Apple’s iPad lead will face pressure from Google and Nokia
Honeymoon is over for Steve Jobs
Apple led the tablet market in Q3, but iPad’s honeymoon will be shorter than iPhone’s.
Apple's headstart in the tablets market is giving the vendor a blissful honeymoon period in this market, where it has accounted for 95 per cent of sales in the third quarter, according to reports.
Credible competitors will emerge for the holiday season, so its share will be squeezed in Q4 – but it will still gain two-thirds of sales, according to a forthcoming report from Rethink Technology Research. In 2011, though, it faces the prospect of a Google attack, similar to that in smartphones, but this time riding on two operating systems – Android and the "cloudbook" platform, Chrome OS.
First products running this new Google system are expected to debut before year end and will be closely followed by another OS optimised for tablets and the cloud (unlike iOS or Android) – the Nokia/Intel platform MeeGo, which has attracted the attention of influential carriers China Mobile and Telefonica.
Recent market studies reflect the huge success of Apple's iPad launch, which sent many firms scurrying back to their drawing boards, delaying their own device releases to adjust to the trendsetter, and giving the Apple product a longer period of virtual monopoly.
According to Strategy Analytics, tablet sales will reach 80 million in five years, from 4.2 million in the third quarter of 2010, when Apple took 95 per cent share. Meanwhile, Juniper Research forecasts that annual shipments of tablets will reach 81 million by 2015 – with Apple maintaining its lead for the medium term.
Apple will lose share quickly, says Rethink report
However this time of clear leadership will be far shorter for the iPad than the iPhone, which had competitors from day one, but none that really matched its appeal for a couple of years at least. Device makers have learned many lessons from the iPhone story, and will be quicker to catch up this time, or to offer a clearly different value proposition. Samsung is already doing this with the main early challenger, Galaxy Tab, which is not an iPad copycat but comes in a smaller, pocketable size and with a heavier focus on integrated content.
By the end of 2011, the number of vendors offering media tablets will rise from about 25 to about 200, although the end of the year will already see the start of some fall-out. Rethink's forecast shows the iPad keeping its lead but with significant erosion of its share in the face of rising competition.
There were already early signs of this in the third quarter of 2010, when iPad sales, though healthy at 4.19m units (up 28 per cent on the first quarter of availability), disappointed analysts. Apple cited component shortages but there was also the anticipation factor, as consumers waited to see what other brands had to offer.
Nook Color: expensive e-reader or cheap tablet?
Barnes & Noble's Nook is the biggest challenger to Amazon Kindle, but is overshadowed by the global reach of its virtual rival. However, B&N has leapfrogged Amazon with the new Nook, which sports a color screen. In fact, with an LCD display and larger size, it comes close to being a tablet rather than a dedicated e-reader – which could be its downfall, making it an uneasy com- promise between the optimized bookwork experience of Kindle and the full capabilities of iPad.
The e-reader has been expected to morph into a more multipurpose tablet ever since it emerged, and it has certainly been a useful test ground for some design ideas before they were unleashed on the more complex and mass market slates sector.
However, many users do want an e-reader not as a dress rehearsal for an iPad or Galaxy Tab, but because they love the e-ink and integrated bookstore of a one-trick device. And the price is difficult too – at $249 far more expensive than a Kindle, but perhaps a low-cost entry to tablets?
There is a rising category of cheap tablets, often with more limited functions than the iPad – HP's printer slate, for instance. But Nook Color may also have a specific appeal of its own – for readers of magazines and children's books, or any other formats that are heavy on pictures rather than words. Indeed, B&N announced a new store just for kids' books with its new reader (but perhaps $249 is rather steep if the main aim is to get it into the Christmas stockings of under-15s).
Like its mono cousin, the device does have a full operating system, Android, and a smaller second screen for navigation – equally loved and dismissed by e-reader reviewers. However, the main screen will divide fans: those who bought the last generation Nook only six months ago, and want color, may be very upset, while others think a backlit, shiny display takes the main selling point, long-battery e-ink, away from a reader.
The new gadget is the same size as the Galaxy Tab, at seven inches, and runs Android 2.1 with a 1m-color screen. Going beyond the bookstore, B&N has also announced a developer program specifically for the Nook Color, allowing programs and content to be created for a rudimentary app store. This will evolve into a full publishing platform like Kindle's.
Apple will remain the market leader throughout the period, because of its brand power, its control of its platform and its ability to innovate. However, its share will drop sharply once it has real competition in 2011, and it will end that year with less than 40 per cent of the total by units (its revenue share will be higher as it will maintain some price premium and also has strong economies of scale). By 2014 its share will have stabilised around 20 per cent, still well ahead of other players, none of which we expect to have more than 10 per cent share on a consistent basis.
