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Why Tablets Keep Eating Away at PC Share

Why Tablets Keep Eating Away at PC Share
June 24, 2013 1:03PM

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"The touchscreen and the thinness overall of tablets provides enough power to do word processing and it gives a different approach to games and other applications. The tablet market is eating right into the $300 to $600 laptop market because you get more usability with a tablet."

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Yet another market research firm is predicting the demise of PCs at the hand of tablet momentum. Meanwhile, the tablet market is seeing some emerging challenges of its own.

Worldwide devices -- the combined shipments of PCs, tablets and mobile phones -- are projected to reach 2.35 billion units in 2013, a 5.9 percent increase from 2012, according to Gartner. Sales in tablets, smartphones, and to a lesser extent, ultramobiles are driven the market, as PC shipments are on the decline.

According to Gartner, ultramobile devices are gaining becoming more attractive to consumers and drawing demand away from other devices. By the fourth quarter, that truth will become even more evident as the combination of new designs based on Intel processors Bay Trail and Haswell running on Windows 8.1 will hit the market. The new chips may not drive higher volume, but Gartner expects the new tech to help drive up average selling prices and margins.

"Consumers want anytime-anywhere computing that allows them to consume and create content with ease, but also share and access that content from a different portfolio of products," said Carolina Milanesi, research vice president at Gartner. "Mobility is paramount in both mature and emerging markets."

Tablet Market Splitting

Most of that is nothing particularly new. What is new is Gartner's prediction that the tablet and smartphone markets are facing some challenges as these devices gain longer life cycles. There has also been a shift as many consumers go from premium tablets to basic tablets, the firm reported. The share of basic tablets is expected to increase faster than anticipated, as sales of the iPad Mini already represented 60 percent of overall iOS sales in the first quarter of 2013.

"The increased availability of lower priced basic tablets, plus the value add shifting to software rather than hardware will result in the lifetimes of premium tablets extending as they remain active in the household for longer," said Ranjit Atwal, research director at Gartner. "We will also see consumer preferences split between basic tablets and ultramobile devices."

With mobile phones, volume expectations for 2013 have been brought down as the life cycles lengthen as consumers wait for new models and lower prices to hit the market in the Fall and holiday season. Atwal said the challenge in the smartphone market is also that, as penetration moves more and more to the mass market, price points are lowering and in most cases so do margins.

All About the Price Tag

"Although the numbers seem to paint a clear picture of who the winner will be when it comes to operating systems (OS) in the device market, the reality is that today ecosystem owners are challenged in having the same relevance in all segments," said Milanesi. "Apple is currently the more homogeneous presence across all device segments, while 90 percent of Android sales are currently in the mobile phone market and 85 percent of Microsoft sales are in the PC market."

To gain additional perspective on the demise of PCs, we turned to Roger Entner, a wireless industry analyst at Recon Analytics. He told us laptops are like compromised mobile PCs because it's less than a PC while tablets are gaining more power and offer a user experienced better suited for mobility.

"The touchscreen and the thinness overall of tablets provides enough power to do word processing and it gives a different approach to games and other applications," Entner said. "The tablet market is eating right into the $300 to $600 laptop market because you get more usability with a tablet."

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