The Relevance of Tablets
Forecast Update After Two Years and Vista's Arrival
By Roger L. Kay
It’s time to take a look at the tablet market again. Recently it has been rather quiet, but there is
still plenty of activity. Microsoft, in 2002, put a shot of energy into a market that had theretofore
been a sleepy niche dominated by proprietary designs (mostly from Fujitsu). Who could forget
Bill Gates heralding the Windows tablet as the Second Coming in Las Vegas at Aureole, a bar
where bikini-clad rappel artists fetch wine bottles from racks inside a five-story clear glass
cage? But last time we looked, which was two years ago, the market was not really meeting
early expectations, and PC hardware OEMs were still experimenting with various designs.
An early IDC forecast, based on the anticipation of a huge infusion of co-marketing dollars from
Microsoft, had the market growing to nearly 10 million units in 2008. One assumption behind
this forecast was that the cost delta for bolting tablet technology onto a standard notebook would
fall to $50. None of that has taken place, and even IDC lowered its forecast in 2005 to reflect a
more modest outlook.
What has changed between 2005 — when Endpoint put out its first tablet forecast — and now is
that Microsoft’s Vista operating system launched. With Vista, Microsoft changed its tablet
strategy substantially, jolting the industry. The company integrated tablet functionality into the
operating system, and, in one stroke, the tablet ceased to be a form factor and became a
feature. From a practical perspective, this meant that the technical resources, the tablet techs,
were folded into the Windows group, and the tablet marketing resources, as such, were
disbanded. Now, that doesn’t mean that there isn’t any marketing support for tablet vendors,
just that it’s not focused in a group anymore, which means it’s harder to come by.
The issue of the tablet’s success is delicate. Since tablet was originally a Bill Gates pet project,
no one wants to call it a failure. Also, tablet, and touch input in general, falls under the rubric of
natural human input, one of Microsoft’s long term interests. But the sales volume in tablets has
mostly failed to materialize, even after a large investment, not only by Microsoft but by a number
of PC hardware OEMs as well. In the future, it will be harder to track tablet shipments. In some
ways, folding the tablet function into the OS has allowed Microsoft to declare victory and retreat.
Meanwhile, the OEMs continue to invest in the hope that this market will ultimately make
something of itself.
Parade of Beauties
As of this writing, a wide array of tablet offerings is available on the market. A review of the
principal tablet vendors ensues in the following paragraphs.
Acer
Acer had one of the first non-convertible tablets (sometimes called “pen-enabled’ notebooks).
That is, the company fielded a notebook that had a touch screen but no swiveling hinge. The
idea was that dispensing with the costly hinge would help shrink the stubborn cost delta
between tablets and ordinary notebooks and might help open up the market. More recently, Acer
introduced the TravelMate C200, a 12.1” convertible, in November 2005 in the United States.
However, while Acer still offers a tablet in some of its international markets, it ceased selling the
C200 in the United States as of early 2006. A company spokesperson said that the volume of
sales was too low to justify continued support. Be that as it may, when Acer acquired Gateway, it
bought into an existing line of tablets. How Acer will deal with this new line has yet to unfold.
Dell
Dell entered the tablet market in the United States on Dec. 11, 2007, with a 12.1” widescreen
convertible. The unit has a capacitive digitizer with multitouch as well as pen input capability and
two screen options, one each for indoor and outdoor viewing. It also offers a solid state drive
option. Target markets include retail, insurance, transport, and engineering mobile workforce
as well as education and healthcare applications. As is often the case, Dell came to market
only after the category was well established. In former times, Dell’s entry would be interpreted
as ratification of a market. However, given the company’s recent history of turbulence and
change, its tablet entry must be viewed in a context of experimentation, as Dell tries a number of
ideas and strategies new the company.
Fujitsu
Fujitsu, the traditional market leader in proprietary vertical tablets, made the transition to
Windows-based tablets fairly smoothly and continues to sell a variety of models under its
Stylistic and LifeBook brands in the United States. The company has 10.4” and 12.1” Stylistic
slates, two LifeBook convertibles (one 12.1” thin-and-light and one 12.1” widescreen ultra-light),
a 12.1” ultra-light pen-enabled notebook, an 8.9” widescreen convertible, and even a tiny 5.6”
widescreen job that weighs a pound and a half.
The company has indicated that it will modify and simplify this broad lineup over time with
technology refreshes, additional capabilities, and greater focus.
