Are Tablets Stealing PCs’ Fire?

Intel Makes Late Foray as Tablet Market Takes Off

By Cheryl Coupé, Contributing Editor

Recent research seems to indicate that tablets are cannibalizing PC sales, but that the cannibalization is due more to consumer confusion than direct competition. According to market research firm iSuppli Corp., (now owned by IHS) global tablet shipments will grow by as much as 197.7 percent in 2011 and 57.4 percent in 2012, while PC shipments will see only 12.5 percent growth from 2010 to 2011 and 11.3 percent the following year. This decline comes after a new quarterly record for global PC sales (driven by corporate demand) in the fourth quarter of 2010.

In the first quarter of 2011, three of the world’s top five PC makers suffered year-over-year declines in shipments. Notably, number three-ranked Acer, which sells a high proportion of netbook-style PCs that compete with tablets, bore the brunt of the downturn, with first-quarter shipments down 20.4 percent to 9.2 million units from 11.6 million during the same period in 2010.

Gartner, Inc. also projects weaker worldwide PC unit growth in 2011, showing PC shipments growing 9.3 percent in 2011, which is down slightly from its previous projection of 10.5 percent growth for this year. Both Gartner and iSuppli blame the weak market on consumer confusion about competing device types as well as economic uncertainty.


"Consumer mobile PCs are no longer driving growth, because of sharply declining consumer interest in mini-notebooks," Ranjit Atwal, research director at Gartner, said in a release. "Mini-notebook shipments have noticeably contracted over the last several quarters, and this has substantially reduced overall mobile PC unit growth. Media tablets, such as the iPad, have also impacted mobile growth, but more because they have caused consumers to delay new mobile PC purchases rather than directly replacing aging mobile PCs with media tablets. We believe direct substitution of media tablets for mobile PCs will be minimal."


Results of a survey of 1,142 consumers conducted by ABI Research in March 2011 indicate that netbooks and media tablets are actually neck-and-neck in terms of consumer interest. According to the survey, 25% of respondents rated themselves as either 'extremely' or 'very' interested in acquiring a netbook, while for media tablets, the number was 27%. In contrast, nearly half of those surveyed reported that they are either 'not very' or 'not at all' interested in purchasing a media tablet. The most common reason for the lack of interest was 'I don’t see the need,' selected by 60% of this group. ABI believes that purchases of these devices are likely to result in prolonged PC lifecycles and delayed replacement.

The total impact of the growth in tablets has yet to be seen, according to at least one researcher. At the recent Semico Summit, Jim Feldhan, Semico Research president, anticipated approximately 100 tablet models being introduced in 2011, each with a market share goal of more than 1%. He believes that as the market shakes out, the result will be excess capacity and inventory in the channel. Combined with the impact of the smartphone market, which continues to grow at double-digit rates and has increasing semiconductor content, he believes overbuilding will result in excess capacity and inventory and lead to falling semiconductor prices.

As the tablet market heats up, the question has been: Where is Intel? According to IHS, Intel® Atom™ processor revenues were down 4% sequentially in the third-quarter of 2010, which may be construed as a sign of cannibalization by tablets, most of which are powered by ARM processors.

The new Intel® Atom™ processor Z760 platform is Intel’s response. At the Intel® Developer Forum in Beijing in April, Intel announced that Oak Trail will be available in more than 35 devices beginning in May 2011, running a variety of operating systems including Android, Windows 7 and MeeGo. The Intel Atom processor Z760 system-on-chip (SoC) was designed specifically for tablets, with specs that include as much as 50 percent less power consumption than previous processors and support for full high-definition video.

At the forum, Doug Davis, vice president and general manager of Intel’s Netbook and Tablet Group, also presented "Cedar Trail," Intel’s next-generation netbook and entry-level desktop platform. Based on leading-edge Intel 32nm process technology, Cedar Trail will include features that will improve media, graphics and power consumption in upcoming netbooks and will enable fanless, fully enclosed, ultra-sleek devices. Davis said other new features will be disclosed in the coming months, with the processor due in the second half of the year.

Matt Wilkins, principal analyst for compute platforms at iSuppli, said in a statement, "Intel is smart. The company knows perfectly well that the media tablet market is being defined right now. And if the company doesn’t become a player immediately, its prospects of getting into the market in the future will only grow dimmer."

The new Intel® platforms are also ideal for small form-factor and portable embedded designs, such as tablets used in retail, medical and industrial applications.


Cheryl Berglund Coupé is editor of EECatalog.com. Her articles have appeared in EE Times, Electronic Business, Microsoft Embedded Review and Windows Developer’s Journal and she has developed presentations for the Embedded Systems Conference and ICSPAT. She has held a variety of production, technical marketing and writing positions within technology companies and agencies in the Northwest.