SpirE-Journal 2012 Q3

The computer tablet industry: Overflowing with opportunities

Reader's Ratings:

The computer tablet industry: Overflowing with opportunities

The tablet industry is changing the face of internet access world-wide. Over 40 different tablets are on offer, but the category is expected to grow even more. This will be driven mainly by demand in populous emerging markets. What will the growing universe of business and leisure tablet applications mean for marketers?

Since the introduction of Apple’s iPad in 2010, a rapid wave of portable computer tablets has flooded the consumer marketplace. 40 different tablets are now produced by over 10 manufacturers, with each running on one of the four different operating systems available. The number of products and players in this category highlights its economic viability. With the recent announcement of proprietary tablets by Google and Microsoft, it is clear that the category’s best days probably lie ahead.

Approximately 68.4 million units of tablets were sold in 2011, over three times the previous year’s 19.4 million units. This year, sales are forecasted to increase by 85% to reach 126.6 million units. In a recent survey on Father’s Day Shopping, 48% of respondents said they would choose tablets as a technology-related gift for the occasion, followed by smartphones at 23%.

The rising demand for tablets versus smartphones reflects consumer demand for information and entertainment on-the-go. In short, consumers’ lifestyle and habits have been redefined due to tablets’ ease of use, affordability and portability. Similar trends have also been seen in the corporate landscape, where tablets are becoming an attractive alternative for portable computing in small and medium-sized enterprises.

The tablet revolution is a worldwide phenomenon and the main drivers will be in emerging markets.

Opportunities in emerging markets

Beyond this year, tablet sales will continue to grow and hit 375 million units by 2016. The main driver of this growth will be the rising middle-class in populous emerging markets. This group of individuals will see rising disposable income and hence discretionary spending. On top of all this, hardware costs will rapidly erode over time, as dictated by Moore’s Law, increasing the affordability of tablets.

Secondly, spending on technology-related products as a percentage of total consumer spending is slowly increasing in developed countries like the United States. This trend is expected to continue. Technology spending now forms 2.9% of personal consumption; and this figure is roughly a one percentage point increase from 19 years ago.

Moreover, mobile networks are easier to build up in emerging markets versus land networks that require heavy infrastructure and earth works. These mobile networks tend to increase a country’s access to the internet. A case in point, it has been reported that there are 388 million mobile internet users in China today, 8 million more than the number of people that use fixed line connections to access to the internet. The tablet industry will stand to gain as it provides users with more computing power than a smartphone Plus internet access.

Consumer usage and impact

The rise of tablets is changing the way consumers seek information, interact with their community and receive entertainment.

Platforms to access information on-the-go

The portability and connectivity of tablets means that consumers today demand information almost instantaneously, regardless of location. They are also able to retrieve and process information for learning. The London Olympics 2012 provided a great example of this phenomenon in action. According to Google , the proportion of Olympics-related searches done on mobile devices, be they tablets or smartphones, saw an unprecedented increase – with most countries seeing more than one-third of searches from such devices.

More interestingly, Google also found an unusually high Olympics-related search share from tablets in popular tourist islands such as the Cayman Islands and Bermuda. It could be that tourists were using tablets to stay connected to the global sporting event while on summer vacations. Almost every major company and event organizer today will create a dedicated app for information retrieval and interaction, on top of conventional websites.

All-in-one reading devices

Consumers’ demand for information on-the-go is also changing the publishing industry. Apart being able to retrieve information on demand, tablets also have the ability to store large amounts of media in a single device. Consumers are now able to store all their favorite magazines, newspapers, e-books and even work documents in one portable device, and access them on-the-go.

A publisher of science and medical journals shared that users read about 65% of their products on tablets whilst surveys suggest only 40% of the print version is read.

Readers are now consuming more articles than before, especially in the niche area of scientific and medical journals. A publisher of science and medical journals shared that users read about 65% of their products on tablets whilst surveys suggest only 40% of the print version is read. Moreover, there is a higher tendency for subscriptions to be renewed, as customers are reading more online. This trend has greatly boosted renewal rates and advertising rates, generating much revenue for publishers.

Education aids

Educators are now looking to tablets as a perfect companion to aid children in their learning. Once again, the ability to store huge amounts of information in a single device means children will no longer have to carry multiple textbooks, and will be able to receive, edit and share information with their teachers and classmates in real-time over the internet or mobile networks.

The creation of iBooks and iTunes U by Apple is a strong indication of the demand for platforms dedicated to classroom learning. As of now, the range of apps and materials to make tablets the perfect school companion is in its infancy. With companies like Blackboard focusing on developing platforms for mobile devices, this industry niche is definitely brimming with opportunities.

The assimilation of tablets into the daily lives of consumers started when Apple’s iPad hit the market. The process is set to deepen in the next few years. At the latest count, there are 600,000 android apps available on Google’s Play Store and 650,000 iOS apps on Apple’s App Store. A closer look at these apps reveals one trend – almost every leading business entity has an app on one of these stores and there is an app designed for almost every need.

