annual developer conference. It is the third party developer community who contribute such value to the Apple ecosystem. I can only imagine the next generation of software experiences that will be created with what is clearly becoming Apple’s high resolution revolution.
My guess is this is also just the beginning. I think anyone who believes that Apple is not innovating in Mac hardware would be incorrect. Like the first generation MacBook Air, I believe Apple will bring these innovations downstream again to more notebooks over time. Again keep pressure on the competition and continuing to make some of the best engineered notebooks on the market.
Affordable UltraBooks are Coming But They aren’t UltraBooks
There are looming PC wars coming and it isn’t between Macs and Windows based notebooks. If you follow this industry you know that Intel is seeking to rejuvenate the notebook market. They are doing this by putting quite a bit of marketing weight behind the term UltraBook. To spur development in this category, Intel is putting some very specific hardware specifications around the term that OEMs like Dell, HP, Acer, etc., must conform to if they want their notebook to be called an UltraBook and take advantage of Intel’s marketing dollars for UltraBooks. Obviously every OEM is making UltraBooks.
The challenge as I see it for UltraBooks is that many of the first ones at launch and perhaps those that follow will be priced more in the premium price range rather than value. Many of the early UltraBooks we will see will be $699 and above although a few may get lower and many will skew higher as well. What our consumer data from our own research and consumer interviews is telling us is that Apple has about a $250 grace price point. Consumers know Apple’s Macbook Pro and MacBook Air lines are not the cheapest products on the market. For MacBook intenders, any comparable product must be at least $250 less than a comparable MacBook product to fully sway a consumer when price comes into play. But as I have pointed out before price is becoming less and less of an issue in mature markets.
Although we expect UltraBooks to continue to drop in price there is a sub-category of notebooks emerging which may be even more interesting.
If It Looks Like an UltraBook…
Intel wants to own the UltraBook category. They are investing a lot of money around the term. However, there is a strict set of requirements notebook OEMs must abide by if they want to use the term. If there is one thing I have learned in my 12 years of being an industry analyst it is that OEMs don’t generally like being told what they can and can’t do with their hardware designs. Every OEM wants to take advantage of the thin and light designs driving UltraBooks but they may want to vary the CPU capabilities, and what if they want to use an non-Intel chip for a design that looks exactly like an UltraBook? The answer is they can’t call it an UltraBook.
Earlier in the week AMD launched a very impressive 2nd-Generation A-Series APU, codenamed “Trinity.” Many OEMs have strong relationships with AMD and will most likely use these chips in their lineup of notebooks. So how do OEMs cover their bases by making non-Intel UltraBooks? Well, HP recently launched a new term called SleekBooks. We call this category Ultrathins and we expect many Ultrathins to enter the market well below the price of UltraBooks. And that is what makes this so interesting.
While Intel is going out and spending millions of dollars marketing the UltraBook term, it will indirectly benefit a range of competing platforms. Ultrathins will look nearly identical to UltraBooks with the only minor configurations or specifications, that many consumers may not even notice. The bottom line is that consumers will walk into retail and see UltraBooks, SleekBooks, and perhaps more terms on the way, and with all of these options consumers may very well go with price and walk with with something other than an UltraBook. Perhaps even not knowing they didn’t purchase an UltraBook.
Now, on the surface it may seem as though Intel may not like this scenario. But realistically Intel simply wanted to rejuvenate the notebook category. I believe their marketing of UltraBooks is going to do just that. Even though it may very well help their competitors chipsets and even to a degree help Apple.
I have a feeling there is a large chunk of consumers who are due for a notebook upgrade. The iPad has, for some, served as a sufficient supplement to their existing notebook making it easier to delay the purchase of a new notebook. Whether it is UltraBooks or these new thin and lights that will look and smell like UltraBooks but be priced quite a bit lower, we expect at least a short term positive jump the overall notebook category over the next few years.
Mac Momentum
This is one of the more interesting things to watch. Mac sales are growing at incredible rates. It seems each quarter Apple is selling more Macs than ever before. I was recently in an Apple store with a newly renovated training center. When I walked into the store I assumed the training tables would be filled with people learning how to use their iPads. Instead every table and every consumer at that table was learning how to use the new Mac they just purchased.
