Apple iPad no fad gadget

Media tablets following the iPad are creating a stir among consumers and businesses. Fleur Doidge looks at the market opportunity

The iPad has kick-started a new category, according to commentators

Apple in May sold its one millionth iPad -- just 28 days after the device's introduction, twice as fast as the iPhone. In that time, users also downloaded 12 million applications for the device from the vendor's App Store and 1.5 million e-books from its iBookstore. Is the California company again onto a long-term form-factor winner?

Will the consumer-focused iPad wave its wand over reseller revenues in the business sector as well? Consumerisation of IT means that items that first target home users soon creep into businesses, whether by stealth or deliberate policy. Staff used to a certain level of ‘connectedness' via a range of gadgets at home may complain or feel frustrated if they don't get the same convenience and functionality at work.

Ultra-portable product

Sectors such as hospitality and healthcare are already finding the ultra-portable product useful. According to Apple, the selling point of the iPad - a new breed of tablet PC - is that it allows users to work with apps and associated content in a more "intimate, intuitive and fun" way, in part because the gadget, with a 9.7in screen, is only half an inch thick and weighs around 0.7 of a kg.

Users can browse the web, do email, share photos, watch HD videos, listen to music, play games, read e-books and more via what Apple calls its Multi-Touch user interface. Substitute that content for corporate videos and communications, and you have a valid business tool.

New Apple product traditionally suffers from supply problems; more cynical observers often speculate that Apple rather likes initially to deliver less product than needed, each time claiming it has underestimated the demand for its latest toy, and each time intensifying consumer hype through scarcity. By June, CRN was able to confirm that iPads were in short supply even at Apple Premium Resellers in the UK.

Fortunately, where Apple has a hit, other vendors soon follow with their own interpretations, and a range of variations on the media tablet theme have appeared, with notable offerings including the Samsung Galaxy Tab and the Cisco Cius. RIM, HP, and Dell have also announced competing devices. It is to be hoped that these vendors will quickly address themselves to unsatisfied demand, as well as offering an alternative to the proprietary Apple OS and hardware.

ICT market research giant Gartner predicts that sales of media tablets worldwide this year will reach 19.5 million units, and that figure will expand 181 per cent to 54.8 million units in 2011. North America will initially account for 61 per cent of those sales - but that part of the world's share of the market is expected to fall significantly with each passing year. By 2014, global sales are tipped to exceed 208 million units worldwide.

Gartner defines media tablets as slate devices that support touch and run a resource-thrifty OS such as Apple's iOS, Google's Android, Palm's WebOS, or MeeGo's self-styled platform. However, the effect of the new form factor on market segments will vary.

Carolina Milanesi, research vice president at Gartner UK, said the all-in-one nature of media tablets will result in the canniba lisation of other consumer electronic devices such as e-readers, gaming consoles, and media players such as the iPod.

"Mini-notebooks will suffer from the strongest cannibalisation threat as media tablet average selling prices (ASPs) drop below $300 (£185) over the next two years," Milanesi says.

Most will not replace notebooks

Gartner says that most knowledge workers will not replace their notebooks with media tablets, and low-end notebooks and communications devices such as smartphones will only suffer limited cannibalisation as a result. Since these workers usually also have smartphones, media tablets become their third device. When organisations do supply at least one smart device to their staff, most will baulk at buying three. So, according to Gartner, many users are in fact buying media tablets as consumers, with their own money - although they are using them for work as well as leisure.

This suggests some potential for augmented sales, rather than buyers merely swapping one type of device for another.

Gartner says that most of the segment cannibalisation that occurs is likely to be from 7-inch media tablets on high-end smartphones - as users are likely to use these devices in highly similar ways. Users buying a 7-inch tablet might opt for a lower priced smartphone with a smaller form factor, according to Gartner.

This year, according to Milanesi, mobile and Wi-Fi media tablets will make up 55 per cent of the media tablets sold globally, but these will become ever more popular. By 2014, 80 per cent of the media tablets sold will support mobile networking and Wi-Fi - suggesting the channel should focus on these types of media tablets in its drive to maximise adoption.

Ten-inch media tablets will be seen by the enterprise market primarily as companion devices to notebooks or as a secondary mobile device with fast access to email, diary functionality, interrogating web applications, and showing presentations. They will go mainstream over time as costs fall, eventually becoming a common household appliance, she suggests.

"Communication service providers who have so far subsidised mini-notebooks to drive mobile broadband uptake will shift their marketing spend to media tablets. Such subsidies will help drive adoption among those consumers who see the initial hardware cost as a hurdle," Milanesi says. "For the rest, the freedom of paying for cellular only if and when needed, and not having to add another contract to the one a user might already have on his or her phone, is a great advantage and has so far proved successful for Apple."

Only this month, Gartner at its annual global Symposium and ITxpo has told chief executives that it believes the time for business to seize the opportunity represented by new mobile devices has come. The Apple iPad and its ecosystem are likely to disrupt existing technology use profiles and business models, according to the market research company.

"It is not usually the role of the CEO to get directly involved in specific technology device decisions, but Apple's iPad is an exception," says Stephen Prentice, Gartner Fellow and vice president, ahead of the event in Australia. "It is more than just the latest consumer gadget, and CEOs and business leaders should initiate a dialogue with their CIOs about if they have not already done so."

Gartner recommends that IT organisations should provide at least concierge-level iPad support for a limited number of key users unless there is a really good reason not to, and prepare a budgeted plan for widespread support of the iPad by mid-2011.

"Individuals are willing to buy these devices themselves, so enterprises must be ready to support them," adds Prentice. "While some IT departments will say they are a Windows shop and Apple does not support the enterprise, organisations need to recognise that there are soft benefits in a device of this type in the quest to improve recruitment and retention. Technology is not always about productivity."

Unlike previous tablet PCs, the new form factor will not remain a niche product for a limited market, according to Prentice.

Much less intrusive

Prentice adds that the iPad-type tablet is much less intrusive in face-to-face environments than conventional notebooks, and well suited to sales or information-sharing. Australian carrier Jetstar has trialled an iPad rental service for in-flight entertainment, and Malaysia Airlines has used iPads in a kiosk mount as self-service check-in devices. It makes electronic media consumption "effortless" and "casual", which means people are likely to feel more inclined to use it than previous tablet PCs.

"Even if you think it is just a passing fad, the cost of early action is low, while the price of delay may well be extremely high," says Prentice.

Milanesi wrote in her recent blog for Gartner, ‘So Our Media Tablet Forecast is Out: Have we been Drinking the Kool-Aid?': "Why are we being so optimistic about this market? Because media tablets are not mini-notebooks and they are certainly not Tablet PCs. If you think this market will be as small as the mini-notebook market you are looking at media tablets like younger siblings of a PC rather than older siblings of smartphones.

"Media tablets have much more in common with a smartphone than a PC. The usage model is closer to what consumers do with a smartphone while on the go than what they do on a PC when they are at their desk."

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