On the eve of Apple’s event–where we expect new iPad’s to be unveiled–I thought I would provide a high level view of the current state of the tablet market. While it may not be terribly obvious to many, the holiday quarter for tablets will easily be the most competitive yet. Amazon’s Kindle Fire HDX tablets have hit their stride and are viable choices. Samsung has been steadily gaining in market share with their onslaught of screen size choices and aggressive pricing. And even though many discount Microsoft’s Surface and the other similar 2-1 PC form factors from vendors like Dell, HP, Lenovo and others, they still represent a force in the market place that some consumers will need to evaluate. While we can debate the legitimacy of all these choices, the fact remains, there will be a plethora of choice in the tablet category this holiday season.
Defining a Tablet
This is easily the most controversial element of this discussion. When those of us who count and segment these categories discuss this point I often feel like it is the ultimate philosophical and post-modern question: what is a tablet?
Early on in the tablet lifecycle many were keen to keep a clean line between tablets and traditional PCs like desktops and notebooks. However, now more than three years later we know the line is blurred.
We have overwhelming data that now suggests that consumers themselves view tablets as PCs. For the mass market consumer there is no division. Many things they used to do on the traditional PC they owned or had access to they can now do on a more friendly form factor with a natural touch interface.
Tablets are the new PC and there is just no way around this. Notebooks and desktops will go through a role shift and have limited appeal and annual growth. When it comes to computing devices, which tablets are, they are the one growth spot. Although, the tablet may come in many different form factors and appeal to different segments accordingly, it is the device for which the PC industry needs to focus on.
We have to take forecasts with a grain of salt in their accuracy. Things change and forecasts need to be considered more liquid than firm. But they do provide a framework to show what segments are growing and which are not. Therefore, looking at what seems realistic in current forecasts is helpful frame the discussion and the category. For my firms estimates I took a number of forecast data we had and used them to create what I feel fits in line with the regional trends we see.
At one time trend data suggested more aggressive growth. It seems as though the trend data in key regions suggests more modest growth to be expected. Perhaps larger screen phones have played a role in slowing tablet growth. One can only speculate but as I point out we must consider forecasts to be fluid. Regardless of conservative or aggressive estimates tablets are a growth segment.
Few Vendors Finding Success
The other key observation when looking at tablet market share breakdown by vendor is that only a few are finding success. Apple, Samsung, and Amazon are the big brands that have the most market share with tablets. And interestingly all of them are coming from a mobile posture not a desktop or notebook posture. Here are the estimates I feel are most accurate of tablet sell through by vendor contrasted with PC sales. ((This chart is using Apple’s quarterly timeline where Q1 is the holiday quarter and Q4 for most others.))
As we can see, Apple is still the dominant tablet vendor by volume. Samsung is growing and Amazon is managing consistency.
Tablet OS Browser Share
Understanding how consumers use tablets is important. We know that iPad leads in browser usage share, which suggests at the very least that the iPad is an internet traffic machine. Browsing the web isn’t the only usage metric that matters but it is the best one we have. Web browsing share is a demonstration of overall device usage. If a tablet is just used for movies is it a tablet or a portable DVD player? If a tablet is just used for games is it a tablet or a portable gaming device? Tablets are best of breed mobile computers capable of web browsing, games, video, productivity and more. A true tablet platform should be about possibilities not limitations. Right now, in all the metrics we can count, it seems the iPad is the best example of a true tablet. ((By stats I mean commerce driven (iPad averages just over $130 per quarter by US consumers), app breadth and depth, developer monetization, etc.))
Here is a chart to grasp web browsing share of major platforms in several key regions.
As we track this information in real time it will be interesting to note any key changes. Right now the iPad dominates every category checked that matters from a market, business, and economics standpoint. The gap between an Android tablet–for someone who wants to use it as a tablet not something else–is minimal from a price standpoint for the value gained. If Apple closes that price gap with iPad pricing options then it is logical that Apple will gain ground in many of the key categories.
Microsoft and their ecosystem partners are the ones to watch to see if ground is gained in any significant areas for tablet intenders. The competition for first time tablet buyers will be fierce. Understanding what consumers want, expect, and desire to do with tablets will be the key in defining who wins and loses in this segment.