The Personal Computing Land Grab

It is hard to describe what is happening right now in the personal computing industry than anything other than a massive land grab. The land grab I speak of does not apply as much to traditional “old school” computing devices like desktops and portables, but it does apply to smartphones and tablets.

The point that continues to be forgotten, is that there are still billions of people who do not have a smart phone, tablet, or other form of primary computing device. This point is understandably forgotten because so many in the mainstream media only focus on the here-and-now and that is ok. But in the here-and-now many tend to focus on the market share point as if the market is as big as its going to get. The reality is that specifically with smartphones and tablets we are in the midst of the largest global total addressable market (TAM) expansion we have ever seen.

Just a quick look at some numbers highlights this. Right now we sell around 80-90 million traditional PCs every quarter. That market is not currently expanding. If we believe, as I do, that the tablet market is larger that the traditional PC market, then the upside is still significant. Approximating up to the current quarter, there are less than 20 million tablets sold worldwide on average every quarter. Which means the opportunity is to add tens of millions of new tablet buyers each quarter with the current growth rate of 50-60 percent a year. Smartphones sell just over 100 million world wide every quarter, similarly growing at about 40-50% year over year. Which means tens of millions of new customers will be buying smart phones globally every quarter. This market expansion is being driven by new customers, first time buyers, and that is the key to the land grab.

This global expansion is being driven primarily by Post-PC devices of a highly mobile nature. The limiter with old school PC devices was and still is the form factor. Desktops and portables, due to their design, simply had limited use cases. Namely, you had to be stationary. With a desktop, you sat at a desk and couldn’t move. With a portable, you could move from one location to another but still needed to be stationary to use it. Tablets and smartphones break the computing paradigm of being stationary and bring mobile computing into new places. This is why the market opportunity for tablets and smartphones is much larger than desktops and portables—mobility.

The key to this land grab is entry points, and they key to defending your land is ecosystems.

Getting Consumers To Move Onto Your Land

Step one is get consumers on to your land. If we trace Apple’s strategy back just over 10 years, this was the iPod. The iPod, with its simple yet powerful value proposition, is the product that set the stage for Apple. The iPod could arguably be explained as the catalyst for the post-pc era.

This battle to get consumers onto your land is the single biggest reason the pace of innovation is picking up. Many were shocked that Apple refreshed as many products in their product line just before the holiday quarter. The truth is that most if not all of the refreshes, new product launches, etc, are targeting new customers or ones who have not upgraded in quite some time. Take the iPad Mini for example.

As hard as it is to believe not everyone has an iPad. Yet there is still extreme interest around the tablet form factor. Apple is convinced that once people start using iPads, they have profound and some times life changing experiences. Our own internal consumer research confirms this as well. So for Apple, primary strategy number one, is to break down the barriers to owning an iPad. Apple’s focus is to bring premium features to the market at mainstream prices. We could debate that point all day but an objective look at the pricing and features of all products in the market would validate the point. With every upgrade the brought to their holiday lineup, they stayed true to that formula. And as Tim Cook said, “we are not taking our foot off the gas.” Most Apple competitors aren’t in total control of the gas pedal, yet alone have enough money to keep their foot on the gas. Strategically, this is a key point in the land grab.

Microsoft, and their partner ecosystem, also understand the land grab. Microsoft had, and still has, most of the land of traditional desktops and portables. Key point number one for them is to maintain that land but expand into new ones. Hence their aggressiveness with new form factors across the board. Windows 8’s success hinges on its ability to move into new land during this land grab, namely post-PC devices. This is also where uncertainty still remains about the platforms ability to do so.

The Sticky Ecosystem

Hardware and software get consumers in the door, or onto the land in my analogy. The services are the part of the ecosystem that keep people loyal. iCloud, iTunes, iMessage, etc., are examples of this for Apple. XBOX Live, XBOX Music, Office related services, SkyDrive, etc., are examples of this for Microsoft. All of these services act as glue tying their hardware and software services together in relevant and useful ways for consumers.

The strategy is to get consumers onto your land and keep them there with a strong and useful ecosystem. To some degree these ecosystems are mature and to some degree they are not. The services element of this is one of the most exciting upsides and is still full of unexplored territory.

There is much land still to be grabbed. The pace of innovation is going to continue to accelerate because of it. But this competition will make each competitor better and in the end bring to us, the consumers, some of the most exciting, useful, and enjoyable technology products never before imagined.

Published by

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

344 thoughts on “The Personal Computing Land Grab”

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    A Retina iPad Mini would also beg the question of why anyone would want a heavier bigger full iPad with the same resolution. Apple could answer that question by upping the size and resolution of the full iPad, once they can do that without adding weight. Maybe a 12″ screen iPad? They will need to do something to keep the larger iPad relevant.

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