Gateway
Now a subsidiary of Acer, Gateway has been a staunch proponent of the tablet from the
beginning. When Acer bought Gateway, part of the transaction involved selling Gateway’s
commercial business to MPC. Since much of Gateway’s tablet volume at the time of the merger
was commercial, most of this business transferred to MPC along with the other commercial
assets. However, Gateway retained the right to sell the tablets — 12.1” and 14.0” convertibles —
to consumers through Gateway’s direct and retail channels. Gateway was the first computer
maker to enter the consumer tablet market in retail in 2006 and has seen enough uptake
through this channel to justify the program. The larger unit is sold mainly to students and other
education customers, but is too heavy for the traditional field force verticals. Nonetheless, the
14.0” tablet, the only one on the market with discrete graphics, does appeal to those who create
visual content or manipulate photos on the go.
HP
The current tablet market leader is HP, and the gap between HP and its competitors is likely to
open up more in the next several quarters, primarily because HP recently placed a big bet on the
bringing the tablet to consumers through retail distribution. Already, this move has had a
noticeable effect. In January 2007, HP started selling a 12.1” convertible in retail, and by midyear
was seeing a nice spike in volume. While most vendors are on a run rate that would deliver flat
growth year on year in 2007, HP is likely to see a growth rate in the healthy double digits, thanks
mostly to the addition of consumer volume. The segments buying in retail include students and
some small office-home office (SOHO) buyers, who use them mainly for handwriting and taking
notes.
Meanwhile, HP has built a steady, if modest, business selling tablets to commercial buyers,
mostly enterprise customers in traditional verticals such as healthcare, insurance, inspection,
and pharmaceutical sales, but also some in education. HP has been committed to the 12.1”
form factor for quite a while, having sensed early on that size and weight were overwhelmingly
important buying criteria.
Lenovo
Lenovo offers a 12.1” one-spindle convertible tablet in the X Series, the smallest and lightest of
the ThinkPads. The company sells this system primarily to the traditional tablet verticals, such
as pharmaceutical sales, but is also seeing some uptake in horizontals like education. Lenovo’
s greatest traction for this product has been the U.S. market. The company is committed to the
form factor and will continue to refresh the product in the coming year with new technologies and
designs.
Motion Computing
Motion remains the champion of slates. Unlike other OEMs in this space, Motion sells nothing
but tablets. The company has recently focused on selling slates tailored for specialized
applications to vertical market customers. On the product side, Motion’s most recent foray,
called the C5, is focused on the healthcare market. The durable slate is designed to withstand
spills and be easily disinfected, both necessary traits for the hospital environment. The
company maintains a highly defensible market position, not only because of specialized
hardware, but also because it delivers a total solution package to its clients, including software
and services. For example, Motion does a brisk business in helping hospitals set up wireless
networks for the tablets to access. The company is likely to further develop this business
model, adding more specialized clients and vertical markets as its resources allow.
MPC
Since MPC just entered the tablet market by way of acquisition, not much is known about what it
will do in the space. However, MPC has good presence in both federal and education
segments and may find a receptive audience for the former Gateway systems among these
customers.
Toshiba
Toshiba has been in the tablet market since Day 1 in 2002 and was a key launch partner for
Microsoft. Its single biggest market is education, both K-12 and higher ed. It also sells to
verticals such as field force, pharmaceutical sales, insurance claims adjustment, and financial
planning. The company’s latest offering, the Portégé M700, is a 12.1” widescreen convertible
model with an indoor-outdoor display as well as touch and pen input. This model will share
Toshiba’s lineup with the R400, introduced in early 2007, a high-end convertible with premium
features.
Microsoft’s Position
Microsoft continues to invest in pen and touch input as part of its larger effort to bring to market
more-natural human interfaces. However, the company has pretty much ceased to provide any
marketing support to tablets as such. Tablet functionality, now a feature of the OS, is no longer
an anointed prince, but these days just “one of the fellahs.” Although one interpretation of this
circumstance is that the PC hardware OEMs have been left to their own devices to fend for
themselves as best they can, the Windows team doesn’t see it that way. They says that
Microsoft provided plenty of co-marketing dollars while the market was young, and now it’s
launched and sailing under its own steam. The company continues to invest in the technology,
and co-marketing dollars are available for tablet makers under other programs. For example, a
firm targeting tablets at healthcare can appeal for marketing support through Microsoft’s
healthcare program.
Other Suppliers
Intel also participates in the tablet market, specifically in a joint program with Motion to go after
healthcare accounts. Wacom, the most prominent supplier of digitizing technology, acts as both
a supporter and inhibitor of tablet market development in that it charges a hefty premium for the
use of intellectual property even as it provides an important component.
