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Suppliers Rushing To Grab Tablet PC Gold, Starting At CES

1/06/2011 12:01:00 AM Eastern
LAS VEGAS — With predictions of a booming market for tablet PCs in 2011, dozens of suppliers are rushing to enter the category or expand their selections during International CES this week.

The Yankee Group forecasts that U.S. retail sales of tablets will grow in 2011 by 40 percent in units this year to 10.8 million, which is why there will be plenty of buzz at CES about this category.

Companies entering the U.S. market at CES include e-reader supplier Aluratek, Coby, Cydle, Enspert, Lenovo, Naxa, Noah, Sungale, Toshiba, Vizio and iStation, which is showing a glasses-free 3D model.

For its part, Lenovo said it would launch consumer and business tablets at CES, but details were unavailable at press time.

Companies that announced their first products late in 2010 — including ViewSonic and Creative Labs — will show their products for the first time to the industry at large.

For their part, other tablet companies are expanding their selection, including Augen and Digital Gadgets, which markets under the licensed Sylvania name.

About 35 companies will show tablet products or prototypes at the show, Yankee Group analyst Dmitriy Molchanov said.

Plenty of formats and features will be available. Most of the tablets on display will use the Android OS; some will come with embedded ATSC-M/H (Mobile/Handheld) DTV tuners to turn them into mobile TV sets, and some will feature glasses-free 3D.

A handful of those products will include embedded ATSC-M/H (Mobile Handheld) DTV reception. They’re in the Cydle and Enspert booths.

For iPad tablets lacking ATSC-M/H tuner, Valups plans second-quarter U.S. shipments of the Tivizen 30-pin dongle for iPhones, iPads and iPod Touches. It incorporates ATSC-M/H DTV tuner to deliver programming to the Apple devices’ displays. The dongle is targeted to retail for $99.

The products will enter a market that, although growing rapidly, is smaller than the numbers suggest — at least for the suppliers launching products here. That’s because, in 2011, Strategy Analytics forecasts that Apple will maintain 75 percent share of U.S. retail unit sales and 78 percent retail dollar share.

The potential for suppliers other than Apple to expand their combined share will grow, however, because of what Yankee’s Molchanov said is Apple’s ongoing strategy in computing devices of maintaining a premium position and high margins at the expense of market share.

However the brand shares shake out, tablet demand will remain strong, said Strategy Analytics analyst Peter King, because consumers are “impressed by the footprint together with the innovative and compelling user experience, particularly for browsing and media consumption.”

In addition, he said, the tablet “is a real alternative” for consumers who would have previously bought a netbook to access the Internet or email but not needing the productivity applications. For these consumers, the tablet is “the perfect coffee table solution.”

Although analysts forecast strong unit growth, at least one is sounding the warning about dollar growth. Yankee’s Molchanov believes average selling prices (ASPs) will drop “precipitously over the next couple of year” because of the sheer number of companies entering the market and the declining cost of components.

With Android tablets, he noted, the OS is free, and Marvell Semiconductor has created reference models to take out the design costs for companies that want to enter the market.

As a result, Molchanov forecasts 2011 retail-level unit sales in the U.S. will rise 40 percent to 10.8 million while dollar volume will grow only 2 percent to $5 billion. In 2015, unit sales will hit 30 million, or almost 4 times that of 2010’s projected 7.7 million, but 2015 dollar sales will reach only $6.8 billion, up only 36 percent from 2010’s projected $5 billion.

For now, however, suppliers are undeterred. See story below for details on what a growing number of tablet suppliers will show.
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