In many ways, 2010 was the year of the tablet PC.
Tablet PCs have been around for some time, of course, primarily used in niche industries such as health care. But thanks to the Apple iPad and a host of competitors, the past 12 months have transformed those touch-screen devices into a must-have consumer item, potentially threatening netbooks and low-cost notebooks in the process.
For companies such as Apple and Samsung, tablets opened a new revenue channel. For others, notably Microsoft, tablets thus far represent a lost opportunity. And for Amazon.com and Barnes & Noble, tablets have become a threatening presence for their e-reader device franchises.
Following months of occasionally outlandish speculation, Apple CEO Steve Jobs took a San Francisco stage Jan. 27 to unveil the iPad, a 9.7-inch touch-screen device with a 1GHz A4 proprietary processor and a choice of Wi-Fi-only or third-generation-enabled connectivity.
In light of the iPad’s subsequent success, it seems somewhat ludicrous that some analysts initially predicted its sales prospects as dim. From the outset, one of Apple’s chief challenges was attracting the applications that could make the device a truly robust competitor in the areas of gaming, e-readers and productivity. Following the iPad’s early April release, though, with sales creeping toward a million units per month, third-party developers began gravitating toward the platform in larger numbers.
But would the iPad impact netbooks and lower-end notebooks? Some analysts seemed more reluctant to see causalities between the iPad’s blockbuster numbers and softening netbook sales. Others saw a more direct link. “U.S., consumer PC, and especially notebook growth decelerated in January when Apple introduced the iPad and again in April when the iPad launched,” Kay Huberty, an analyst with Morgan Stanley, wrote in a May 6 research note. “Given the corresponding increase in [average selling prices] in the market, we believe much of the demand shortfall came from netbooks and low-cost notebooks.”
By the end of the year, according to research company Strategy Analytics, the iPad’s share of the tablet PC market would total 95.5 percent. Combined with millions in sales, that represented a sizable temptation for competitors such as Dell and Samsung to carve off their own piece.
Dell was one of the first out of the gate with its 5-inch Streak. Originally scheduled for U.S. release in July, the device included a 1GHz processor, WVGA touch-screen and 5-megapixel camera. Early critics complained that the Streak ran the thoroughly outdated Android 1.6, which prompted Dell to offer the device later in the year with Android 2.2 (Froyo).
At September’s Oracle OpenWorld, CEO Michael Dell offered a sneak peek at a 7-inch tablet, while indicating the market segment was in a constant state of chance and evolution. That device has yet to hit store shelves, however, leaving Dell with the Streak-which sells for $300 with a two-year AT&T contract or $550 unlocked-as its only competitor in the arena.
Meanwhile, Samsung made a concerted effort to challenge the iPad with its Galaxy Tab, a 7-inch tablet running Android that managed to sell more than 1 million units worldwide within two months of its initial release. Unveiled for American audiences Sept. 17 in a high-profile event at New York’s Time Warner Center, the Tab included 3G connectivity, support for Adobe Flash and Android 2.2. In an effort to create a widespread presence in the tablet market, Samsung offered the tablet via all major carriers.
“We believe the Galaxy Tab has been an unexpected success considering it runs a version of Android not optimized for tablets,” Piper Jaffray analyst Gene Munster wrote in a Dec. 10 research note. “We believe this success is partly due to the fact that it is the only non-iPad tablet available, but also that Android will be a meaningful competitor.”
Motorola and a host of smaller manufacturers began promising their own tablets for release in 2011. Google Android 3.0, code-named Honeycomb, is expected to be optimized for tablets in a way that allows apps to run on a larger high-definition screen. In light of those devices in the pipeline, analysts have adjusted their tablet market-share predictions for the next several quarters; IMS Research predicts that Android-based tablets will compose 15 percent of the market in 2011, on their way to a 28 percent share by 2015.
Not to be outdone, Research In Motion proclaimed that it, too, would produce a 7-inch tablet running a proprietary operating system. Dubbed the PlayBook, and expected to be released in the first quarter of 2011, RIM’s entry into the market could very well change the game for businesses already grappling with how to best integrate the iPad into their IT infrastructure. “Although the release of the RIM PlayBook isn’t expected until late-1st quarter 2011, RIM (9 percent) is now tied with Dell (9 percent) for second place in terms of future buying-a positive development for the Canadian manufacturer,” Paul Carton, vice president of research for ChangeWave, wrote in a Dec. 15 note about corporations’ prospective tablet-buying habits.
Despite its strong presence on traditional PCs, Microsoft remained largely absent from the tablet market-all the odder, considering how CEO Steve Ballmer’s keynote at last January’s Consumer Electronics Show featured him showing off a tablet built by Hewlett-Packard.
But if that HP device was due to be the first Windows tablet on the market, those plans were possibly derailed by HP’s April acquisition of Palm for $1.2 billion. With its attention shifted toward porting Palm’s WebOS onto mobile devices, HP may have pushed its Windows tablet to one side; in any case, it would be close to the end of the year before the HP Slate 500 hit the market-and even then, a November posting on tech blog Engadget suggested that the manufacturer had planned only a very limited run of the devices.
With the iPad surging and other tablet competitors coming online, Microsoft executives began suggesting that Microsoft’s big tablet play would come in 2011, when Intel releases its upcoming line of Oak Trail processors.
“We think that’s going to offer a lot of new capabilities,” Bill Koefoed, Microsoft’s general manager of investor relations, told the audience during an Aug. 10 talk at the Oppenheimer Annual Technology, Media & Telecommunications Conference in Boston. “Whether it’s better usage of battery life and the like, it’s going to really help move the category forward.”
Microsoft will reportedly unveil a new line of Windows 7 tablets during this January’s Consumer Electronics Show, according to unnamed sources speaking to The New York Times.
Rumors are also rampant that Apple will unveil its next-generation iPad sometime in January. Various news outlets have suggested the device will feature front- and rear-facing cameras, along with a higher-resolution screen and a slimmer form factor.
By then, of course, the tablet PC market will be poised to kick into an entirely new gear-one that shows no signs of slowing down.