A Convergence on Optimal Technology
The hardware elements that distinguish a tablet from any ordinary notebook are a pen or stylus
of some sort, a screen that takes input directly on its surface using the software and hardware
related to touch, and, in the case of the convertibles, a hinge that allows the screen to rotate so
that it can be used either in standard notebook position or flat, like a slate. In fact, the great
divide in the tablet world is between these convertible and slate versions. Early wisdom had it
that the slates served well in traditional tablet vertical markets — field jobs like utility, sales,
public safety, home health care, and other forms-oriented specialties like hospital floor — while
convertibles would ultimately serve a much larger, horizontal market. At introduction in 2002, the
vertical markets already existed, and Windows-based slates rapidly began infiltrating them. The
convertible market was hypothetical. Normal folks didn’t know yet that they might enjoy or get
some value from a tablet. Yet in Gates’ grand vision, many, if not all people would be using
tablet before long. This scenario has clearly not played out. The reality is that the vertical
segments still represent the core of the market, and the horizontal scenario is just beginning to
open up now.
Technology Trends
There seems to be a consensus emerging as to what a tablet should actually look like. An
analysis of emerging tablet technology trends follows.
Size
One thing that almost everyone figured out pretty fast is that any tablet with a 14” or larger screen
was too heavy and cumbersome to be used for any length of time in the field. Any serious tablet
user in the field isn’t going to hold a 14” tablet weighing 4 or 5 lbs in one hand while scratching
its surface with a pen held in the other for more than about 10 minutes. We all like to get our
exercise, but doing one-armed curls with a tablet all day long isn’t really what we had in mind.
The larger tablets still in the market are aimed primarily at students, who are presumed to like
the pen interface and don’t mind schlepping the thing from classroom to library to dorm room to
cafeteria in their backpacks. However, almost all vendors are heading toward 12.1” widescreen
models. As glass vendors make the 13.3” wide form factor less expensive, it’s possible that the
optimal size could bump up by an inch, particularly with further weight decreases, but the larger
versions are going the way of the dinosaur.
Slate vs. Convertible
At this point, only Motion and Fujitsu offer the slate form factor, and Fujitsu’s support is wobbly.
Most of the convertible vendors are selling their products into the traditional verticals — the
natural domain of slates. The idea of the convertible as a hedge — a “notebook plus” — is
extremely attractive. The risk of buying a convertible is low. Even if it isn’t used as a tablet, it still
makes a pretty good notebook. HP says that some of its tablet customers buy the convertible
tablet more for the hinge — the ability to turn the display around and show someone else what’s
on it — than for the pen input.
So, it appears that not much is left for slates. However, Motion has adapted nicely to its niche.
By emphasizing its specialized hardware, software, and services targeted specifically at its
chosen segments, the company is able to satisfy customers’ requirements better than more
general solutions offered by the convertible crowd. If Fujitsu does leave the slate market, Motion
will have that market to itself, a situation that cuts both ways. The good news is, Motion will have
no direct competitors; the bad news is, the viability of the category will come into question. If
Motion continues to focus on specialized solutions, however, it may be able to do quite well as a
niche player.
Input Method
To date, tablet input is accomplished by a number of methods, including resistive, capacitive,
and electrostatic. Optical, currently used only for non-tablet multitouch devices, also represents
a potential option. Multitouch, the ability of an input device to interpret multiple touch points at the
same time, is relatively new to tablets, but is likely to become more common.
Resistive input, written into the original Windows XP Tablet specification by Microsoft, requires a
special active pen, which carries a greater expense, and is less sensitive than capacitive
technology. As a result, resistive is on its way out.
Wacom, which controls many of the relevant patents in pen input, is the main digitizer supplier
for tablets, including those that need more sensitive pen input. Other suppliers, like InPlay, can
provide active-pen digitizers, but those who want pressure and tilt sensitivity need Wacom’s
technology. Unfortunately for market development, the company charges a healthy premium for
use of its rights, perhaps inhibiting, or at least slowing the rate of, tablet penetration.
Meanwhile, N-trig has entered the market with a dual-mode digitizer that can take both
electrostatic pen input and capacitive touch input (with digitizers on both sides of the display).
However, despite this versatility, the N-trig solution cannot handle pressure and tilt, elements
needed by creative content producers. Nonetheless, this functionality could prove quite useful
for industrial applications, and, in addition to Motion Computing, Dell has also committed to the
technology for its first generation tablet.
Solid State Drives
Like other notebook form factor, the tablet is a great candidate for flash-based hard drives.
