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Tuesday, March 08, 2011

Market Analysis of Competition for Tablet Buyers

Are we heading towards an all out vendor battle for prospective new tablet buyers? According to the latest market assessment by In-Stat, they believe the tablet market will eventually support many sub-segments -- based upon usage. Therefore, demand will be driven by innovation in the technology, the usage models and ultimately vendor business models.

"When you compare the iPad 2 to the most recent competitor, the Xoom from Motorola, you end up with two devices that are very similar all the way down to the basic specifications of the processors," says Jim McGregor, Chief Tehnology Strategist at In-Stat.

In-Stat expects future generations to begin to offer more differentiation in form factor, features, and applications. They also believe that we should not forget that there are still many factors that will determine the growth and adoption rates of tablets, including:

The carrier business models. A small percentage of the population is willing to pay for 3G/4G access when they need it, especially when the device is Wi-Fi-enabled. And, an even smaller number are willing to pay for a new contract for each new device. However, if the carriers finally offer a single plan for a single user that applies to all devices, this could fuel rapid growth and usage and an anywhere-anytime solution.

The usage models. Everyone is still trying to determine the usage models of tablets. Is it primarily a game console, an e-reader, a social networking device, or an IP video phone? The answer is all of the above, but it depends on the user and the environment. Some applications, like video telephony, have been around for decades but have failed to gain wide consumer adoption. Maybe the latest generation of smartphones and tablets will finally lead to the success of video telephony. The devices and the applications will eventually need to target these usage models, because there is seldom a one-size-fits-all solution in the consumer market.

The view of tablets by consumers. Is this a must have device or just a nice to have device. Although it can do many of the same things as a PC and smartphone, it doesn't execute voice calls or enable content creation particularly well. And are consumers willing to carry tablets all the time like a handset or with a handset? Once again, it depends on how consumers intend to use their tablet.

The prices. Although prices on some tablets, including the iPads, are competitive for the mainstream, it is still on the rather high side for CE devices. Will the increased competition bring these down into the $199 to $299 range, especially when consumers are looking for advanced features? Prices alone could help determine the overall size of the market and how rapidly it grows.