If Ultrathins that are very thin, light, and powerful hit the market below the $599 price like we think may happen, it could provide a serious jump start to the notebook category. And at $599 or lower the prices of quality notebooks will be significantly less than an entry level MacBook Air, which may be a key in slowing down Apple’s momentum with Macs.
The Notebook form factor is facing important times as consumers are faced with new questions about computing and their own computing preferences due to the iPad. Consumers are asking new questions about their own computing needs and looking more intently for specific solutions–especially those shopping for new notebooks.
This is exciting and challenging for many in the notebook ecosystem.
The iPad May Kill Laptops and Save the Desktop
The iPad–and other tablets if we ever get some good ones–poses an existential threat to the laptop. But it might provide a new lease on life for the much-ignored desktop PC. My colleague Ben Bajarin touched on this theme in his a post Notebooks Are the Past, Tablets Are the Future. I want to take a look at it in more depth.
I’m starting from the increasingly uncontroversial premise that a good tablet is all the computer most people need. The biggest weakness of tablets, the lack of local storage, is being solved in the cloud. For the times that you want to write more than is comfortable with the on-screen keyboard, a lightweight Bluetooth keyboard does the trick.
For some of us, though, a full-featured PC remains very much a part of our everyday toolkit. I frequently work on complex documents with a large number of windows open at one time. I do a fair amount of research. I edit video and work on databases. These are tasks that range from inconvenient to impossible on my iPad. So I have a Windows 7 desktop, which I use primarily for accounting and as a sort of poor man’s file server, and a 27″ iMac, which is my desktop workhorse.
What I am finding however, is that is use my laptops less and less. I spent this past weekend at a family event in North Carolina. I took both an iPad and a 13″ MacBook Air and the MacBook never came out of my bag. Everything I wanted could be done more conveniently on the iPad. Even on business trips, I’m finding the laptop doesn’t get used unless I really need it.
My first notebook was a Hewlett-Packard OmniBook 600c in the mid-1990s and since then I have used everything from tiny netbooks to a dual-screen ThinkPad (barely) mobile workstation. And the truth is that every notebook has felt like a compromise. The displays were never big enough, even on units too heavy to carry comfortably. Except on the ThinkPads that I favored for years and the more recent MacBooks, pointing devices ranged from barely adequate to awful.
Ergonomic nightmares. The ergonomics are just plain bad because a keyboard permanently attached to the display meant that the positioning of the keyboard or the display or most likely both was less than optimal. (This is why I prefer my separate ZAGGkeys Flex keyboard to more integrated units.) The push to include touch screens on Windows 8 laptops is going to make bad ergonomics worse. I tried many Windows Tablet PCs over the years and the awfulness of using touch in laptop mode was not due entirely to Microsoft’s dreadful software.
Desktops are actually a much happier solution for heavy-duty computing. Feature for feature, you get more for your money than with laptops. Storage is cheap and all but unlimited, and even with the cloud lots of local storage is a good thing to have. You can buy the keyboard, pointing device, and displays you prefer and put them where you want relative to the keyboard.
The trend in recent years has been to use a laptop as an all-purpose computer, perhaps connecting it to a bigger display and an external keyboard when it’s at home on your desk. That made a fair amount of sense in a pre-tablet world. Today, however, even most heavy users of computing power will be happy with a tablet when away from their offices (there are exceptions, say, engineers and software developers.) And instead of settling for the compromises of a laptop when in your office, why not go for a no-compromise desktop. And if you really want touch in a desktop, the displays can be designed so they will tilt nearly horizontal for better ergonomics; HP has been using this feature in their TouchSmart all-in-ones. It’s time for a lot of businesses that have replaced desktops with laptops to rethink the policy.
I can’t see myself giving up a laptop just yet. There are still times when I need a full computer while traveling or when I have to work out of an office (someone else’s) and bring my own computer. But these occasions are getting rarer and rarer, and I could be laptop-free sooner than I think. But the desktops will survive and maybe even prosper.