Several, including the new Dell unit, offer solid state drive (SSD) options and others will be
hopping on the SSD bandwagon in 2008. These drives have a number of qualities that make
them well suited to tablets. They are durable and can take some roughing up in the field without
failing. Many tablet applications — public safety, utility field force, insurance adjustment, security
— can take advantage of improved durability. The main inhibitor preventing a faster penetration
of SSD into the tablet is price. For now, a 64GB SSD carries an $800 premium, which should
drop to half that by midyear 2008. Also, some vendors report reliability issues with SSDs, but
these issues also are likely to be worked out in the next year.
GPS
Location awareness, applications dependent upon knowing where the user is, will likely
become a more popular feature of tablets in the coming year. Both proprietary software and
mashups based on databases like Google Earth are increasing the utility of Global Positioning
Systems (GPS). At the moment, GPS is typically included in tablets as part of a custom system.
However, it is likely to become a standard option in the coming year.
Displays
Other than how they are digitized and their size, an important dimension of displays in tablets is
the degree to which they are viewable outdoors. Naturally, since tablet are often used outdoors,
many of the current tablet offerings have outdoor-viewable screens. However, brighter, non-
reflective screens come at a price, both in cost and battery life. Some vendors offer this feature
as an option. Others bridge the gap by deploying a hybrid (more expensive) that can go either
way.
Pricing
The premium for tablet features — digitizer, pen, and hinge — remains stubbornly high. At list
price, it can be as much as $350, but even with discounting, it is still close to half that. Costs are
between $70 and $100. Despite years in the market, tablet features have not achieved the
economies of scale necessary for make the form factor more popular.
Forecast
To quote from Endpoint’s August 2005 tablet forecast: “Early forecasts … [showed] growth in the
tablet market reaching 5 million in 2005, 9 million in 2006, and 14 million by 2007.” As noted
previously, IDC lowered its forecast in 2005 to shipments of 10 million in 2008. As of mid-2005,
the run rate had yet to hit even 1 million for the year. In its inaugural forecast, Endpoint
estimated that tablet shipments would reach 1.7 million in 2007. So far, the run rate indicates
that the year should finish right around there. That forecast has already been pretty close at
calling 2005 and 2006 (see Figure 1). If anything, it was a little optimistic. And using a simple
formula that takes the seasonality of 2006 and applies it to the data we already have for the first
half of 2007 shows that, if anything, tablets will fall a little further behind this year, losing yet more
momentum.
Figure 1
Endpoint Forecast vs. Actual Tablet Shipments, 2005 and 2006
still plenty of activity. Microsoft, in 2002, put a shot of energy into a market that had theretofore
been a sleepy niche dominated by proprietary designs (mostly from Fujitsu). Who could forget
Bill Gates heralding the Windows tablet as the Second Coming in Las Vegas at Aureole, a bar
where bikini-clad rappel artists fetch wine bottles from racks inside a five-story clear glass
cage? But last time we looked, which was two years ago, the market was not really meeting
early expectations, and PC hardware OEMs were still experimenting with various designs.
An early IDC forecast, based on the anticipation of a huge infusion of co-marketing dollars from
Microsoft, had the market growing to nearly 10 million units in 2008. One assumption behind
this forecast was that the cost delta for bolting tablet technology onto a standard notebook would
fall to $50. None of that has taken place, and even IDC lowered its forecast in 2005 to reflect a
more modest outlook.
What has changed between 2005 — when Endpoint put out its first tablet forecast — and now is
that Microsoft’s Vista operating system launched. With Vista, Microsoft changed its tablet
strategy substantially, jolting the industry. The company integrated tablet functionality into the
operating system, and, in one stroke, the tablet ceased to be a form factor and became a
feature. From a practical perspective, this meant that the technical resources, the tablet techs,
were folded into the Windows group, and the tablet marketing resources, as such, were
disbanded. Now, that doesn’t mean that there isn’t any marketing support for tablet vendors,
just that it’s not focused in a group anymore, which means it’s harder to come by.
The issue of the tablet’s success is delicate. Since tablet was originally a Bill Gates pet project,
no one wants to call it a failure. Also, tablet, and touch input in general, falls under the rubric of
natural human input, one of Microsoft’s long term interests. But the sales volume in tablets has
mostly failed to materialize, even after a large investment, not only by Microsoft but by a number
of PC hardware OEMs as well. In the future, it will be harder to track tablet shipments. In some
ways, folding the tablet function into the OS has allowed Microsoft to declare victory and retreat.
Meanwhile, the OEMs continue to invest in the hope that this market will ultimately make
something of itself.
Parade of Beauties
As of this writing, a wide array of tablet offerings is available on the market. A review of the
principal tablet vendors ensues in the following paragraphs.
