Ever since the introduction of the iPad in 2010, the tablet market has come on leaps and bounds, with traditional PC vendors among the first to feel the pinch. Indeed, recent research reveals that the tablet market has overtaken the PC market in the UAE and most other countries in the Middle East region, so why are tablets making waves all over the world and how will the traditional PC vendors respond?
It goes without saying that price is a major determining factor when it comes to purchasing a new device. Cheaper devices appeal to a much bigger portion of the market, and it is clear that PCs simply can’t compete with tablets that are priced as low as $100. These are, of course, from low-cost Far-Eastern tablet brands; however, even tier 2 brands are now making devices available at around $200 and below. PCs, on the other hand, start at around $300, and for that you get a very basic, low-powered device; as the processing speed increases, so does the price.
Portability is another key factor that is influencing device selection among consumers. Though portable PCs are quite mobile, they cannot be compared with the lightweight, ultra-compact features of today’s tablets. Some PC vendors have responded by introducing slimmer devices such as ultrabooks, but these come with high price points, and with tablet vendors now offering devices with screens as small as seven inches, this portability battle is one that PC vendors cannot possibly win.
For a while, mini-notebooks addressed the challenges that traditional notebooks faced in terms of portability, but they were unable to sustain their push as they sorely lacked in terms of power. When talking about power, we must consider not only processing speed, but also battery life. And tablets win out here too, as they generally boast a much longer battery life than PCs due to primarily being used by home users for simple tasks such as browsing and social networking. And while their processing speeds may not be as fast as high-end portable PCs, they are more than adequate for these basic needs.
Aside from the obvious appeal of these devices to the consumer market, there have been a number of major developments that have helped further boost the tablet market’s performance in the region. For example, tablets are now the new must-have tool for educating students in most countries across the Middle East. Textbooks are gradually being replaced by tablets in both schools and universities, and laboratories that previously housed banks of portable PCs are now being fitted out with tablets.
We are also seeing considerable demand for tablets in the hospitality sector, as high-end hotels look to kit out their rooms and leisure facilities with the devices. Meanwhile, a growing number of restaurants are replacing their traditional paper-based menus with the latest tablet models, and these are trends we expect to become even more widespread over the coming years.
So then, all would appear to be rosy in the world of the major tablet players? Well, not quite. Traditional PC vendors are finding it increasingly difficult to manage their losses from the declining PC market, leading them to intensify their focus on the tablet space. And this new strategy seems to be going quite well for them, as they have been rapidly gaining share in the region’s tablet market. The primary reason for this success is that they have introduced devices that are of better quality than the low-cost Far-Eastern brands, but cheaper than the products offered by the likes of Apple and Samsung.
However, they are suffering in terms of profitability as their margins are gradually being whittled away, particularly on their most in-demand devices, which were not particularly highly priced in the first place. They are currently working on a solution to this problem by offering 2-in-1 tablet devices that come with detachable keyboards. These devices are slightly more expensive than their standard tablet offerings, but they provide better financial returns and at the same time give users the feel of using a PC.
Both Apple and Samsung have ruled the market since its very inception and still jointly account for the majority share of the pie, but they have both been losing portions since the start of this year. Indeed, the traditional PC vendors are eating their way through that pie at some considerable speed, with price being their major competitive advantage.
Meanwhile, the low-cost Far-Eastern brands that were flourishing last year have seen their progress slow considerably. The major reason for this slowdown is the fact that numerous faults and defects have come to light with these products over the last 12 months, causing manufacturers to discontinue a number of models and return to the drawing board. These vendors have also been squeezed by the emergence of the aforementioned traditional PC players in the tablet space, and it is fair to say that consumers are becoming more aware of the pros and cons of different tablets and thus making more informed decisions at the point of purchase.
The dynamics of this market continue to shift, with new devices being introduced on a seemingly weekly basis. As such, it is still not yet clear which vendors will emerge as the beating heart of the tablet market, particularly as any innovative, reasonably priced new device has the potential to be a true game changer. However, we can safely say that the traditional PC vendors are refusing to sit quietly in the corner and nurse their wounds as the fight for tablet market share enters another pulsating round.
The columnist is group vice-president and regional managing director for the Middle East, Africa, and Turkey at global ICT market intelligence and advisory firm International Data Corporation (IDC).