Notebooks are the Past, Tablets are the Future
This may be one of the more controversial columns I have written in sometime, although my goal is not to be controversial but to spur thought- so please hear me out. It is no secret that I am very bullish on the tablet form factor.
I have written extensively about them since the launch of the first iPad about my beliefs in this product’s role in the future of computing. But there are still many in the industry who have long watched, predicted, and benefited from the evolution of the desktop computer to the notebook and its success world wide that disagree with the more bullish thinking about tablets replacing laptops eventually.
At analyst meetings I attend and during many conversations with industry folk, I constantly hear a theme of tablets turning into notebooks. In essence there is a belief that the tablet form factor will evolve in form and function to look more like a notebook rather than less. This device is in essence the convergence of a notebook with a tablet. There is a good chance that with Windows 8 this form factor will appeal to a segment of the market. Even if that happens, and because of Windows 8, I believe that it is inevitable that all major software going forward will be re-imagined for touch interfaces first and foremost.
Notebooks of Old Will Become Relics
Because of the incredible growth of the iPad and smartphones over recent years, nearly all software developers have turned their eyes to touch. I have been one of the foremost proponents of touch computing and I firmly believe it is the foundation of our computing future. With that reality in mind, it seems clear to me clear that the software industry has been reborn around touch computing–R.I.P Computer-Aided Display Control (aka Mouse).
It is because of this new computing paradigm built from the ground up around touch that when I see notebooks I feel like I am looking at the past. Yet when I see how kids, elderly, non-techies, first time computer users in emerging markets, and more, all use the iPad, I am convinced I am looking at the future.
If you read my column on the new era of personal computing, I made the statement that notebooks are not actually mobile computers but are really portable desktops with compromises made on behalf of portability. In fact it was fascinating to hear Apple’s COO Peter Oppenheimer refer to the Mac business as desktops and portables–that’s my kind of industry terminology! Many desktop use cases are the same on notebooks. The only difference between the two is that one is portable and one is not. The iPad is however much more of a personal mobile computer than a notebook ever was or will be and the drastic change in use cases between the iPad and notebooks is significant.
I don’t know anyone who owns an iPad who has stopped using their notebook or desktop entirely. Sometimes there are times when you want a larger screen and a keyboard to accomplish some tasks. This is the best argument for the hybrid tablet / notebook computer. However, acknowledging that for some tasks a larger screen and keyboard are convenient, there is another scenario I can see playing out that may make the notebook form factor irrelevant for many consumers.
The Desktops New Role
Believe it or not, I see desktops making a comeback due to a role change. There is an interesting trend emerging around desktops. Consumer all-in-one Desktops (Like the iMac) are being designed to be showcased prominently in the house rather than stuck in the den or office. These computers will be very elegant, very powerful, and very affordable. So rather than try to converge a notebook and a tablet, I think a better solution is to pair a desktop all-in-one with a tablet. This would especially be interesting in consumer markets.
In this solution, when you want a big screen, keyboard, etc., you get it in a no compromise package with more processing power, graphics, memory, and storage than you would ever get in a converged tablet / notebook or a laptop. Then when you want a mobile computer you get a no compromise mobile computer with a tablet. I think this makes a lot of sense, perhaps even more than a converged notebook / tablet for the mass market.
Without fully testing one of these converged notebook / tablet devices it is hard to say this with absolute confidence but my fear with this converged form factor is that it will be a compromised notebook and a compromised tablet. Even though it is trying to be the best of both worlds, my fear is that it fails at both, or at the very least is heavily compromised on both fronts. Plus, if you buy my logic that a notebook is just a portable desktop, then the notebook becomes irrelevant in a desktop / tablet solution.
Of course the cloud and specifically the relationship between a desktop and a tablet would need to evolve quite a bit more than it is today for this to work. That is why I refer to it as a solution because it would need to have solution based thinking for this particular scenario to be done right.
This even works in a family setting where each person of the house has their own tablet screen and the desktop remains the communal screen for more “heavy lifting.” Each person’s cloud would have to work harmoniously on a personal level and also at a family level.
