updated 11:00 am EST, Thu November 18, 2010
UBS says tablets to grow fast and delay PC sales
Tablets are on a fast growth track that could delay many PC sales and is comparable more to TVs and other major electronics, UBS analyst Maynard Um said in a detailed study. The iPad, Galaxy Tab and other tablets wouldn't directly steal share from notebooks but, by late 2011, could persuade many users to stall computer upgrades if a tablet costs the same. Users will still need computers for writing, and iPad users are still tied to a computer to sync and get updates.
The effect may increase as tablets get faster and hold more storage; most tablets, including the iPad, are likely to go dual-core in 2011. Handling for large content, such as large spreadsheets, photos and multiple websites, should also get better.
Notebook growth could drop from 18 percent this year to 12 percent in 2011 as a direct result.
Netbooks, however, were almost certain to be cannibalized since they were always a "fad," Um explained. They were just cheap notebooks and didn't offer significantly different features. Sales would have tapered off even without tablets as regular notebooks edged closer in price.
Reflecting this, the analyst compared the estimated growth of tablets and netbooks to non-computers like smartphones and LCD TVs. Tablets were more likely to follow an "early adopter" curve like that of smartphones TVs, where growth was the most rapid early on but was also strong and sustained as prices came down. Netbooks, however, were already slowing down after four years and weren't expected to keep growing upwards without any genuinely new features.
Apple is expected to still hold on to the majority of the tablet market next year with just over half going to the iPad, while Android reaches about 36 percent. Windows 7's lack of optimization would leave it at just four percent, while all other platforms including e-readers would get about nine percent.
In spite of the shift, the tablet industry could see a major shakeout at the same time, UBS warned. With 46 companies either already making tablets or launching them next year, it was inevitable that there would be some "drop outs" as the fierce competition left inferior or niche devices by the wayside. As many as 70 million tablets could ship just in 2011, but 44 million of those would be divided between the iPad, Samsung's Galaxy Tab and HTC models would make up the majority at 44 million. LG, Motorola and other major companies would have to fight for the next largest piece at 27 million, while a slew of niche or low-profile companies like ExoPC, Fusion Garage, Kno and Velocity Micro would be left with about five million.
The analysis noted that this could change and might hurt companies like Samsung that have persuaded themselves they should use a carrier model. Customers aren't as willing to trap themselves in contracts for a device that doesn't need cellular access. Apple was smarter to not require a plan, even contract-free, since it not only saved money but made it much easier to buy in.
"The carriers' interests in signing people to contracts complicates what otherwise should be a simple sale in much the same way a PC and even iPad and Kindle are sold -- purchase the device and walk out of the store with no need to decide on a data plan," Um explained. "We believe simplicity is key and see this as a potential speed bump to adoption."