From The Sip Trunking Experts

TMCNet:  The Tablet Horizon-An Update [Strategic Finance]

[August 20, 2011]

The Tablet Horizon-An Update [Strategic Finance]

(Strategic Finance Via Acquire Media NewsEdge) Recently, a research group decided to test the thesis that the tablet computer was subject to the same diminishing appeal that is experienced by many early adopters of new technologies. The honeymoon for new technology is often notoriously short because first adopters are notoriously fickle and look to move on to the next latest gadget or solution in a relatively short period of time. Some think this has to do with a cultural attention deficit disorder conditioned by the accelerating rate of change all around us. Others cite the shallowness of most gadgets' novelty appeal.

Well, the digital gigolos disappointed this time because the iPad owners have reported an increase in their attachment and attention paid to what the book-size computers can do.Maybe it has something to do with the continual novelty available in the app stores, especially the Apple outlet. Estimates from informed sources of how many new apps are submitted to Apple each day range from 626 to 1,000 or more. The netbook, when it was a novelty, remained pretty much the same over time-it was a smaller notebook, and, other than the new reliance on cloud storage, it was very familiar from the outset.With the Apple iPad, a finger-tap can open a book, a television, a weather station, a medical advisor, an alarm clock, a serious digital sound studio with multiple instruments, a personal finance manager, a cartoon cat that talks back to your kids in their own recorded voices, a glass canvas on which you can paint or sketch with charcoal or inks, a live star-map viewer, a camera, or your e-mail. The variety has reached an astounding 425,000 apps currently available.Most are free. Piper Jaffray analyst Gene Munster says about 82% of the apps are available at no cost. CNN Money, using data from Munster's report, predicts iOS device owners will download 83 apps this year, which represents quite a growth from last year's total of 51 per user. The cost of the average app is $1.44, which is up 14% from last year.

There are other computers in various formats that can do much of what is done in tablet programs, but there are none, so far, that let you do all of this comfortably curled up on the couch, looking at a wireless, almost buttonless, 10- inch interface that will run for 10 hours on its internal battery. Sure there are iPods and smartphones and handheld video players, but none of them does all of what the tablet does in such an accommodating format.

COMPETITION Historically, the Apple tablet has dramatically beaten expectations. The experts guessed that the initial sales of the iPad 1, released in spring 2010, would be approximately 3.3 million units. It was four-and-a-half times that. The release of the second, iPad 2, sold out in the first week, and a program of scheduled deliveries was announced to avoid annoying customers worldwide.

And speaking of the international market, Robeco Consumer Trends Equities recently assessed the overseas interest. Robeco says that, in October 2010, 11% of consumers in the U.S. expressed an "extreme interest" in purchasing a tablet. The numbers elsewhere were even stronger. "Looking at only the major developed markets, the corresponding numbers are 15% in France, 16% in Japan, 18% in Germany, and 20% in the U.K." The analysts at Robeco estimate that the number of tablets shipped in 2011 could be as high as 100 million units.

In late spring 2010, Robeco claimed the iPad owned 90% of the market, with a leveling out later in the year to 70% to 80%. A survey of CIOs by Morgan Stanley AlphaWise showed that the market is reaching into corporations. Robeco quoted the uptick in corporate, noting in its report: "So enthusiastic are companies that two-thirds expect to buy tablets for staff or allow employee-owned tablets on their networks over the coming year, up from 29% currently." At the end of 2010, the belated appearance of the competitors began to decrease Apple's ownership of the niche. Computerworld reported in January 2011 that because of the strong sales of the Samsung Galaxy Tab and others, "Android tablets grabbed a 22% share of the world's tablet market last quarter, denting for the first time the iPad's dominance." The actual numbers used by Computerworld were from the U.K.-based Strategy Analytics, which said 9.7 million tablets were shipped in the fourth quarter of 2010, which represented a 120% increase over the previous quarter.

Now, past midyear, the Android tablets have arrived, and the Apple share is slowly giving a little ground. But according to Canaccord Genuity analyst T. Michael Walkley, the price of the iPad 2 is making it difficult for rivals to make any substantial gains.Walkley is quoted in a recent eWeek article: "Our checks indicate both the Motorola Xoom and RIM PlayBook have not sold well at current price points, as we believe competing tablets must sell at a substantial discount to the iPad 2." Further, the Canaccord group estimates Apple's share of the tablet market will be 56% this year, with Samsung grabbing 12% and Asus, 5%. LG Electronics, Motorola, and Research In Motion will struggle with 3%, followed by HTC with 2%.

Out further on the horizon are a rumble and a ripple. Amazon is rumored to be poised to release its own tablet in October. Sources say it will be an iPad-size device with a nine-inch screen that will run Google's Android operating system.

Amazon was sued by Apple in March for violating its trademark "App Store," but, despite that, Amazon continues to sell its books in Apple's iTunes store to be read on the Kindle App that runs on the iPad. The Wall Street Journal has pointed out that Amazon might have a larger conflict with itself than with Apple. The release of an Amazon tablet could cannibalize the sales of the company's very successful Kindle reader, the device the company says is its best-selling item. But with tablets moving into the Kindle bailiwick, the company seems to have no choice but to create its own tablet to compete.

Sara Rotman Epps, a Forrester Research analyst, thinks Amazon has an advantage over the other competitors to the iPad because of its enormous warehouse of digital content, books, music, and movies (disc and streaming). Some, in fact, have said the Amazon tablet might become the 21st Century's Sears Roebuck catalog for what is one of the largest retailers on the planet.

Also, out there sometime later this year, Sony says it's going to release its own tablet. Not much is known about what the format, OS, or price will be.

Amazon is rumored to be poised to release its own tablet in October. Sources say it will be an iPad-size device with a nine-inch screen that will run Google's Android operating system.

By Michael Castelluccio, Editor (c) 2011 Institute of Management Accountants

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