I have in fact been trying this experiment for myself at my house. Using a desktop as my primary big screen computer and a tablet for all my other mobile use cases. It is surprisingly sufficient already even without being built with this specific use case in mind.
Now realistically the notebook form factor will always exist for a certain segment. This model may not work for business users or mobile professionals. But I am beginning to wonder whether this desktop paired with a tablet solution may be a very attractive proposition for the mass consumer market. In this scenario everyone in the home has their own personal tablet rather than everyone having their own personal notebook. This scenario is not tomorrow, next year, or even a few years away but I would not be shocked if this solution gains traction at some point in time in the future.
This topic again is meant more of a thought exercise around a scenario that I could see playing out. Rarely am I struck with such a feeling that when I look at the excitement from many vendors around notebooks that I am sensing they are investing in the past, not in the future. But that is exactly the feeling I am having of late.
Intel and Microsoft’s Secret Weapon Against Apple
Intel and their partners are about to launch the biggest promotion in a decade for a new product category called UltraBooks. Microsoft is also about to launch a major update to Windows called Windows 8 that introduces a new user interface based on touch with their new Metro UI. Together they are critical products for the future of each company individually.
Form Factor Evolution
In the case of UltraBooks, I actually see them as the natural evolution of laptops and not revolutionary as Intel would like us to think. Rather, they take advantage of the industry’s constant push to make things smaller, lighter, thinner and have better battery life. For mainstream consumers who have had to lug around their rather bulky laptops for the last 5 years, they would be justified in asking Intel and other Wintel vendors “what took you so long?” Given the fact that Apple has had their MacBook Air on the market for 5 years and it has defined what an Ultrabook should be.
With Windows 8 and Metro, Microsoft is also following an evolutionary path towards touch interfaces with their Metro based smart phones and soon to be Metro based tablets and PCs. Again, consumers could ask Microsoft “what took you so long?” since Apple has had their touch UI on the iPhone for 5 years and on their iPads for 2 years.
But both products have some interesting challenges attached to them when they launch later this year. In the case of UltraBooks, they most likely will have starting prices of at least $799-$899 although I hear there could be at least one that is pretty stripped down coming out at around $699.00. At these prices, they completely miss the mainstream laptop market that represents the bulk of laptops sold and are priced from $299 to $599.
In the case of Windows 8 and Metro, while Metro is great on Microsoft’s phones and works very well on the tablets I have tested it on, it does not translate well to the laptop or PC since 100% of existing PCs don’t have touch screens on them. And most of the PC vendors are not putting touch screens on the majority of their new laptops because to do so adds at least another $100-$150 in cost to the customer. If you have tested the consumer preview of Windows 8 and Metro on an existing laptop, you know how frustrating it is to use it on existing trackpads. I consider this an Achilles’ heal for Windows 8 and one that could really hurt its short-term prospects.
To be fair, Microsoft has recently (three weeks ago) released recommended guidelines for next generation track pads and a new design I have seen from Synaptics could make laptops work well with Metro once it gets into new laptops. But this should have been something Microsoft focused on a year ago and had all of the new laptops “Metro” enabled at launch. My sense is that Microsoft should have only launched Metro on tablets this year and gradually moved Windows 8 Metro to the consumer PC markets once they had laptops optimized for it.
Instead, I see a lot of consumer confusion on the horizon when they try to use Metro on existing trackpads and any other non-touch input device, as the experience will be confusing at first and frustrating afterwards. Also, you notice that Apple has not put touch screens on their laptops and desktops and instead, worked extra hard to create trackpads and external trackpads that map to the touch experience on the iPhone and iPad.
I consider the initial pricing for UltraBooks and putting Metro on laptops and desktops issues that could slow down any early adoption of these products this year and perhaps deliver a graduated adoption in the future. The two companies do have a secret weapon in the works that could get them a lot of kudo’s from the marketplace and be a key component in getting users really interested in Intel and Microsoft again.
