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Tablet Productand Market History

Geoff WalkerPrincipal Analyst

IMS ResearchAugust 9, 2011

v1.3

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“Insanity is doing the same thing over and over again

but expecting different results.”-- Rita Mae Brown (novelist), “Sudden Death”, p.68, 1983

Tablets…

Time Line

In the Beginning: 1970-1990 The First Consumer (Pen) Tablet Frenzy: 1991-1993 The First Tablet Crash: 1993-1994 The Apple Newton: 1993-1998 Tablets for Vertical Applications: 1994-2000Webpads: 1999-2001 & Smart Displays: 2002-2003 The Second Consumer Tablet (PC) Frenzy: 2001-2004 The Second Tablet Crash (Slow Death): 2004-2009 UMPCs: 2006 & MIDs: 2007 Tablets for Vertical Applications: 2001-Present The Third Consumer Tablet Frenzy: 2010-Present Conclusions

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In the Beginning: 1970-1990

Dynabook concept (1972 ) Alan Kay, PARC

● 9”x12”, <4 lbs., $500, 1MB (500 pages), on-screen keyboard

Apple “Knowledge Navigator” concept (1987) Added voice-recognition

and intelligent agents

Go (1987) Founded by Jerry Kaplan Created PenPoint OS

GRiDPad (1989) – first tablet Created by Jeff Hawkins (Palm, Graffiti, Handspring…)

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The First Consumer (Pen) Tablet Frenzy: 1991-1993 Go’s PenPoint released (1992), spun off into EoWindows for Pen Computing (1992)

Driven by fear of PenPoint (see Jerry Kaplan’s book “Startup”) Hype-time! (1992-1994)

Tablets by NCR, Samsung, Fujitsu, Compaq, Toshiba, Eo,Momenta… mostly aimed at the consumer!

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The Original IBM ThinkPad!

Model 700 slate April 1992 - October 1992 10” VGA mono STN LCDWacom pen digitizer Paper-like writing surface Intel 386 @ 20 MHz 4-8 MB RAM 2 PC Card slots 3.5 pounds PenWindows or PenPoint

These specs are typical of mostof the tablets in this time frame

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The First Tablet Crash: 1993-1994

Why did the first tablet wave fail? Pen was measured against keyboard and mouse

● Like touch sometimes is today! Handwriting recognition wasn’t good enough Hardware was underpowered

● Same for notebooks, but it was more acceptable there Price was $500 - $1,000 more than equivalent notebook No wireless (too early), so limited mobilityWindows OS was too big and not pen-centric

● Like Windows 7 and touch today! Apps were primitive – although there were some, such as the

InkWriter text editor that could even do reflow● Microsoft bought InkWriter and turned it into Journal on Tablet PCs

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The Apple Newton: 1993-1998

The first PDA, but also a small tablet It was originally a platform for wireless communication (too early!) Handwriting recognition was grossly overemphasized

Why did Apple kill the Newton? No profit (business decision) Newton == Sculley; Jobs

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Steve Jobs doesn’t like pens MS & Apple conspiracy theory

August, 1993

Tablets for Vertical Applications: 1994-2000 Tablets survived by going vertical

Sales force automation, utilities, insurance, healthcare, government, transportation, etc.

Many vendors, but Fujitsu became dominant Husky, Telxon, Microslate, Intermec, Symbol, Xplore, Walkabout

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WebPads: 1999-2001 Smart Displays: 2002-2003Mobile thin client

Descended from the 1995 Zenith CruisePad “WebPAD” = Web-based Personal Access Device (NatSemi)

● Created as a way to sell NatSemi’s low-power CPUs

100% failure rate in the consumer market A thin client is a very tough sell to almost everyone

● And yet, Google is trying it again with the Chrome notebook… A hardware BOM of $400 is much too high for a mobile thin client

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Zenith Cruisepad Ericsson webpad Frontpath webpad Viewsonic Smart Display

The Second Consumer Tablet (PC) Frenzy: 2001-2004 Announced at Comdex 2000

Slate, heavily influenced by Dick Brass’ work with eBooks (OEB ePub)

Launched at Comdex 2001 Still a slate Forecast: Notebooks = 50% tablets in 2005

Early Tablet PCs (2002) Four slates and one convertible (Acer)Microsoft and the PC OEMs got

cold feet on slates● Not enough mass appeal● Bill Gates used a convertible

By 2005 there were >30 brands,80% convertibles

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The Second Tablet Crash(Slow Death): 2004-2009Microsoft closed the Tablet PC blog in 2010…Why did the Tablet PC fail? (“fail” = <2M units/year)

No tablet (or ink) applications to motivate consumer purchase Price was $500 - $1,000 higher than equivalent notebook

● Sound familiar? The product was too evolutionary and not revolutionary enough

● A mouse-oriented OS that supported a pen and digital ink(basically Version 3 of Windows for Pen Computing)

Underpowered (to achieve mobility) Zero consumer marketing from Microsoft PC OEMs had zero understanding of the product or market

● They were sheep blindly following Microsoft

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UMPCs: 2006MIDs: 2007 Ultra Mobile PC (UMPC)

7” tablet running Windows XP with a touch shell (“Tablet Pack”) Failed: Rigid spec, no applications, low performance, high price

Mobile Internet Device (MID) UMPC with less restrictive hardware specs Failed: Poorly understood product category, very high price

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Samsung UMPC Sony MID OQO MID

Tablets for Vertical Applications: 2001-Present Slate and convertible Tablet PCs were successful

in vertical applications, just like in 1994-2000

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The Third Consumer Tablet Frenzy: Apple iPad, 2010-PresentWhy did Apple succeed when so many others failed?

Availability of appropriate hardware (finally!) “Effortless elegance” and an immersive user experience Ease of use – Apple got the touch UI exactly right The rise of social media and networking Location subsystem – navigation, area search, tracking people Sharing subsystem – passing information & URLs between people The App Store™ The increase in consumption of digital media The growth of casual (and addictive) games The desire for a “real” browser, better than any phone browser

Timing is everything!

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Is It Going To Continue?

Speaker’s opinion: Yes, to some extent Apple (iOS) seems likely to build a very large business in tablets

● Apple’s distribution channel produces an inherent advantage● But business missteps – such as forcing all suppliers of eBook-reader

apps that run on iOS out of business (the 30% tax) – can be serious

Android has the potential to become a successful tablet OS● But it’s less mature than iOS and MUCH less controlled (fragmented)● Copying Apple’s UI is not a guaranteed path to success

But very few (if any) device OEMs have Apple’s understanding of and focus on the tablet user experience● Most current tablet forecasts are too optimistic

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Conclusions

Sometimes it’s just too early for the hardware

When the shepherd’s lost, the sheep are in trouble

Tablets today are all about the total user experience, including the ecosystem, not just the hardware and software

Maybe the third time really is a charm…

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Thank You!Geoff Walkergeoff.walker@imsresearch.com+1 408-945-1221 office+1 408-506-7556 mobile

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