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October 14, 2010 6:57 pm
Apple’s quarterly results on Monday are expected to confirm 2010 as the year of the iPad but the tablet category to which the gadget belongs is in its infancy.
A swathe of companies are approaching tablets as either large-format smartphones or keyboard-less notebooks but none has so far mounted a serious challenge to the iPad.
Therefore, in spite of the hooplah that greeted the creation of an entirely new computing sector at the iPad’s launch, the success and size of this category is far from being determined.
Apple could sell about 15m units this year of a product it unveiled in January and only introduced in April, according to analyst estimates. By comparison, the iPhone sold less than 6m units in its first full year.
Hewlett-Packard, the leading PC maker, has postponed a planned tablet launch till next year and Research in Motion will not introduce its recently unveiled seven-inch tablet, the BlackBerry PlayBook, until the first quarter of 2011.
On Tuesday, ZTE, the fast-growing Chinese telecom equipment maker, became the latest IT company to join the bandwagon. The ZTE Light, which runs on Android and has a seven-inch screen, is expected to go on sale before the end of the year.
Doug Reid at Stifel Nikolaus, the investment bank, expects the iPad to have an 82 per cent market share of the 19.2m tablets he forecasts will ship this year.
Mr Reid said its dominance would be due to the end of shipment delays, a “window of de-facto market exclusivity” and the likelihood that rivals will try unsuccessfully to integrate their hardware with operating systems such as Android that are unproven relative to Apple’s iOS.
Apple is also likely to upgrade the iPad in January: a seven-inch alternative to its 9.7-inch screen is rumoured, while front and back cameras for video conferencing is expected.
As well as being a hit with consumers, the iPad is being rapidly adopted in the corporate world.
Good Technology, which makes consumer-oriented devices secure on corporate networks, says the iPad entered its top five of devices activated on such networks in its first two months.
Apple’s rivals, while eager to enter the segment, are hoping that tablets will not cannibalise sales of netbooks and notebook PCs – expected to be about 40m units and 170m units respectively in 2010.
That may already be happening, without consumers actually buying tablets. The latest data from Gartner, the research firm, suggest that netbook sales are flagging. It said consumers were holding off purchases and adopting a wait-and-see attitude due to the forthcoming tablets.
Warren East, chief executive of Arm, whose chip designs are the blueprint for the iPad’s processor, said recently the next five years might see the end of the PC and “a new era of computing based on smartphones and tablets”.
Intel, AMD and Microsoft, who have more of their business tied up in the PC, have maintained tablets will help grow the overall PC market into a bigger pie, while analysts say a mixture of both cannibalisation and the addition of new sales is most likely.
Christian Heidarson, principal analyst at Gartner, says direct competition from tablets will likely only shrink the PC market by 8 per cent this year. “But from 2013 onwards, the impact will be significantly more pronounced ... we will see tablets with the same capabilities as netbooks retailing for $300 instead of $600,” he says.
Arthur Hsieh, analyst at UBS, said t he netbook was originally aimed at people who wanted a second computer, or those who would not buy a full-featured notebook and that “the tablet pretty much fulfils both these functions”.
What most analysts agree on, however, is that Apple will maintain a significant lead against competitors for at least the next year due to their struggles with different operating systems.
Tablets using Android, originally designed to power smartphones, do not easily display content at a high resolution without extra customisation. While Samsung has worked out a compromise on its seven-inch Galaxy tablet, LG this month shelved its plans until a more tablet-friendly version of Android is released next year.
Meanwhile, analysts say that problems persist with Windows 7, which they say remains difficult to use without a mouse and a keyboard. This has led to a number of prospective tablet makers, such as Lenovo, preferring to wait for Android rather than launch a Windows-based tablet.
Gartner’s Mr Heidarson says PC and smartphone makers are likely to find more success in making seven-inch tablets rather than trying to compete directly with Apple’s 9.7-inch iPad.
Mobile operators are much more likely to want to subsidise a seven-inch tablet such as the Galaxy Tab than a bigger model that users may not always carry around with them.
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