The iPad has not only been a hit in the U.S.
The technologically-finicky Japanese
love it too.—(Credit: Apple)
Posted on 10/17/2010 10:02:14 PM PDT by Swordmaker
"That tablet thing? Yeah, we'll get back to you on that." That's a crude but fairly accurate encapsulation of the attitude Microsoft, Intel, and Advanced Micro Devices have toward the iPad and the tablet market in general.
Why the cavalier attitude? Before I defer to the opinion of an IDC analyst I interviewed (below), here's one pretty obvious reason I'll put forward. All three companies look at their revenue streams--traditional PC hardware and software on laptops, desktops, and servers--and come to the conclusion that the tablet is a marginal market. A deceptively accurate conclusion, because at this point in time--and even 12 months out--the tablet is marginal compared with the gargantuan laptop, desktop, and server markets.
And listening to both Intel's and AMD's earnings conference calls this week, it's clear that relative nonchalance is the prevailing attitude. While Intel's CEO did address the iPad directly, he later opined that the tablet "numbers...are relatively small in the grand scheme of the ship rate of the PC, notebook, and Netbook businesses." A variation on a theme he's stated during past conference calls. And AMD's CEO went so far to say that the tablet doesn't even warrant R&D spending yet.
At the other extreme is Apple's earnings statement (which, I submit, is as good a crystal ball as you'll get for future market trends), showing a brave new world that is moving to tablets in a significant way.
According to figures cited by Apple in its third-quarter earnings, 3.27 million iPads were sold versus 3.47 million Macs. And that happened, mind you, in a matter of months. And iPad revenue? From zero in the first quarter to $2.17 billion by the third quarter.
So, am I being too harsh--or too simplistic--in judging Microsoft, Intel, and AMD by saying, it's the tablet, stupid? On Friday, I asked Bob O'Donnell, a program vice president and analyst at IDC, about the seeming failure of the PC camp to fully grasp the significance of the tablet. His response, more than anything, tries to put the Microsoft-and-Intel-just-don't-get-it argument in perspective.
First some raw numbers. IDC expects Apple to sell about 15 million iPads this year. All media tablets (including other brands) will be about one-tenth of projected notebook shipments, which are forecast at 200 million, O'Donnell said in a phone interview. "That's an amazing accomplishment for one year," he said, referring to the rise of Apple's iPad.
And what does the total tablet market look like in 2011? "Next year, we think it could be in the range of 50 million. Our current published number is 30 [million] but we think we're too low," he said. The numbers include the BlackBerry PlayBook; an HP WebOS-based tablet; and tablets from Motorola, Samsung, and Nokia, among others, according to O'Donnell. Notebook shipments, on the other hand, are expected to be about 250 million in 2011, he said.
Though O'Donnell offers some arguments below explaining--if not defending--the Windows-Intel camp's apparent lackadaisical attitude, he also has some harsh words. "The problem that both Intel and AMD have is that Microsoft doesn't have an answer. There have been Windows tablets since 2002. This year Windows tablets will be about 1.5 million, about one tenth of tablet market this year. That's because Windows is not designed for these environments," he said. "Microsoft really needs to get its act together."
And where does a discussion like this inevitably go? Cannibalization, of course. Which is often cited because it crystallizes the threat that the tablet poses.
"Everyone talks about cannibalization. That's the hot word. There are three ways to think about this," O'Donnell said. "The one critical thing to remember is that it's not an either-or equation. One does not preclude the other," he said, referring to tablets and laptops.
Cannibalization scenario 1: "Short-term purchase cannibalization. That is, I walk into Best Buy with $500, and what do I walk out with? I walk out with an iPad instead of a notebook. That is happening to some degree. The [CEO] from Best Buy said so. Our own research suggests the same."
Cannibalization scenario 2: "Long-term purchase cannibalization. Two years ago, Netbooks were going to kill the notebook market. Now, a few years later, we can look back and say 'no, not really.' There was a period that people bought a lot of Netbooks. And it delayed the purchase of notebooks. But at the end of the day, when people wanted to update their notebook, they went out and bought a new notebook. A similar phenomenon happens with tablets. People may short-term delay the purchase, but when they need to get a new notebook, they're still going to get a notebook. In other words, they're going to use both of these things simultaneously."
Cannibalization scenario 3: "Usage cannibalization. I buy one device and I don't use the other device." But O'Donnell believes that argument is problematic. "So, you play with your new toy for a week. But at a certain point you realize you're going to use both of them."
So, are Microsoft, Intel, and AMD not that obtuse after all? Can they afford to take their time? Well, let's see if Microsoft and Intel and the PC camp gets it act together by early spring of next year. If they're still jawboning about the tablet being marginal, then maybe they're fine with ceding the lion's share of the market to Apple, Android, and other platforms, like WebOS and the BlackBerry. And ultimately losing a lot of PC mindshare in the process.
Brooke Crothers has been an editor at large at CNET News, an analyst at IDC Japan, and an editor at The Asian Wall Street Journal Weekly, among other endeavors, including co-manager of an after-school math-and-reading center. He writes for the CNET Blog Network and is not a current employee of CNET. Disclosure.
