Gateway is going back to school, this month, with a new tablet PC.
The company on Wednesday introduced a new convertible tablet PC that promises higher performance and better ergonomics for a lower price than its predecessor. Those improvements, the Irvine Calif., PC maker believes, will help Gateway Inc. tablets continue their momentum in education and break into retail, countering a disappointing trend for tablets of late.
Other tablet PC makers are also looking at various segments of the education market to raise the overall grades for the portable platform.
Tablets, based on Microsoft Corp.s Windows XP Tablet PC Edition software, have failed to meet expectations since their introduction in 2002. Bucking early predictions for millions of unit shipments per year, due to their abilities allow people to navigate with a pen and capture handwritten notes or digital annotations, the machines have failed to win over consumers or everyday business users, market watchers say. Instead, the machines have only caught on in vertical markets, including areas such as health careand education. Growth projections for the platform, which analysts once envisioned totaling shipments of up to 14 million units by 2009, have recently been tempered to around 4 million by some analysts.
But one market—higher education—has heartily embraced the tablet, Gateway says, giving the company a focus for its second-generation tablet and offering a beachhead to continue attacking other areas, including small and medium businesses and retail.
“I think the tablet is here to stay. I think its going to continue over time to become a mainstream platform. But I dont think its going to take off as quickly as some of the folks in the industry thought initially,” said William Diehl, vice president of product marketing at Gateway.
“The big hurdle we have is just to get the education out there—get people exposed to the pen computing experience for the first time—and once that happens people get it immediately,” Diehl said. “If you have the right price at the right time interesting things happen.”
The 6.2-pound machine, based around a 14-inch widescreen display and Intel Corp.s Pentium M and Celeron M processors, will offer better improvements in ergonomics, adopting a curvier design and adding a hand grip as part of its battery, along with sturdier hinges and a bay for an optical drive. When an auxiliary battery is added, it will run for up to 8.5 hours, potential boon for students spending long hours at the library.
Where its current tablet, the M275, commands a premium of about $500 over Gateways least expensive business notebooks, the new machine will range from $1,359 for Pentium M-equipped S-7200C model for small businesses to $1,509 for an M280E model for education customers. An S-7200C model will cost as little as with $1,149, when configured with an Intel Corp. Celeron M, a company spokeswoman said. Overall, the lower prices reflect a premium thats closer to $200, making it easier for consumers and students to step up to the tablet, the company contends.
Indeed, education “is our biggest [tablet] segment,” said Chad McDonald, director of notebook product marketing. “We expect that to continue to expand. We expect big things from this product both in education and in consumer retail.”
Next Page: Gateway isnt the only table maker eying education.
Tablets Find Safety at
Gateway isnt the only tablet maker to be eyeing education. Competitors such as Toshiba Corp. are in the hunt for higher education as well. Bentley College, in Waltham, Mass., recently chose to outfit a number of its incoming freshmen with Tecra M4 tablets from Toshiba America Information Systems Inc., one of Toshibas United States arms. Toshiba said the college would outfit 410 of its 925 incoming freshmen with the tablets and study the impact of tablet PCs on their learning as part of its Student Mobile Computing program.
“Inasmuch as there is a market there [manufactures like Gateway] can develop substantially, I think education is it,” said Roger Kay, president of Endpoint Technologies Associates. “Id call it the biggest niche.”
Kay, in a report published last month, predicted that tablet shipments will long be a niche product and will total less than 4 million units per year by 2009, well below some recent forecasts, which had predicted tablets would quickly become general purpose computers and see shipments as high as 14 million during the same time period, he said.
Gateway doesnt dispute the lower projections. In some ways, it embraces them. It will market the new machine more as a notebook with a pen interface than a tablet PC, expecting people to use it as a notebook about 75 percent of the time and only about 25 percent of the time as a tablet, McDonald said.
“This product is all about taking a convertible mainstream. Its not about being the thinnest, super light, $2,000 convertible youve seen,” Diehl said.
But he added Gateway still aims to better Kays figures, in part by taking some of the analysts suggestions.
Next Page: Tablet troubles could be over pricing.
Tablets Find Safety at
Some of tablets troubles are due to higher pricing than similarly-sized notebooks and lackluster marketing, Kay said in his report. Despite helping out individual PC makers with co-marketing, Microsoft has done little else to help broadly promote the category, he wrote in his report.
Gateway will start by becoming more aggressive on price when it rolls out the machine at retail later this year. The PC maker is looking to well undercut prices of established players, such as Toshiba and Acer Corp., whose machines cost $1,600 to $2,000 at retail, well above the average notebook sale price, which is about $1,100 according to NPD Group.
Gateway executives suggested it could hit prices of closer to $1,200 with its retail tablet models. However, they declined to comment directly on prices.
If Gateway were to offer a tablet for a price thats more in-line with the average selling price for a notebook, it would likely be rewarded with sales from consumers as well as some small businesses that shop at retail, said Steve Baker, analyst with NPD Techworld, which tracks retail sales of computer equipment in the United States.
“At this point, you could put a lollipop out on the shelf and say it was a notebook and it would sell,” Baker said. “Will it be the number one SKU the week before Christmas? No. Could…do okay? At the right price point some people will buy it just because its there.”