Acer
Acer had one of the first non-convertible tablets (sometimes called “pen-enabled’ notebooks).
That is, the company fielded a notebook that had a touch screen but no swiveling hinge. The
idea was that dispensing with the costly hinge would help shrink the stubborn cost delta
between tablets and ordinary notebooks and might help open up the market. More recently, Acer
introduced the TravelMate C200, a 12.1” convertible, in November 2005 in the United States.
However, while Acer still offers a tablet in some of its international markets, it ceased selling the
C200 in the United States as of early 2006. A company spokesperson said that the volume of
sales was too low to justify continued support. Be that as it may, when Acer acquired Gateway, it
bought into an existing line of tablets. How Acer will deal with this new line has yet to unfold.
Dell
Dell entered the tablet market in the United States on Dec. 11, 2007, with a 12.1” widescreen
convertible. The unit has a capacitive digitizer with multitouch as well as pen input capability and
two screen options, one each for indoor and outdoor viewing. It also offers a solid state drive
option. Target markets include retail, insurance, transport, and engineering mobile workforce
as well as education and healthcare applications. As is often the case, Dell came to market
only after the category was well established. In former times, Dell’s entry would be interpreted
as ratification of a market. However, given the company’s recent history of turbulence and
change, its tablet entry must be viewed in a context of experimentation, as Dell tries a number of
ideas and strategies new the company.
Fujitsu
Fujitsu, the traditional market leader in proprietary vertical tablets, made the transition to
Windows-based tablets fairly smoothly and continues to sell a variety of models under its
Stylistic and LifeBook brands in the United States. The company has 10.4” and 12.1” Stylistic
slates, two LifeBook convertibles (one 12.1” thin-and-light and one 12.1” widescreen ultra-light),
a 12.1” ultra-light pen-enabled notebook, an 8.9” widescreen convertible, and even a tiny 5.6”
widescreen job that weighs a pound and a half.
The company has indicated that it will modify and simplify this broad lineup over time with
technology refreshes, additional capabilities, and greater focus.
Gateway
Now a subsidiary of Acer, Gateway has been a staunch proponent of the tablet from the
beginning. When Acer bought Gateway, part of the transaction involved selling Gateway’s
commercial business to MPC. Since much of Gateway’s tablet volume at the time of the merger
was commercial, most of this business transferred to MPC along with the other commercial
assets. However, Gateway retained the right to sell the tablets — 12.1” and 14.0” convertibles —
to consumers through Gateway’s direct and retail channels. Gateway was the first computer
maker to enter the consumer tablet market in retail in 2006 and has seen enough uptake
through this channel to justify the program. The larger unit is sold mainly to students and other
education customers, but is too heavy for the traditional field force verticals. Nonetheless, the
14.0” tablet, the only one on the market with discrete graphics, does appeal to those who create
visual content or manipulate photos on the go.
HP
The current tablet market leader is HP, and the gap between HP and its competitors is likely to
open up more in the next several quarters, primarily because HP recently placed a big bet on the
bringing the tablet to consumers through retail distribution. Already, this move has had a
noticeable effect. In January 2007, HP started selling a 12.1” convertible in retail, and by midyear
was seeing a nice spike in volume. While most vendors are on a run rate that would deliver flat
growth year on year in 2007, HP is likely to see a growth rate in the healthy double digits, thanks
mostly to the addition of consumer volume. The segments buying in retail include students and
some small office-home office (SOHO) buyers, who use them mainly for handwriting and taking
notes.
Meanwhile, HP has built a steady, if modest, business selling tablets to commercial buyers,
mostly enterprise customers in traditional verticals such as healthcare, insurance, inspection,
and pharmaceutical sales, but also some in education. HP has been committed to the 12.1”
form factor for quite a while, having sensed early on that size and weight were overwhelmingly
important buying criteria.
Lenovo
Lenovo offers a 12.1” one-spindle convertible tablet in the X Series, the smallest and lightest of
the ThinkPads. The company sells this system primarily to the traditional tablet verticals, such
as pharmaceutical sales, but is also seeing some uptake in horizontals like education. Lenovo’
s greatest traction for this product has been the U.S. market. The company is committed to the
form factor and will continue to refresh the product in the coming year with new technologies and
designs.
Motion Computing
Motion remains the champion of slates. Unlike other OEMs in this space, Motion sells nothing
but tablets. The company has recently focused on selling slates tailored for specialized
applications to vertical market customers. On the product side, Motion’s most recent foray,
called the C5, is focused on the healthcare market. The durable slate is designed to withstand
spills and be easily disinfected, both necessary traits for the hospital environment. The
company maintains a highly defensible market position, not only because of specialized
hardware, but also because it delivers a total solution package to its clients, including software
and services. For example, Motion does a brisk business in helping hospitals set up wireless
networks for the tablets to access. The company is likely to further develop this business
model, adding more specialized clients and vertical markets as its resources allow.
