Market research from Barclays analysts is predicting strong unit sales of tablet computers such as the Apple iPad through the rest of 2010, and an even bigger surge in 2011. However, unlike others in the technology industry, the Barclays analysts do not see tablets as yet another device that users will add. Instead, they see tablets directly cannibalizing sales of Wintel laptops.
Analyst Ben Reitzes wrote, "We believe the initial phase of the tablet surge will cannibalize a portion of the notebook category, particularly a chunk of the netbook market and low-end notebook market... Most industry players insist the tablet is incremental but industry data and our checks point out otherwise -- especially now at the beginning of the market's formation."
This is the opposite of what we heard from Gartner earlier this year when research analyst Raphael Vasquez said, "Media tablets will not impact the mini-notebook segment this year. However, media tablets, such as the iPad and similar devices, will significantly detract from mini-notebook shipments in 2013 and onward, when we expect their prices to be lower and, more importantly, their functionality to be more similar to mini-notebooks."
According to Barclays estimates, sales of tablet computers are expected to hit 15 million in 2010 and will grow to 28 million in 2011. The Apple iPad is expected to sell 10 million units in 2010 and 18-25 million units in 2011, so it is controlling a large share of the market.
These tablets -- and others like them that we'll see in 2010 and beyond -- have two things in common: 1.) They run on ARM-based processors, and 2.) They are powered by non-Windows operating systems (Apple iOS, Google Android, or Palm webOS). As a result, the growth and user acceptance of tablets hurts two tech industry giants more than anyone else: Intel and Microsoft.
Neither of the two are well prepared to take advantage of tablets. Intel's chips are too expensive and too power hungry to compete with ARM, and Microsoft Windows is too big and slow to run well on a tablet (and it doesn't have a capable mobile OS that can scale up). That means that every tablet sale is likely to take money out of the pockets of Microsoft and Intel, if you believe Barclays that tablets cannibalize laptop sales.
I'm more inclined to side with Barclays than Gartner on this one. I don't see the tablet as an add-on device for workers or consumers. I think it will have to compete on its merits against a purchase of a low-end laptop.
However, while the tablet market is growing at a phenomenal rate, it's also important to keep it in perspective with the PC market as a whole. Global PCs are expected to sell 376 million units in 2010 (a 22% increase over the 308 million sold in 2009), according to Gartner. And both both IDC and Gartner expect the overall growth of the PC market to continue.
Still, Microsoft and Intel should be concerned about the future and should be more focused on effectively adapting to tablets. The fact that Dell, arguably the biggest Wintel cheerleader, is building a widely-hyped, ARM-based Android tablet is a pretty good sign that the PC market is evolving.
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