On the eve of the first anniversary of the Tablet PC launch, Canalys research reveals how the product category has performed so far in EMEA and looks at what the industry needs to do in year two.
The main findings in this research were:
91,950 Tablet PCs shipped in EMEA, from Nov. 7th 2002 launch to end of Q3 2003
Tablet PCs represent less than 1% of the total notebook market
HP is leading Tablet PC vendor, with 31% of market, followed by Acer at 23%, then Toshiba and FSC
Just under one-third of the products shipped so far are in the slate form-factor
Key notebook vendors - Dell, IBM, Sony - still noticeable absentees from the segment
Vendors will need Microsoft's help to make substantial progress in 2004
Highlights from the Canalys research
Q3 2003 was the second quarter of negative sequential growth for Tablet PCs in EMEA, with shipments falling 20% from the level seen in Q2. With the product category now one year old, it is clear that the market needs another push.
"Microsoft still isn't doing enough to help Tablet PC vendors - particularly in Europe," said Canalys director and senior analyst Chris Jones. "Rather than pricing the Tablet PC OS at a premium, adding to the vendors' costs and the end-user price, it should be doing the opposite: subsidising the vendors to help them get the market up and running."
As long as the market for Tablet PCs remains small, there will be an understandable reluctance on the part of software vendors to develop applications specifically for the platform. Jones observes that there are two areas in particular that need attention.
"There is clearly an opportunity for vertical solutions specialists. We are starting to see the first signs of some significant customer wins, but these are largely confined to the US and in a limited number of sectors, for example healthcare. Companies looking to solve very vertical- or occupation-specific problems in the different European markets will be looking for providers who understand their particular technical, operational and legal requirements. It is imperative that Microsoft actively supports and encourages these developers."
The second area is in adding pen-based functionality and interface enhancements to the mainstream applications people already use on a day-to-day basis.
"Obviously Microsoft can do this itself in Office, but if the other big software vendors introduced upgrades that took advantage of the Tablet PC's features it would help increase awareness, interest and the overall credibility of the concept," Jones added. "While a handful of companies are offering packaged applications for the Tablet PC, they are typically not mainstream volume plays. As long as the Tablet PC is perceived as serving the needs of only very specific occupational groups it will be subject to long evaluation/sales cycles and low shipment levels."
Even a moderate crossover into the mainstream notebook market would provide a tremendous boost to the Tablet PC's fortunes, but Canalys senior analyst Andy Buss points out that this will be difficult under the current circumstances.
"On top of the issues of lack of promotion, higher cost and limited application availability there is a fundamental problem in the range of products available. Not only are key vendors like Dell, IBM and Sony missing, but also the vendors that are present have a very limited offering, typically one or two models in the ultraportable class with 12.1" or 10.4" screens."
Buss points out that over 90% of notebooks ship with 14.1" or larger screens, and recommends that Tablet PC vendors add comparable convertible models to target the mainstream mobile professionals who demand a full size notebook, but would also appreciate the additional benefits of occasional note-taking and drawing using a pen.
"Most users do not spend all day standing up in a corridor. The smaller slate, convertible and modular Tablet PCs all have their place, but vendors, particularly those leading the notebook market, should not stop there. If the Tablet PC is to become a significant part of mainstream mobile computing, and we think it can be, then Microsoft needs to help its partners invest, promote, develop and expand their offerings."