A New Category
The secret weapon comes in the form of a new form factor often referred to as “hybrids.” These are either tablets that can be docked into a keyboard, turning them into a laptop or a laptop with a detachable keyboard. You might think they are one in the same, but they are very different in terms of design goals. In the case of the first, the design is specifically around the tablet and the keyboard dock is modular. We already have a lot of examples of this with the iPad where the tablet is the central device and the attachable Bluetooth keyboards are more of an after thought. In this case the keyboard just supports the input functions of the tablet. The same is true with the Asus Transformer line of devices.
But in the latter case, the design is around a slim laptop case and the screen (tablet) can be taken off and used as a tablet. I believe this latter design is the secret weapon that Microsoft and Intel can use against Apple and at least on paper, give Apple a run for the money especially in business and the enterprise. To a lesser extent it could be hot in some consumer segments where the keyboard is critical to what they do with a tablet and want a laptop centered experience as well.
This is where Apple’s current strategy can be challenged as they are offering these market two distinct products. There is the iPad that stands by itself, and then the MacBook Air, their UltraBook that like the iPad, also stands by itself as a separate product. The key reason is that each has their own operating system and although Mountain Lion, Apple’s new version of OS X brings a lot of iPad like iOS features to OSX, they are still separate and distinct operating systems.
But with the introduction of Windows 8 and used especially on a laptop centered hybrid in which the screen (tablet) can be detached and used as a true tablet that takes full advantage of Metro, Microsoft and Intel can give their customers the best of both worlds in a single device. When in “UltraBook” laptop mode, users can use Windows 7 and its comfortable UI they are used to and have available to them the over hundreds of thousands of Windows apps as is. But when the screen detaches, it automatically defaults to the Metro UI and the touch experience is now central to the device. Now apps designed for Metro can give the users a rich tablet experience out of the box. Sure, they could default to old Windows programs if needed, but running those on a tablet is clunky at best.
If done right, the user would end up with a Windows 8 UltraBook with a detachable screen (tablet) and have to only buy one device instead of two. Our research shows that IT and even some consumers would have no trouble paying $999 and above for this combo product. At this price it would be a bargain. Most IT purchased laptops are in the $699-$999 range now and those who bought iPads to augment their users work experiences cost at least $599 so a combo device say at even $1299-$1399 is more then reasonable for them. Intel knows this and believes that as much as 50% of all Windows tablets will be hybrids. And Microsoft will push these types of designed products especially if the uptake on Windows 8 on laptops doesn’t take off as planned.
Could anything potentially derail Intel and Microsoft’s “hybrid” strategy? Well, if Apple applied their great innovative design knowledge to creating a hybrid that blends the iPad and the MacBook Air into a single device, it could have an impact their ability to dominate this market. On the other hand, it would validate Intel and Microsoft’s strategy as well. If they beat Apple to the market with their version, which is highly likely since at least four hybrids are set to come out by Oct, it could be the “hero” product of the launch that shows users the value of an X 86 ecosystem and highlight to Windows users the need for Ultrabooks and Tablets and Win 8.
We Are Entering the True Era of Personal Computing
Remember that old HP campaign “The computer is personal again?” I remember seeing that campaign and thinking to myself, when did the computer become un-personal? I’ve been cogitating on this term “personal computer” and in light of the recent debate of whether the iPad is a PC, I have come to some personal conclusions on this topic.
I would also like to preface this by saying that I agree with how Tim Cook illustrated what Post PC meant. He explained how Post PC means the PC is no longer the center. That is true. However, we are using this term “post pc” only because a desktop or notebook form factor is what has been associated with “PC.” We should not forget that the term PC literally means personal computer. So my overarching point is that we are actually in what is truly the PC (personal computing) era. My logic is as follows.
First lets look at some computing history. To do that I am going to look at the evolution of personal computing by calling out specific “eras” of computing. The first era was the birth of computing. During this era computing was in its infancy. Things like the transistor, then the microprocessor were invented which paved the way for computing. During the first stage of computing, computers were quite large and normally filled a room mostly and in the form of mainframes then eventually minis. Many visionaries dreamed of making these devices smaller so people could bring them into their homes and own their own computer. This vision paved the way for desktop computing.