MPC
Since MPC just entered the tablet market by way of acquisition, not much is known about what it
will do in the space. However, MPC has good presence in both federal and education
segments and may find a receptive audience for the former Gateway systems among these
customers.
Toshiba
Toshiba has been in the tablet market since Day 1 in 2002 and was a key launch partner for
Microsoft. Its single biggest market is education, both K-12 and higher ed. It also sells to
verticals such as field force, pharmaceutical sales, insurance claims adjustment, and financial
planning. The company’s latest offering, the Portégé M700, is a 12.1” widescreen convertible
model with an indoor-outdoor display as well as touch and pen input. This model will share
Toshiba’s lineup with the R400, introduced in early 2007, a high-end convertible with premium
features.
Microsoft’s Position
Microsoft continues to invest in pen and touch input as part of its larger effort to bring to market
more-natural human interfaces. However, the company has pretty much ceased to provide any
marketing support to tablets as such. Tablet functionality, now a feature of the OS, is no longer
an anointed prince, but these days just “one of the fellahs.” Although one interpretation of this
circumstance is that the PC hardware OEMs have been left to their own devices to fend for
themselves as best they can, the Windows team doesn’t see it that way. They says that
Microsoft provided plenty of co-marketing dollars while the market was young, and now it’s
launched and sailing under its own steam. The company continues to invest in the technology,
and co-marketing dollars are available for tablet makers under other programs. For example, a
firm targeting tablets at healthcare can appeal for marketing support through Microsoft’s
healthcare program.
Other Suppliers
Intel also participates in the tablet market, specifically in a joint program with Motion to go after
healthcare accounts. Wacom, the most prominent supplier of digitizing technology, acts as both
a supporter and inhibitor of tablet market development in that it charges a hefty premium for the
use of intellectual property even as it provides an important component.
A Convergence on Optimal Technology
The hardware elements that distinguish a tablet from any ordinary notebook are a pen or stylus
of some sort, a screen that takes input directly on its surface using the software and hardware
related to touch, and, in the case of the convertibles, a hinge that allows the screen to rotate so
that it can be used either in standard notebook position or flat, like a slate. In fact, the great
divide in the tablet world is between these convertible and slate versions. Early wisdom had it
that the slates served well in traditional tablet vertical markets — field jobs like utility, sales,
public safety, home health care, and other forms-oriented specialties like hospital floor — while
convertibles would ultimately serve a much larger, horizontal market. At introduction in 2002, the
vertical markets already existed, and Windows-based slates rapidly began infiltrating them. The
convertible market was hypothetical. Normal folks didn’t know yet that they might enjoy or get
some value from a tablet. Yet in Gates’ grand vision, many, if not all people would be using
tablet before long. This scenario has clearly not played out. The reality is that the vertical
segments still represent the core of the market, and the horizontal scenario is just beginning to
open up now.
Technology Trends
There seems to be a consensus emerging as to what a tablet should actually look like. An
analysis of emerging tablet technology trends follows.
Size
One thing that almost everyone figured out pretty fast is that any tablet with a 14” or larger screen
was too heavy and cumbersome to be used for any length of time in the field. Any serious tablet
user in the field isn’t going to hold a 14” tablet weighing 4 or 5 lbs in one hand while scratching
its surface with a pen held in the other for more than about 10 minutes. We all like to get our
exercise, but doing one-armed curls with a tablet all day long isn’t really what we had in mind.
The larger tablets still in the market are aimed primarily at students, who are presumed to like
the pen interface and don’t mind schlepping the thing from classroom to library to dorm room to
cafeteria in their backpacks. However, almost all vendors are heading toward 12.1” widescreen
models. As glass vendors make the 13.3” wide form factor less expensive, it’s possible that the
optimal size could bump up by an inch, particularly with further weight decreases, but the larger
versions are going the way of the dinosaur.
Slate vs. Convertible
At this point, only Motion and Fujitsu offer the slate form factor, and Fujitsu’s support is wobbly.
Most of the convertible vendors are selling their products into the traditional verticals — the
natural domain of slates. The idea of the convertible as a hedge — a “notebook plus” — is
extremely attractive. The risk of buying a convertible is low. Even if it isn’t used as a tablet, it still
makes a pretty good notebook. HP says that some of its tablet customers buy the convertible
tablet more for the hinge — the ability to turn the display around and show someone else what’s
on it — than for the pen input.