Ignoring burgeoning iPad sales of an estimated 8 million in just six months of 2010 and with forecasts of 50,000,000 for 2011, AMD CEO says "tablets are not even worth investing any R&D money on!"
Can anyone say "Shortsighted!!!"
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My daughter and her husband were in another city and traffic was terrible. She got the ipad out, looked at the map which has the traffic on it, too, got off the interstate, went to a restaurant,enjoyed coffee and kept up with the traffic. When it was less crowded, they got back on the interstate and came on home.
My daughter and her husband were in another city and traffic was terrible. She got the ipad out, looked at the map which has the traffic on it, too, got off the interstate, went to a restaurant,enjoyed coffee and kept up with the traffic. When it was less crowded, they got back on the interstate and came on home.
I don’t own a tablet or even a notebook for that matter. But mostly I use the computer for research and entertainment. I’d say that puts me in the largest camp of computer users. The iPad is perfect for ‘surfers’.
My desktop died last year, I haven’t replace it yet, instead I use a notebook. I use my netbook more and when the iPad has more, I will buy one.
It’s just a passing fad. They’re way too small, too limited for real computing. Some companies will make a few bucks, but it’s not worth the attention of a company that makes full-blown computers.
— IBM, c. 1979.
It’s just a passing fad. They’re way too small, too limited for real computing. Some companies will make a few bucks, but it’s not worth the attention of a company that makes full-blown computers.
— IBM, c. 1979.
At any rate I own and iPhone 4 and love it. I have no use for an iPad since it's just a bigger iPhone without the camera and phone capabilities.
Apple makes great products, but still out of my budget. I just recently purchased a new Dell PC laptop. Love it too. Windows 7 Professional (don't get home because it will not run old XP software) is great and a big improvement from XP. Not that I disliked XP, but Windows 7 will be around for a while.
Now THAT was funny. Thanks!
My droid does everything an ipad will do. I think smart phones will eventually kill the tablet puter.
I pay more for less. Sorry, no sale. Plenty of things that I need a laptop for that a tablet just can’t do.
If I have 500 bucks, I’m going to buy a used laptop with all the horses. Or I could spend 4x as much to get the same thing. Or spend as much to get 1/4th that of what I need.
They’ve got all the wrong price points.
In my own opinion I think that tablet computers are a good idea. I don’t own one nor do I intend on getting one. I also don’t own a iPhone or an Android style cell phone.
Even though I don’t at this time intend on getting either one. It will be interesting to see how the market works out over the next ten years or so.
“My droid does everything an ipad will do.”
Except provide the output on a screen big enough for comfortable viewing...which is why Apple is selling millions of iPads. ;-)
“I think smart phones will eventually kill the tablet puter.”
Perhaps wearable displays will merge the two categories...time will tell.
IMHO the tablets and laptops are really for two different purposes, although they can be somewhat interchangeable. Instead of an iPad, I have a Kindle, which, with some exceptions, I really like. The Kindle is great for storing and reading books, but does badly with maps and diagrams (not enough contrast & contrast isn’t adjustable) and doesn’t have color. The best thing the Kindles and iPads do for books (I speak from direct personal experience) is they enable the users to store massive libraries in minuscule spaces, keeping those users from being driven out of their homes by malignantly growing libraries of dead tree books. From what I’ve learned the iPad does have color and may have adjustable contrast, but uses transmitted light instead of reflected light, which causes it to require more electricity and to be hard to read in direct sunlight compared to a Kindle. Laptop and desktop PCs, OTOH, have keyboards, making them much better for data entry and various writing tasks, although iPads can be used, rather awkwardly, for the same things.
Plus, I want one with an SD/micro SD card slot for a quick memory boost, or for when I really don't have the time to sync up the tablet with my computer... but have enough time to quickly drag-n-drop my files onto an SD card.
That, and I really need it to work globally. So an AT&T 3G setup isn't going to cut it... as that doesn't work in the Far East.
So I wait. And I'll continue to wait until there is a tablet on the market that’ll offer all that.
Maybe they feel that trying to compete with the somewhat unique marketing and product Apple produces would be pointless?
Think for a moment - the iPad’s price point is north of the average netbook... While one might be able to argue that these are completely different markets - which is likely to be less expensive to produce? I would guess, the netbook. But to compete with the iPad, not only would there need to be extensive research (Apple really did their homework), but to “beat” Apple, they would have to be able to sell the resulting product for significantly less, provide a market/store with 300,000+ apps, and make up a LOT of lost ground.
That being said - they might change their story if the iPad continues to blow the doors off - some might question their thinking.
Keep in ming - Verizon said no when Apple first came around with the iPhone idea... Now, if current info is correct - they will be carrying the iPhone soon enough...
Actually, it should - the iPad’s 3G radio is GSM.
Yeah, but AT&T isn’t found in the far east. And I’m *NOT* paying international rates just for data.
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