Desktop Computing
This is the second era of computing. What most during this time would consider the personal computer I will call a desktop computer. The term personal came from the idea that each “person” would have one. When computers were largely mainframes or minis they were too big for each person to own. Bill Gates famously said “some day there will be computer on every desk.” This was the result of the next evolution of computing as computers become smaller and were able to now fit on desks as well as become more affordable. Of course these devices could become personal in the sense that a person owned them and could personalize them to a degree. But more personal computers were still ahead.
Portable Computing
The next era was the era of portable computing. This was the era of notebooks. Some call this mobile computing but my argument is that notebooks were really more portable computers than they were mobile. Meaning you could move them more easily than a desktop but you still sat down and were stationary using the device at arms length (generally) to type. My point is you weren’t actually doing computing while being mobile–you were still stationary.
Notebooks certainly took us one step closer to personal computing because they added an element of portability. They tended to travel with a select person who largely customized the notebook thus making it more personal to that individual. I would argue that the notebook is actually the first truly personal computer and birthed personal computing.
Now enter smart phones and tablets. The Merriam-Webster definition of a computer is:
“a programmable usually electronic device that can store, retrieve, and process data.”
Another definition I found in the dictionary says:
“An electronic device for storing and processing data, typically in binary form, according to instructions given to it in a variable program.”
So my first question is how is a tablet and smart phone not considered a computer? I also highly customize my smart phone and tablet for my own tastes and likings via software, personal data storage, access to media, and take them with me everywhere I go. So how exactly how are they not also personal? Thus one would have to logically conclude that smart phones and tablets are in fact personal computers on which computing tasks take place.
What we need to realize in this evolution of personal computing is that devices like smart phones and tablets represent a form factor evolution of computing similarly to the way the desktop form factor evolved to the notebook form factor. This evolution led to portable personal computing and it made computing possible in places that were before impossible with a desktop–like at Starbucks. The evolution of the personal computer form factor from notebook to tablet and smart phone represents the evolution to truly mobile personal computing. Again bringing computing to places not before possible or were before inconvenient–like the couch, bed, walking down the street, etc.
The Era of Mobile Personal Computers
My point earlier was that notebooks were more portable than they were mobile due to the form factor of a notebook still requiring its user to be stationary, with the device resting on a surface being used at arms length. Devices like tablets and smart phones change this computing paradigm. We can hold these devices in our hands and use them, we can move around while using them, we can use them in a range of places and situations where a desktop or notebook could never be used. Places like point of sale retail, by waiters, or car salesman, while running through the woods, while hunting, while boating, at the park, at the beach, etc.
The tablet and smart phone form factor represent what I believe are the best form factors for truly mobile personal computing. Thus they are simply form factor evolutions in personal computing not something other than a personal computer.
Can they replace other form factors?
The answer is no; tablets in particular are not replacing PCs, at least not in the foreseeable future. Rather what is happening is tasks or jobs are being replaced. Things that once were done primarily on the notebook or desktop form factor are now being done largely on devices like tablets and other form factors. In essence the best way to think about this is that time is shifting from notebooks or desktops to tablets and smart phones.
Prior to tablets, for example, the notebook owned the bulk of a consumers time when it came to computing tasks like searching the web, consuming media, checking email, etc. Now with tablets, time has been shifted to the tablet or smart phone where the form factor is more convenient for tasks like browsing the web, checking email, etc, in many situations.
Each form factor has a role to play. Based on the list of computing tasks consumers perform, the form factors play a role in making those jobs easier to accomplish. In this environment what happens is that consumers spread their time across a number of form factors to accomplish computing holistically.
Before one “personal computer” monopolized consumers time. Now time is shared between computing devices in the ecosystem in order to accomplish a wider range of computing tasks. Things that were not possible, or were harder to accomplish with previous form factors become possible with new computing form factor evolutions that stick in the market.
Rather than look at tablets and smart phones as separate from PCs it would be more helpful to look at them within the larger personal computing ecosystem. If we did this then we would not be arguing about whether the “death of the PC” is imminent or the degree at which PC sales are slowing. Instead we would be talking about the growth of the PC industry as well as the expansion of personal computing into new form factors, use cases, tasks, etc.
What we need to let go of is not the idea that these devices are not personal computers. What we need to let go of is an archaic and out of date definition, assumption, and stereotype of the term PC.