So, it appears that not much is left for slates. However, Motion has adapted nicely to its niche.
By emphasizing its specialized hardware, software, and services targeted specifically at its
chosen segments, the company is able to satisfy customers’ requirements better than more
general solutions offered by the convertible crowd. If Fujitsu does leave the slate market, Motion
will have that market to itself, a situation that cuts both ways. The good news is, Motion will have
no direct competitors; the bad news is, the viability of the category will come into question. If
Motion continues to focus on specialized solutions, however, it may be able to do quite well as a
niche player.
Input Method
To date, tablet input is accomplished by a number of methods, including resistive, capacitive,
and electrostatic. Optical, currently used only for non-tablet multitouch devices, also represents
a potential option. Multitouch, the ability of an input device to interpret multiple touch points at the
same time, is relatively new to tablets, but is likely to become more common.
Resistive input, written into the original Windows XP Tablet specification by Microsoft, requires a
special active pen, which carries a greater expense, and is less sensitive than capacitive
technology. As a result, resistive is on its way out.
Wacom, which controls many of the relevant patents in pen input, is the main digitizer supplier
for tablets, including those that need more sensitive pen input. Other suppliers, like InPlay, can
provide active-pen digitizers, but those who want pressure and tilt sensitivity need Wacom’s
technology. Unfortunately for market development, the company charges a healthy premium for
use of its rights, perhaps inhibiting, or at least slowing the rate of, tablet penetration.
Meanwhile, N-trig has entered the market with a dual-mode digitizer that can take both
electrostatic pen input and capacitive touch input (with digitizers on both sides of the display).
However, despite this versatility, the N-trig solution cannot handle pressure and tilt, elements
needed by creative content producers. Nonetheless, this functionality could prove quite useful
for industrial applications, and, in addition to Motion Computing, Dell has also committed to the
technology for its first generation tablet.
Solid State Drives
Like other notebook form factor, the tablet is a great candidate for flash-based hard drives.
Several, including the new Dell unit, offer solid state drive (SSD) options and others will be
hopping on the SSD bandwagon in 2008. These drives have a number of qualities that make
them well suited to tablets. They are durable and can take some roughing up in the field without
failing. Many tablet applications — public safety, utility field force, insurance adjustment, security
— can take advantage of improved durability. The main inhibitor preventing a faster penetration
of SSD into the tablet is price. For now, a 64GB SSD carries an $800 premium, which should
drop to half that by midyear 2008. Also, some vendors report reliability issues with SSDs, but
these issues also are likely to be worked out in the next year.
GPS
Location awareness, applications dependent upon knowing where the user is, will likely
become a more popular feature of tablets in the coming year. Both proprietary software and
mashups based on databases like Google Earth are increasing the utility of Global Positioning
Systems (GPS). At the moment, GPS is typically included in tablets as part of a custom system.
However, it is likely to become a standard option in the coming year.
Displays
Other than how they are digitized and their size, an important dimension of displays in tablets is
the degree to which they are viewable outdoors. Naturally, since tablet are often used outdoors,
many of the current tablet offerings have outdoor-viewable screens. However, brighter, non-
reflective screens come at a price, both in cost and battery life. Some vendors offer this feature
as an option. Others bridge the gap by deploying a hybrid (more expensive) that can go either
way.
Pricing
The premium for tablet features — digitizer, pen, and hinge — remains stubbornly high. At list
price, it can be as much as $350, but even with discounting, it is still close to half that. Costs are
between $70 and $100. Despite years in the market, tablet features have not achieved the
economies of scale necessary for make the form factor more popular.
Forecast
To quote from Endpoint’s August 2005 tablet forecast: “Early forecasts … [showed] growth in the
tablet market reaching 5 million in 2005, 9 million in 2006, and 14 million by 2007.” As noted
previously, IDC lowered its forecast in 2005 to shipments of 10 million in 2008. As of mid-2005,
the run rate had yet to hit even 1 million for the year. In its inaugural forecast, Endpoint
estimated that tablet shipments would reach 1.7 million in 2007. So far, the run rate indicates
that the year should finish right around there. That forecast has already been pretty close at
calling 2005 and 2006 (see Figure 1). If anything, it was a little optimistic. And using a simple
formula that takes the seasonality of 2006 and applies it to the data we already have for the first
half of 2007 shows that, if anything, tablets will fall a little further behind this year, losing yet more
momentum.
