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The main challenge that tablets face if they are to grow significantly is that they must become more central to our everyday lives. Today, most consumers and employees have a mobile phone – increasingly a smartphone – and a PC in some form or other. So, at best, a tablet will be a third or perhaps fourth computing device. For tablet sales to grow significantly, they must have sufficient added features to displace at least one of these other devices.
This research looks at how customer demand for tablets is being driven, and how many vendors have developed a range of tablet size, feature and price combinations to help differentiate their product and address particular market segments.
Further, it explores the issues that mobile operators face to develop compelling tablet business models and provide innovative mobile data plans to drive incremental revenues.
Executive summary: Tablets – segmentation, mobile operator business models and forecasts
12 July 2011
A growing requirement for faster connection speeds has given rise to a range of electronics goods – from mobile handsets to laptops to consumer electronics (CE) – that offer broadband data transfer. For many markets, this has been the case in the fixed-line world for years but the wireless world faces a number of significant challenges to meet this growing demand for connected devices, notably across the developed and emerging markets, but the opportunities are still abundantly clear.
Initially, the research focused on a broad array of device types in the mobile world but, today, outside the handset and smartphone market, it is tablets that are currently commanding most attention. The continued introduction of tablets will have a marked effect on a number of surrounding and linked product segments.
However, the main challenge that tablets face if they are to grow significantly is that they must become more central to our everyday lives. Today, most consumers and employees have a mobile phone – increasingly a smartphone – and a PC in some form or other. So, at best, a tablet will be a third – or perhaps even fourth – computing device. For tablet sales to grow significantly, they must have sufficient added features to displace at least one or these other devices.
In an effort to avoid direct competition with the clear tablet market leader, the Apple iPad, many vendors have developed a range of size, feature and price combinations for tablets that can help address particular market segments. Over the past 12 months, this has led to an explosion of tablet shapes and sizes. It would seem that current thinking has it that the further a product can be differentiated from the iPad the better the chance it has of succeeding in the market.
Despite this, as of today, the tablet market should still be seen as largely a one-product market. Although the number of credible alternatives to the iPad has grown since the end of 2010, Apple has been the only company to invest significant marketing dollars to educate people about the benefits of the iPad, which has enhanced and extended its ecosystem
> The potential of tablet-based devices was first hinted at during the 1960s. After decades of significant additional hardware and software improvements, today’s tablets – as typified by Apple’s iPad 2 – are equipped with high-resolution touchscreens, GHz-plus multi-core processors and gigabytes of storage.
> Informa Telecoms & Media defines a tablet as a mobile computing device with a screen size of between 5 and 12 inches using touchscreen as its primary input method (see fig. 1).
> Akin to the smartphone market, customer demand for tablets is being mainly driven by software, in the form of the operating system (OS), the user interface (UI) and the available content and applications; these are the key factors for delivering an appealing user experience (UE).
> Much of the interest in tablet computers has been re-ignited by Apple’s launch of the iPad in March 2010. The company made full use of its aspirational brand, recognizable quality product promise, well-developed content ecosystem and pleasing UE.
> In an effort to avoid direct competition with the tablet market leader, many vendors have developed a range of size, feature and price combinations for tablets that can help address particular market segments. This has led to an explosion of tablet shapes and sizes.
> In general, there is strong and growing interest in tablets from both the consumer and enterprise markets. Given its market dominance, the iPad continues to dictate consumer and enterprise tablet usage. For consumers, a broader choice of tablets offering advanced features, and the availability of lower-priced tablets would help drive sales.
> Today, most consumers and employees have a mobile phone, increasingly a smartphone, and a PC in some form or other. For tablet sales to grow significantly, they must add sufficient features and be priced in such a way that they are able to displace at least one of these devices.
Mobile operators face the challenge of developing compelling tablet business models
> Data revenues have become an increasingly important revenue stream for mobile operators in developed markets in recent years due to the competition in the market for voice traffic. Given their data-centric nature, tablets can make a significant contribution to this revenue stream without cannibalizing other revenues in a significant way.
> The role of mobile operators in the tablet value chain differs greatly from their role in the traditional handset value chain.
> While the vendors have been busy extending their device offering, they have thrown up a new business model framework for the mobile operators related to the provision of tablets. A variety of new business models are being explored; these vary by operator and by market (see fig. 2).
> With the launch of more advanced new tablets during 2011, operators will start to become more competitive.
> If mobile operators want to start playing a significant role in the tablet market, they will have to carefully examine their role in the value chain and their business models and then develop attractive offers that provide additional value to tablet buyers.
> At the core of the mobile operator value proposition is its ability to extend the use of tablets beyond the home. While tablets are mostly used at home, many tablet buyers decide to buy a WWAN-enabled tablet in order to be able to use their tablet on the move occasionally. This provides mobile operators with an opportunity to provide value to these customers and generate corresponding revenues.
> A major advantage that the mobile operators have is that they already have many customers and can therefore cater for all their customers’ mobile device needs as a single port-of-call. For example, they could offer to include additional devices in existing data plans or generate incremental revenues through users upgrading to a larger data package.
> Using and extending existing relationships is likely to be the most important success factor of the tablet for mobile operators given an attractive device portfolio.
Distribution relationships are still a key factor in Germany’s tablet market
> Germany’s tablet market has been in its early-development phase in 2010 and early 2011.
> Apple’s iPad dominates this tablet market, and its stores dominate the main distribution channel: consumer-electronics retailers (see fig. 3).