The iPad Earthquake
Who Will Survive the Tablet PC War?
Tablet computers have taken the world by storm since Apple introduced the iPad last April. What kind of unpredictable opportunities will this new craze spawn, and who will emerge as the winners?
Who Will Survive the Tablet PC War?By Elaine Huang
From CommonWealth Magazine (vol. 465 )
When Apple introduced its iPad last April, it triggered a "tablet" craze. At the world's biggest consumer electronics trade show in Las Vegas in January, the world's major high-tech vendors were all hoping to jump on the bandwagon.
"I calculated that there were 85 tablet computer models at the International Computer Electronics Show," said Alan Chang, managing director of the Asia Pacific Region for U.S. monitor maker ViewSonic Corp., soon after returning to Taiwan.
After sitting on the sidelines in this once unfancied market, many of the world's leading computer vendors (Acer, Asustek, and Lenovo), smartphone players (RIM and Motorola) and top consumer electronics brands (Panasonic and Samsung) were suddenly desperate to show off their best tablet designs, fearing that they might seem to be behind the curve on the tablet take-off.
International market researcher IDC has forecast that "media tablet" shipments will rise dramatically from 17 million units in 2010 to 44.6 million units this year and will overtake the sales volume of the previous darling of high-tech analysts, the netbook.
These stunning figures indicate that the tablet PC has successfully created a new product niche that bridges the gap between the notebook computer and the smartphone, one that through the touch of a finger is revolutionizing interpersonal relationships and generating new commercial applications.
Changing the Boss's Behavior
Pegatron Corp. chairman T.H. Tung is one of the device's new converts. He has recently grown accustomed to carrying around a 9.7-inch iPad in its elegant pouch to receive his e-mails and read e-books, and he urges anybody he comes across to try the device for themselves.
"He now responds quickly to our e-mails. In the past, he didn't," says Sharon Su, Pegatron's chief investment officer, describing how the tablet computer has brought her boss into real time.
ViewSonic's Alan Chang, who flies frequently between Europe and Asia, keeps a 7-inch tablet in his suit pocket and uses it to work while waiting at airports. He has expunged his more "cumbersome" notebook from his briefcase when on the move, packing it in his checked baggage instead.
With their lightweight and multi-touch design, and long battery life, tablets can be used by people on the go to surf the Internet, download information, or watch movies at any time. And because of their unique applications, they have spawned three new industry trends.
Trend No. 1: Wintel Fades; Apple, Google Battle for Supremacy
As PC keyboards and mouse devices are replaced by fingers and touch screens in the new tablet era, the winds of change are blowing in the high-tech industry's power structure.
Tablet PCs have three major elements: a central processing unit, an operating system and applications. Under this new paradigm that puts software on a pedestal, the Wintel (Windows + Intel) axis that was so powerful when hardware was at the forefront of the industry no longer reigns supreme.
According to Topology Research Institute researcher Ryan Lee, tablet PCs emphasize fast boot times, interconnectivity, and visual images, enabling Qualcomm Inc.'s ARM processor and the Nvidia Tegra superchip, which delivers advanced visual computing, to capture a share of the hardware market long dominated by Wintel. The data sheet Lee compiled for more than 50 tablet computers shows that the major brands, such as Apple and Samsung, all use ARM processors, which have an 80 percent market share in the overall tablet market.
The iPad has also driven a new commercial model that puts a priority on creating applications and integrating software and hardware in one package.
"In the PC era of the past, it was hardware that led the way. But since the Apple iPad introduced the App Store, applications have become the driving force," declares popular Taiwanese high-tech blog "Jeremy's 3C Observatory."
That trend has only further elevated Apple and Google as the top players in the battle among industry titans and relegated Microsoft to the sidelines.
Starting with the iPhone, Apple introduced its own iOS operating system, and Google has promoted the Android operating system, which has relied on its mostly free software to drive sales volume higher. Microsoft is hoping to regain its past luster with its Windows 7 platform.
But Apple's App Store has more than 200,000 software applications that can be downloaded, occupying a 28 percent share of the benchmark North American market.
Google Android has also roped in many major brands, building its market share in North America to 26 percent within a year, and in the highly competitive software market race, Google's free platform has proved highly attractive to software development companies. In September 2010, Android's Android Market had roughly 100,000 apps, but that number soared in the final few months of the year, and as of early January, it had accumulated more than 200,000 apps and games.
