How “New” Is the Tablet Market?

An editorial on the Globe and Mail posited that the tablet market in 2014 will be radically different than it is today, likening the changes to those found in the PC market in it’s early days. The author’s specific point at times was that the players in the PC market changed as the market matured starting 1982, and that most of the major players then aren’t around today, or weren’t in the PC market at the time. The PC market is mature because externally the products have become largely indistinguishable. The author tries to bolster his argument about the tablet market by remarking that the cell phone market, even after 20 years, still offers a vibrant choice in terms of form, colour and feature set. They liken the current tablet market as having a single player (Apple), and trying to say which of the current players will still be around in 3 years (2010 is nearly gone) is a bit of a guess.

While I have a number of minor issues with the article, the biggest one is the idea that the tablet market is new: it is and and it isn’t. It depends on how you look at it. The form-factor of a larger, thin, highly portable, touchscreen device is certainly new-ish. There have been slate PC’s around for a number of years, although none of them were aimed at the mainstream market until Windows XP Tablet Edition came out in 2002. The Windows-based tablets were bulky, featured limited storage and processing power, and never gained general acceptance. The iPad was the first real tablet computer that could easily be carried around, had a fairly long battery life, and offered a degree of usefulness for many people. The Android tablets and the RIM PlayBook offer similar technical features, as well as support for 3rd party apps and content. So the device itself is largely new.

But if you look at the iPad and the other tablets as really just over-sized smartphones, then the tablet market is already at least 3-4 years old. The iPhone, Storm, Droid, etc, really represent little tablets. The iPad and Android tablets are arriving into an ecosystem that is already fairly rich and established. While the editorial’s author likens the state of the market of having a single player at bat in the 1st inning of the game, it’s really more like having a new player join the 4th inning of a game in progress. It changes the game, but there are already elements of the game we’re are familiar with, and some baggage that comes along for the ride. This isn’t a truly green field. Compared to the PC market in 1982, the tablet market is already several generations ahead of the game, coming into a market that was started by smartphones going back 8-12 years.

So let’s start with a look at the PC landscape starting in 1982, and see what happened in the first 3 years of it’s existence. In 1982, there was a broad selection of vendors, hardware platforms and operating systems, but very poor selection of software to run on them. Intel-based PC’s from IBM and others were available with PC-DOS/MS-DOS (IBM offered it with a different name than Microsoft). Commodore offered the PET, the VIC-20 and the 64. Texas Instruments sold the TI/99, and Atari offered the Atari 400 and 800. Apple had the Apple II Plus and the Apple III. There was also a host of CP/M based machines from companies like Kaypro and Osborne and any number of other specialized PC-like devices, as well as the Xerox Star. Up until this point, the personal computer market was largely confined to a tiny number of small businesses, as well as hobbyists and technologists. Having a PC of any kind in the home was unheard of for all but a tiny fraction of households, and you saw few, if any, PC’s in most office environments. The few that did exist would be on the desk of a secretary or a receptionist, and virtually none would be found on a manager’s desk. There was nothing meaningful in the way of e-mail, music, or video, and most games were either text-based or used rudimentary graphics.

By 1985 that landscape had changed, but was still pretty vibrant. Apple had introduced and discontinued the Lisa, but had also brought the Macintosh to life. The Apple II Plus was replaced by the Apple IIe and Apple IIc. Commodore continued with the 64, and 1985 would be the last year of the VIC-20 and the first year of the Amiga. The PET was last seen in 1982. Atari would introduce the Atari ST, XT and XL, and end the 400/800 machines. A host of MS-DOS based IBM compatible clones were on or entering the market, led in part by an upstart from Texas called Compaq, but included companies like HP and DEC. Texas Instruments had ended the TI/99 and was making MS-DOS computers, but not IBM PC compatible ones. Kaypro was in decline and Osborne no longer existed. It truly was a time of change and upheaval, with the market largely driven by businesses and not the consumer market.

That market, starting in 1982, was in many ways a green field. Larger businesses had familiarity with computing, but it was on a large scale with computers like the System/360 mainframes and minicomputers like DEC’s VAX and PDP families. They were typically used for “big” jobs like inventory databases and payroll. They didn’t get used for word processing, page layout or “spreadsheets”. Some companies would use specialized word processing machines like Wang, but most documents were drafted by hand, and then typed on a typewriter. Any documents requiring graphics or “fancier” layout, were created by people using drafting tables, Xacto knives and rubber cement, manually building the pages one by one. The first laser printers were just hitting the market in 1984, and the Macintosh was a platform for more advanced software like Aldus Pagemaker to do graphical page layout on a computer. But these were by far the exception. Larger companies still relied on “typing pools” and secretarial staff for most day-to-day office activities, and graphic artists who pasted together pages for documents requiring colour and images. Inter-office communication was over the phone, face-to-face or via printed paper memos. E-mail hadn’t gained much, if any, traction outside of academia yet, and the Internet as we know and use it today did not exist. The “mechanical” aspects of office life really didn’t disappear until sometime in the 1990’s, over a decade or more after the first “real” PC’s appeared on the market, and when PC’s started to gain a meaningful presence in the home.

