Tablets: The Goldilocks device

Apple iPad

On January 18, 2010, of Deloitte Canada Research predicted that would ship 10 million devices this year. Sure, a bold prediction for a product category that had never seen one million units in a year. But made much more likely by the fact that by that time, the launch of the was all but confirmed by everyone except .

By this fall, that promise was realized, testament to the fact that there is room for a device size between the size and usage pattern of the smartphone and that of the PC, Stewart told attendees at Rogers’ Tablife TO event late last week.

Stewart said the products have been popular because they’re what he described as “The Goldilocks Device” – not too big, not too small. Just right, somewhere in between the laptop and the smartphone.

Although Stewart called the sales numbers, he said he’s a little surprised by how tablets are being used – or more specifically, what tablets are taking the place of. “The laptop displacement effect is significantly more than I would have expected before. We’re seeing more and more of that,” he said.

Currently, Apple’s accounts for a massive majority of the tablet market via the iPad. But Stewart believes that will not – cannot – continue to be the case. “Two years from now, I don’t think even Apple expects to have the kind of share they have now,” Stewart said.

He predicts “between three and six OSes” for tablets by 2014, with Apple, Android, , RIM and /Palm being likely contenders, plus one other notable contender – . “People trying to do PC-like things with their tablets are going to want Windows compatibility, or even more – the full Windows experience,” he said.

Citing the variety of form factors and feature sets seen in smartphones today, he said that “screen size wars are stupid,” and bemoaned the fact that every product that launches and isn’t exactly like the iPad gets pegged for instant failure. Just like people want different size laptops or smartphones with different feature sets, he posited the same will happen with tablets.

“We’re 10 months into the game, to assume that one team has it locked up is just impossible based on the history of technology,” he said.

Today, the mix of WiFi-only devices to WiFi-plus- is skewed heavily in favour of the former – only 30/40 per cent of devices in North America are -enabled, and that number plummets outside of North America. One clear trend is that ratio turning around to ’s favour. But when it does, the data consumption of tablets with users hungry for high-bandwidth applications such as streaming video has the potential to significantly increase worldwide mobile network congestion issues – even with the arrival of next-generation networks.

“The capacity of the network isn’t ramping up at the same speed as the bandwidth. Tens of millions of users sitting around watching HD video on their tablets is not going to happen – there’s just not enough bits out there,” he said.

That, in turn, will have a major impact on how applications are designed for the devices because won’t be able to pre-suppose a massive bandwidth connection. will be “living in a constrained environment for most of the world.”

They’ll also have tough choices to make. There’s a clear option – develop a Web-based application that can work on any platform but offers less functionality, or build a native app that offers a much richer experience but needs to be re-written for each platform. Today, that’s not such a problem with one platform dominating the market. But if the kind of fragmentation likely with multiple OSes over the next few years happens, developers are going to be forced to make their bets or eat the costs of redeveloping across the various platforms.

One thing that Stewart doesn’t see changing as quickly as many have predicted is the price. He described the pricing for the existing iPad as “aggressive,” and noted that Apple doesn’t make quite its normal margins on the devices.

But even if average selling prices remain relatively high, Stewart expects enterprise demand to grow rapidly. Today, less than 10 per cent of enterprises support tablets. By 2014, Stewart expects that figure to be around 40 per cent.

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