In contrast, "Microsoft's Win 7 has gone from being a dominant player in smartphones with a market share exceeding 20 percent to having a market share in the single digits. In terms of the software apps market, it doesn't even have 10,000 applications that people are willing to download and the gap is growing bigger," Alan Chang says. "The tablet game is now a war between Apple and Google."
Trend No. 2: Computer Addicts Become Rich Overnight
The development of commercial software application platforms by Apple and Google has created a "stay-at-home" economy.
"Many computer addicts who love to hole up at home and write software post their applications on Apple's App Store. They can get downloaded more than 10,000 times in a day, and the programmer gets 90 US cents per download. Whenever anybody else downloads the app, money comes in, making the programmer rich overnight," Chang says.
Blogger Jeremy has observed that many of these nouveau riche otaku have concentrated their efforts on games and Web tool software. Applications that make it into the App Store's top 100 generally score downloads in the hundreds of thousands. Examples include the paid game Angry Birds, and the Web-based file hosting service Dropbox, whose founder Drew Houston went from being an MIT grad to the new favorite of Silicon Valley's benchmark venture capital firm, Sequoia Capital.
"The paid game Angry Birds, which has been very popular recently, came out with a special Christmas version last Christmas, attracting 1 million downloads," says Jeremy, but he cautions that applications at the bottom end of the rankings sometimes are not downloaded even once in a day. Because of the fine line between success and failure, stay-at-home app developers have to make use of social networking to get their products noticed.
Trend 3: Airports and Hospitals Go 'Tablet'
Tablets have evolved from diversions used by individuals whittling away their spare time to professional tools used in a variety of service businesses.
In one such case recently, Victor Chen, the general manager of MagV Ltd. was invited to a meeting with Taiwan Taoyuan International Airport's biggest duty-free store, Ever Rich Duty Free Shop.
The company's MagV magazine subscription service is the download champ in the Taiwan iPad App Store's "general" and "books" categories, and Ever Rich wanted to have tablet computers with MagV's software platform in its store in the airport's departure area to enable passengers who stroll in to browse e-magazines and e-books for free.
"Having people use a tablet to read an e-book while waiting for their flights can give the airport a more high-tech look," Chen says.
Even conservative hospitals have gotten tablet fever. As attending physicians at Taipei Veterans General Hospital do their morning rounds, resident physicians can now be seen following in their wake with iPads in hand.
In the past when attending physicians would do their rounds, the group of residents at their side would hold a patient's medical record and report on the person's condition. On the other side, a nurse would carefully push a cart with a notebook computer and power source to display X-rays or other information. Getting around quickly was not easy.
"Before resident physicians did the rounds with attending physicians in the morning, they would have to scramble to use the computer and enter their patients' conditions so that they could provide the attending physician with accurate information. After going around, they needed more time on the computer to enter new records," says Taipei Veterans General resident physician Jeff Hsu. A resident physician responsible for the records of 15 patients, for example, needed to begin preparing for the day's rounds 40 minutes early.
To ease the residents' burden, Hsu and software company Wantoto Inc. worked together to design a user interface conforming with regular medical practices and then entered patients' electronic records, X-rays and other data. Now, resident physicians need only to carry around a tablet computer to give the attending physician up-to-date information on the patient and record prescriptions or follow-up instructions at the same time.
Main Challenge: Just Another Netbook-like Fad?
The iPad's breakthrough in the tablet computer market reversed the product's lack of success historically, including a Microsoft tablet computer initiative launched in 2001 that died a quiet death. And that has some wondering how long the market can be sustained.
"What everybody is wondering is how big this market will get and how long it will last," says blogger Jeremy. "Especially since not everybody has a need for immediate mobile access to the Internet."
The once-hot PDA is a prime example of the challenge the tablet computer faces. When PDAs were at the height of their popularity, people scrambled to buy them for company year-end parties or to give as gifts, and sales reached 20 million units. "But 20 million units was the ceiling. So whether or not tablet computers can exceed that number is an important indicator," says Jeremy, who believes the sales forecasts for tablet computers by high-tech research companies are overly optimistic.
At present, the iPad accounts for 80 percent of all tablet computer sales. It has also cannibalized some of the market for e-readers, such as Kindle, and has even seized a share of the netbook market.
"The big rapid transit stations are benchmarks for observing new trends. Gradually, you can see more and more people on the MRT and high-speed rail carrying iPads. But whether or not other non-iPad tablets will be able to make the fad expand even further is something worth watching," says Hi Achieve Digital Technology Inc. vice president Ray Chen.
Ultimately, how long the tablet computer wave can last will depend on whether you and I have decided to join the tablet craze.
Translated from the Chinese by Luke Sabatier