Chrome OS ready for market
Just as the iPhone shifted handset goalposts through its user experience and applications, not by being a stand-out hardware product, so the biggest tablet challengers will be those with modern software platforms and UIs that support and enhance new user behaviors, such as rising use of the cloud/browser and streaming. Android and iOS are adapted for those trends, but were really designed for download or hybrid models, while the new breed will overtake them in delivering a powerful and appealing cloud tablet experience.
Chrome OS is setting the bar high, early indicators suggest. It puts most of the functions of the conventional operating system into the browser, which then runs on a cutdown Linux platform. This should provide optimised running of web and cloud services, and support emerging developer standards like HTML5.
The new platform is on the verge of commercial deployment, according to Taiwanese report DigiTimes, which said the island's device manufacturers are putting the final touches to Chrome OS tablets or cloudbooks, which would indicate shipment in late November or December.
The first big name launches are expected to come from Acer and Hewlett-Packard, indicating that the initial cloudbook wave will be led by the PC community, seeking a substitute for the declining netbook category, while the vendors from a cellphone heritage will focus, for now at least, on the iPad-style tablet. Some cloudbooks are expected to have keyboards, making them more responsive netbooks, though the real disruption will come from consumer slates and new designs, not a new iteration of the netbook.
One rumour says that, undeterred by the failure of its foray into hard- ware with Nexus One, Google will launch its own-branded Chrome OS device. This might be – like the putative Nexus Two – primarily a way to showcase the user experience and gain developer support (a commercialised version of Intel's concept designs), rather than an attempt to compete with established OEMs or carrier models, bids that clearly failed with Nexus One (see separate item). Google has only said it will release Chrome OS and the associated Chrome OS Web Store in the fall.
One thing is clear – most OEMs will make tablets running several OSs, at least before it becomes clear which platforms are most popular. Dell chief Michael Dell said this week that the firm aims to release a “significant number” of tablets, in different form factors and running different OSs, next year.
This will raise an interesting situation for Nokia – how far to push MeeGo as a multivendor platform, something that has virtually failed for Symbian, and how far keep the shiny new cloud OS close to its chest, to provide valuable differentiation in the emerging devices sector.
MeeGo is here to stay
MeeGo will turn up in high-end smartphones as well as netbooks and tablets next year. Currently, its parents Intel and Nokia have quite separate channels and developer programs for the system, the former geared to Intel's OEMs, mainly from the PC world. Nokia's side has been all about its own developments rather than third parties, but this could change as it seeks to wrongfoot Google in the new devices space.
This week, the Finnish firm unveiled a project release version of MeeGo 1.1, with an updated SDK to follow in the near future. This release contains Linux Kernel 2.6.35, X.org server 1.9.0, Web Runtime, Qt 4.7, and Qt Mobility 1.0.2, with support for contacts, location, messaging, multimedia, and sensor and service frameworks. It also includes the oFono telephony stack, the ConnMan connection manager, the Tracker data indexer, the Telepathy real time communications framework, the Buteo sync framework and other components.
And MeeGo has attracted China Mobile, which has joined Telefonica this week in expressing enthusiasm for the platform as a future multiscreen platform. The giant cellco, which also joined the Symbian Foundation earlier this year, is now the first Chinese firm to sign up for the Linux Foundation, which hosts MeeGo. This reflects growing closeness between China's leading cellco – and one with increasing influence on the global operator community – and Nokia.
The operator has joined the Linux Foundation as a "gold member", which the body said "could represent a seismic step toward a re-alignment of OSs in China and the telecommunications industry". Mobile certainly brings some valuable carrier input to the Foundation, whose gold and platinum levels are entirely populated by vendors, including Fujitsu, IBM, NEC, Cisco, Google, HP and Motorola.
Mobile is interested in many Linux-based activities and has developed its own oPhone platform, which is a variant of Android. However, insiders said its primary focus in joining this Foundation is MeeGo, and it expects some of the features and user experience it created for oPhone will be included in future MeeGo versions.
Rethink Research will publish its report next week. It will forecast the size and key trends of the tablet market, both the iPad category and a far wider range of devices adopting a tablet format. It will also examine in detail the market split between vendors and operating systems, the winners and losers in the supply chain, and the impact on other product groups such as smartphones and netbooks. There will also be detailed analysis of the rise of the cloud and the devices to access it.
For information and to request an executive summary, please email Peter White on [email protected]
Copyright © 2010, Wireless Watch
Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.