So, could someone have reasonably predicted how much the PC landscape would have looked 3 years out, even in the early years from 1982 to 1985? Not really, simply because there hadn’t been anything like it. There was no precedent. While the PC offered functions that had a direct analog to some office activities, like document processing, it introduced new ideas like the concept of the “spreadsheet”, which was at best a close approximation of accounting activities on ledger paper. While the concepts offered were similar (Pagemaker did look, in many ways, like a “drafting table”, skipping the mess of the rubber cement and the nicked fingers courtesy of small, sharp knives), the execution was very, very different. The underlying technology changed dramatically at the same time. Most of the 8-bit machines were gone by 1985, and the world was dominated by 16-bit machines based on Intel or Motorola CPUs. The user interface started to radically change, too, as GUI’s started to become more and more common, and eventually expected by the people using the machines. But the users and buyers of these machines really didn’t know what to expect, simply because they hadn’t experienced anything like this before.

Moving forward to another period the author discusses, the mobile/cellular phone market today seems pretty vibrant and dynamic, with many different makes, models and form-factors available. But is it the “wild west” that the PC market was? Was it ever? Not really. The major, early players in mobile phones were Motorola, Nokia and Samsung. Who are the major players today? Nokia and Samsung and HTC, Motorola having diminished in importance over the past few years. Unlike the PC market, where the only initial “standard” was the use of AC power from the wall, handset makers had to conform to one of a limited set of protocols and frequencies. The devices had to receive a number of government and 3rd-party certifications. The biggest barrier to becoming a handset maker? In the early days, phones had to be accepted and approved by the carriers, and those carriers were notorious for sticking with companies they knew. The phones got smaller and the batteries lasted longer. The biggest new feature for mobile phones was offering cameras. Some offered some apps and other games, but most people ignored those, and just used the devices to make calls, and eventually take the occasional picture. Unlike the PC market, there wasn’t a massive influx and retreat by many, many different vendors, with the market leaders changing every year or so. There were companies that came and went, but the major players never really changed, just shifted who had what share of the market.

The advent of the smartphone, with Nokia’s 9000 model in 1996, started to change the landscape for mobile users. Apple is the most recent to attend the party, and HP/Compaq has come and gone (and is trying to come back). But Nokia, Palm (now part of HP), RIM, Samsung and HTC have been in the market for quite some time, relatively speaking. The platforms and positions have shifted. Nokia established an early lead outside North America, but in the US and Canada, the lead shifted from the Treo to Windows Mobile and now over collectively to BlackBerry, iOS and Android. Globally, Nokia went from owning the market almost exclusively to having control of less than half and dropping. But, unlike 1985, where I couldn’t buy another Osborne to upgrade the one I got in 1982, I can still buy a BlackBerry today that feels familiar to the one I might have used in 2002.

Let’s move forward to the tablet market today. While the current form-factor of a large screen in a thin, light, highly portable device is new, many of the features and functions people expect from it are already grounded in activities performed on smartphones, desktops, notebooks and netbooks. People expect the devices to handle e-mail, web browsing, social activities like Twitter and Facebook, games, movies, music and books. The iPhone and iPod Touch had already set the expectation of a touch-screen interface, as had the first Palm and Windows Mobile machines (albeit with a stylus). The iPad arrived into an ecosystem that already offered millions of songs, thousands of movies and TV shows, and hundreds of thousands of apps. The Android tablets are in a similar environment. The PlayBook’s ecosystem is very sparse, since it doesn’t appear that any existing BlackBerry 6 apps will run on it. The latest generation of Windows Mobile and HP’s WebOS tablets will arrive with very few apps and minimal content. Fighting the “feature checklist” battle may be easy, but it’s not just the features that count, it is also the ecosystem that supports the device. Right now Apple has a commanding lead there, and Android is making up ground, although it’s media content story is more fragmented.

Who are the current and potential major players? Who will be around in 3 years? I can see Apple with a range of iPads continuing to own a significant share of the market, likely about 30% by 2014, not because of superior features or price but because of the App Store, iTunes and 3rd party content. The Androids, likely dominated by Samsung and HTC, will easily get 30% as well, although if someone like Amazon can do a better job than Android Marketplace for apps, plus be a more unified source for media, that could change the landscape, putting Android machines up to 40% or even 50% of the market. I can see RIM taking another 10-15%, primarily in enterprise customers, but with minimal presence in the consumer market. I don’t see WebOS or Windows Mobile coming on strong, simply because they haven’t (or won’t) attract the developer base. A dearth of applications, and a weaker story on content, will keep them to the margins, the same way it hampers RIM’s offerings today.

The tablet market won’t be determined by who has the more advanced hardware. Price and features matter in the PC market because there is one commonality: most PC’s run a Microsoft operating system which gives them all access to the same catalog of software and eventually content. It happened in the mobile phone market because, in the end, people just wanted something that had decent battery life than made calls reliably. It isn’t happening in the smartphone market because it’s as much about the apps and content as it is about the technology, and the same will continue to apply to the tablets. Barring some new, unforeseen product or new technology, I don’t see the players in the tablet market being radically different than the entrants we are seeing today.

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