Opportunities in the corporate market

Tablets have traditionally been identified as a product mainly meant for leisure uses – being a portable media player, e-book reader and gaming device. According to a recent study that compared the types of apps found in users who own both a tablet and smartphone, the former device tended to have more leisure apps than the latter. This is not surprising, given the way tablets have been marketed to home consumers for the past two years.

However, the future of tablets will see greater demand from enterprise users. Since the beginning of the tablet revolution in 2010, there has been a growing trend of corporations encouraging employees to integrate their personal devices with the company’s IT infrastructure, a process known as bring-your-own-device (BYOD). With the advent of productivity apps created specifically for business users, technological changes in hardware such as faster tablet processors, and preference for cloud computing and flash memory over hard disk drives, corporations may progress beyond BYOD and incorporate tablets as standard issue to their employees.

For businesses, the major factors for choosing a suitable tablet to be integrated into the IT infrastructure include security, portability and compatibility with productivity suites. Almost all tablets in the market currently meet the portability criterion, and security issues have been resolved by third-party applications from firms like Citrix and Salesforce.com. However, most tablets still do not have a convenient built-in keyboard for occasions where heavier computing is needed. In addition, the current offering of tablet-enabled productivity suites still lacks the sophistication and compatibility with its counterparts on desktops.

As a late entrant to the industry, Microsoft observed such companies’ needs and has recently announced the launch of the Surface tablet as well as its Windows 8 platform that will seek to address this gap. The Surface tablet will come with ‘Type Cover’— a form of cover for the tablet as well as acting as a tactile keyboard. Also, the new Windows 8 operating system running on mobile phones, tablets and desktops will provide users a seamless transition when working on files, regardless of the device that is used.

It remains to be seen if both Microsoft products will be a success with enterprise users. The first issue would be the variety of apps on the Windows Store. Apple’s iTunes store boasts a comprehensive range of apps created and supported by numerous developers including major software companies. Also, a revenue-sharing policy by program developers with Microsoft may be required, since the software for Windows 8 has to be purchased and downloaded via the Windows Store. However, this may create a backlash against Windows from the developer community.

The second issue lies with the pricing of the Surface tablet, which may deter consumers and enterprises in favor of cheaper alternatives. As a late entrant to the market, Microsoft faces pricing pressure from competitively-priced 7” tablets such as Amazon’s Kindle Fire, Barnes & Noble’s Nook and the new Google Nexus 7. Having said that, these devices are mainly e-book readers and entertainment-based products, and they are thus not direct competitors when it comes to enterprise users.

Enterprise usage and impact

The most important feature of a tablet is probably its capacity to input and retrieve information real-time. This feature is extremely valuable to businesses as it allows for collection of data for optimization in real-time, also known as mobile machine-to-machine (M2M) communications and telematics. An example of a company utilizing this technology is US firm Golden Flake Snack Foods. Using handheld wireless-enabled devices, sales representatives of Golden Flake were able to transmit demand information from retailers via mobile networks to their headquarters. M2M has allowed Golden Flake to optimize its delivery schedule, which would otherwise have taken two weeks under its old system, at a minimal IT cost.

M2M enables important information for inventory management, delivery optimization and asset tracking to be delivered to back office computers in real-time. This saves businesses time on waiting, inputting data and analysis. However, the Operating System compatibility between tablets and back office systems is still a big obstacle. There remain plenty of opportunities in this arena that big players like Google, Apple and Microsoft can exploit.

Another form of usage by firms is the entire replacement of traditional hardware systems by tablets. Tablets come at a fraction of the price of a desktop without sacrificing too much computing power. A great example in this is the application POSLavu. This application allows restaurants to utilize iPads for point of sale transactions. The POSLavu system costs only about 60% of the cost of conventional systems. With such attractive savings, it is not surprising to learn that approximately 1,600 restaurants use the POSLavu system today, with more small and medium-sized retailers poised to jump on the bandwagon.

Some restaurants have already begun replacing traditional menus with tablets, for a more interactive ordering experience.

With more consumers owning tablets, more businesses will start to use tablets to communicate and relay information to their customers. Some restaurants have already begun replacing traditional menus with tablets, for a more interactive ordering experience. Besides, tablets are also gradually being used by restaurants to manage customers’ queues and waiting time. The business possibilities are tremendous.

Opportunities abound in tablet industry

We have barely begun to scratch the surface of the tablet revolution. A simple indicator of this prediction is the growing number of big technology companies setting up business units dedicated to mobile device technology.

Tablets are here to stay and have already started to change our habits and the way we do things.

What should marketers do to get on the right side of the tablet revolution?

Ensuring the availability of content-rich applications that can run on the main tablet Operating Systems is a good place to start. These could be user guides, cloud storage for data, loyalty program sites or push-entertainment provided as a benefit of being your customers.

Next would be utilizing tablets to enhance the customer experience, be it in the show-room, retail outlet, restaurant, hotel, trade show, school, factory or warehouse. Consider bulk-buying of tablets to offer to customers as part of a big deal when purchasing your product.

Lastly, do not neglect opportunities to use tablets at the back-end of operations, perhaps as substitutes to desktops or notebooks and using Cloud computing functionality – to help with business intelligence and customer analytics functions, for instance.

Back to Top

Back to Home