Figure 1
Endpoint Forecast vs. Actual Tablet Shipments, 2005 and 2006
Second Look
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However, recent activity among the OEMs indicates that all is not lost in tabletland. Specifically,
it looks like this year the consumer segment is at long last taking off. HP, in particular, entered
the consumer segment in retail early in the year, and the company’s shipments have bucked
the general 2006-2007 trend, which is basically flat. HP is demonstrating that the horizontal
market is indeed viable, selling tablets not only to small businesses but also to outright
consumers in retail. For this reason, the forecast is boosted slightly. The expectation for 2007
is that it will come in with a normal seasonal picture, but 2008 and subsequent years are raised
somewhat to take into account the long-awaited increase in consumer uptake. Thus, the tablet
market should grow from 1.1 million units in 2006 to 1.4 million units in 2007 and hit 3.1 million
units in 2011 (see Figure 2).
Figure 2
Worldwide Tablet Forecast, 2006-2011
it looks like this year the consumer segment is at long last taking off. HP, in particular, entered
the consumer segment in retail early in the year, and the company’s shipments have bucked
the general 2006-2007 trend, which is basically flat. HP is demonstrating that the horizontal
market is indeed viable, selling tablets not only to small businesses but also to outright
consumers in retail. For this reason, the forecast is boosted slightly. The expectation for 2007
is that it will come in with a normal seasonal picture, but 2008 and subsequent years are raised
somewhat to take into account the long-awaited increase in consumer uptake. Thus, the tablet
market should grow from 1.1 million units in 2006 to 1.4 million units in 2007 and hit 3.1 million
units in 2011 (see Figure 2).
Figure 2
Worldwide Tablet Forecast, 2006-2011
But the rise in tablets overall will be only dimly reflected in the slate market. Breaking down the
total tablet shipment number into slates and convertibles shows that, despite reasonable
double-digit growth, slates will still only account for 4% of the tablet market in 2011. The
forecast assumes that Motion will remain the only major vendor committed to slates after 2007.
Thus, slate volume is likely to dip slightly in 2008 before picking up again in 2009 (see Figure
3).
Figure 3
Worldwide Tablet Forecast by Form Factor, 2006-2011
total tablet shipment number into slates and convertibles shows that, despite reasonable
double-digit growth, slates will still only account for 4% of the tablet market in 2011. The
forecast assumes that Motion will remain the only major vendor committed to slates after 2007.
Thus, slate volume is likely to dip slightly in 2008 before picking up again in 2009 (see Figure
3).
Figure 3
Worldwide Tablet Forecast by Form Factor, 2006-2011
The Future
It seems fairly clear that tablet will continue to be a force in the marketplace, although a limited
one. Tablet features are useful for certain people in specialized situations, but are less useful
for just anyone in general situations. Nonetheless, consumers will likely boost tablet
shipments, adding their volume to existing commercial shipments and maintaining double-
digit growth in the category. The cost inhibitor is likely to decline, albeit slowly, and applications
that make use of tablet functionality will continue to arrive periodically. There won’t be a rush to
take up tablets, but rather a steady increase in their popularity. GPS will help.
However, one technology may make a huge difference: Multitouch. In fact, the real market for
touch technology may not be the tablet as we know it at all, but rather a category only just
coming out now: the Mobile Internet Device (MID), the first and most famous instance of which
is the iPhone. Other firms are likely to join Apple in fielding small devices with touch-sensitive
screens that can perform Internet tasks, including email and multimedia. If we were to loosen
the tablet definition to include MIDs, the category could explode. However, that is a topic for
another day. This forecast covers only those tablets that look mostly like computers.
© 2007 Endpoint Technologies Associates, Inc. All rights reserved.
It seems fairly clear that tablet will continue to be a force in the marketplace, although a limited
one. Tablet features are useful for certain people in specialized situations, but are less useful
for just anyone in general situations. Nonetheless, consumers will likely boost tablet
shipments, adding their volume to existing commercial shipments and maintaining double-
digit growth in the category. The cost inhibitor is likely to decline, albeit slowly, and applications
that make use of tablet functionality will continue to arrive periodically. There won’t be a rush to
take up tablets, but rather a steady increase in their popularity. GPS will help.
However, one technology may make a huge difference: Multitouch. In fact, the real market for
touch technology may not be the tablet as we know it at all, but rather a category only just
coming out now: the Mobile Internet Device (MID), the first and most famous instance of which
is the iPhone. Other firms are likely to join Apple in fielding small devices with touch-sensitive
screens that can perform Internet tasks, including email and multimedia. If we were to loosen
the tablet definition to include MIDs, the category could explode. However, that is a topic for
another day. This forecast covers only those tablets that look mostly like computers.
© 2007 Endpoint Technologies Associates, Inc. All rights reserved.
