The nascent tablet PC market is underperforming even the most conservative expectations, according to a report published late on Tuesday, with shipments in the second quarter of this year 23 percent lower than in the first quarter even though more manufacturers entered the market in that period.
The tablet PC market is small -- less than 1 percent of notebook sales, and amounting to less than 100,000 units since the category launched last November -- according to analyst group Canalys. However, it has been the subject of much publicity by Microsoft, which jump-started the product category in late 2002 with its Windows XP Tablet PC Edition, as well as by manufacturers such as HP, Toshiba, Acer and new entrants such as China's TDV Vison.
Tablet PCs are portable computers that let people input data by writing on the screen, although some double as conventional notebooks.
Sales in the US have been slightly ahead of conservative estimates, but in Europe, the Middle East and Africa (EMEA) they are sinking steadily, according to UK-based Canalys. "The first year was always going to be slow, but it is particularly disappointing that shipments have declined this quarter," said Canalys analyst Rachel Lashford in a statement.
HP led Q2 shipments, but shifted only 7,550 units, down 35 percent from the first quarter. Fujitsu Siemens Computers, the second-ranked vendor, shipped just 3,460 for the quarter, down 54 percent from Q1.
Canalys analysts argued that tablet shipments will not amount to much until the devices broaden their appeal outside specialised industries, which they said is largely a marketing challenge. Canalys director and senior analyst Chris Jones also pointed out that all currently shipping tablet PCs fall into the category of smaller form-factor notebooks, which account for only about 5 to 10 percent of vendors' notebook shipments, suggesting that greater popularity might depend on making tablets more like conventional, mainstream laptops.
Currently, tablets are limited by the touch-screens they incorporate -- the larger sizes are short in supply and are more expensive than traditional laptop LCDs. Ironically, laptop sales are currently one of the few segments of the PC industry showing healthy growth, with sales rising at about 40 percent a year.
Canalys pinned most of the blame for the category's failure on Microsoft, and argued that the software giant should subsidise the devices' operating system, vendors' marketing costs and even vendors' expenses for widening their tablet product portfolios. Canalys also said Microsoft should establish a dedicated EMEA tablet PC marketing team and attempt to raise awareness around a new version of the Tablet PC operating system due later this year.
"The PC industry, perhaps more than ever before, needs to innovate, be seen to innovate, and show commitment to those innovations, constantly improving them and delivering business benefits to customers, and it cannot do this without Microsoft's help," said Jones in a statement.
CNET News.com's Michael Kanellos contributed to this report.