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    ‘Honeycomb’ Tablets Lead to Market Markdown vs. iPad

    Written by

    Clint Boulton
    Published May 17, 2011
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      While many analysts agree that tablets and other mobile devices are gobbling computing share from PCs and netbooks, some are also taking a more sober view of the overall tablet market in 2011.

      Financial research firms Goldman Sachs and Jefferies & Co. have both ratcheted down expectations for the tablet market, thanks to thin demand for Google’s Android tablets as it struggles to compete with Apple’s iPad.

      Jefferies analyst Peter Misek noted that his firm six months ago forecast 100 million tablets would sell in 2011. But after polling 1,400 consumers in North America, Europe and Asia and performing a competitive analysis, Misek is ratcheting down those figures by 30 percent.

      “We now believe 70 million to be more realistic due to: 1) Android 3.0 Honeycomb needing polishing, and 2) Android tablets that are priced too high,” Misek wrote in a research note May 17.

      The part about Honeycomb requiring polishing is not new. Global Equities Research analyst Trip Chowdry has noted buyer complaints about Honeycomb’s lack of polish on the Motorola Xoom slate.

      Moreover, Misek believes that tablet makers such as Motorola and Samsung might have to take the hit and slash their Android device prices to be competitive with the iPad, which sold 4.7 million units in the first quarter alone.

      “The findings support Apple as our top pick,” Misek said, adding that he expects the iPad and iPad 2 to account for 20 percent of Apple’s 2011 revenues and 17 percent of gross profits.

      By way of comparison, Misek said Motorola’s Android tablets will account for 5 percent of the company’s 2011 sales and 4 percent of its profits.

      Misek’s report alone might not be much cause for concern for Google. Yet the Jefferies report comes after Goldman Sachs analyst Bill Shope lowered his total tablet market estimates for 2011 and 2012, and raised those for the iPad in the process.

      “Our iPad forecast remains unchanged, though we have lowered our non-Apple tablet unit assumptions by 2.3 million units in 2011 and 2012,” Shope wrote in a research note, according to AllThingsDigital.

      “Meanwhile, we have raised our forecast for Apple’s tablet market share to 66.4 percent in 2011 (64 percent prior) and 66.6 percent in 2012 (65 percent prior). Overall, we are expecting 57.7 million total tablets for 2011 and 78.0 million tablets for 2012, versus 60.1 million and 80.3 million previously.”

      Does all of this mean Samsung and Motorola should cease making Android tablets altogether? On the contrary, Misek wrote:

      “We believe that tablets and smartphones are symbiotic, and therefore Android vendors need to have a competitive tablet offering if they wish to continue to remain the fastest market share growers.”

      The Xoom may have fallen short of quality expectations, but Honeycomb and the devices it runs on are improving. eWEEK’s early tests of the Samsung Galaxy Tab 10.1 are favorable, though as with the Xoom the software is prone to occasional freezes.

      Clint Boulton
      Clint Boulton

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