We are not really in the post PC era. We are in the post notebook form factor era. We are in the post traditional definition of a PC era. We are actually just entering the era of truly personal computing. If Bill Gates vision of long ago was that every desk would have a computer then I offer up this: in this new era, every pocket will have a personal computer.
Why Tablets Won’t Cannibalize Laptop Sales – Yet at Least
If any of you have gone out to buy a laptop computer lately, you may have asked yourself “do I need a laptop or could I get by with a tablet?” We know from our research that this question is top of mind with a lot of consumers these days as tablets have really clouded their thinking when it comes to new laptop purchases.
Last summer, when the PC vendors were planning their spring collection of laptops, consumer tablets were still in their infancy. Apple’s iPad had some serious interest from consumers but at that time, it had only been on the market for a few months and the vendors did not see it as a threat to their laptop business. But by the holiday season they realized that Apple not only had a hit on their hands but also were pushing more and more non-PC vendors to jump on the tablet bandwagon. They also saw that Apple’s iPad and Google’s Android tablets were starting to get serious attention from potential laptop buyers.
But the problem for the PC vendors is that the projection of cannibalization of laptops by tablets is also all over the map. Some financial analysts that I talk to who cover the PC vendors think that tablets could cannibalize as much as 50% of the laptop business for traditional PC vendors by 2014. In my talks with PC vendors, they currently fear that tablets could impact their total laptop sales by more then 10-12% over the next three years.
However, a new report from Bernstein Research Analyst Toni Sacconaghi is challenging this assumption. John Paczkowski over at the AllThingsD blog shared the reports findings and added some thoughts in his article. Sacconaghi believes that tablets are not cannibalizing notebooks but are instead converging with them. He postulates that a product like Apple’s MacBook Air, with its thin and light design, is more synergistic to Apple’s iPad. And that it represents a broader convergence of the tablet and notebook designs.
He is on to something here. If you look at the key trends in processor designs that focus on very low voltage yet high performance, you see that PC vendors now have the technology to create very thin and light laptops that in some ways work the same way. With a tablet, all you need is a Bluetooth keyboard and it in essence is a notebook. What’s more, if you take a very thin and light laptop and put a touch screen on it that can be folded back or slid down, you have a tablet.
Mr. Saccononaghi also says “ironically, availability of such notebook devices might undermine tablets sales rather then vice versa.” That is a possibility. But the blurring may really come through what we call Hybrids or sliders. When I was in Taipei a few weeks ago I saw a couple of products called sliders. The one officially launched was the Asus slider but I also saw one behind the scenes that will be ready for the holidays that was even cooler then the one from Asus. Both work like a laptop when the screen is slid up and then works like a tablet when the screen is slid down. A tablet and laptop all-in-one!
We see this hybrid slider as the device that actually does blur the two devices into one and could end up driving a portion of the market to buy products like these instead of a laptop or a tablet individually. However these designs still have small 10.1 inch screens and laptop users – who are used to larger screens to work with – may be intrigued by this design but still opt for a laptop and a tablet if they feel the need both.
What’s interesting is that if you consider a tablet a portable computer and lump them into total portable computer sales, Apple would be the #1 portable computer maker in the market today with HP being a distant second.
In the end I believe it will come down to personal choices. If a person uses their computers more for productivity, then a laptop is still needed. But if they mostly use computers for content consumption, then a tablet is more ideal for them.
Either way, consumers will end up with a lot of compelling choices and form factors for ultra light computing and will buy the ones that make sense for them. And for the PC industry, the amount of portable computers shipped starting in 2013 will increase by at least 50%. The big question when we get to 2015 though will be who the real Apple challengers will be and how much market share Apple will still own in both the ultra light laptop and tablets markets by the middle of the decade.
Microsoft Has A Chance to Compete With Windows 8
It’s way to early to count Microsoft out. Just look at history. Microsoft has a fighting chance with Windows 8 because they are Microsoft. We can argue and debate whether they understand the consumer. Or whether the market has passed them or not but the simple truth is they are still a force in the computing landscape.
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