How Did Tablet PC End up in Failure

It has done nothing but taking away a tiny share of the notebook market.

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The tablet PC has been available in the market for a year. According to Acer CEO J.T. Wang, the company, which is the second largest tablet PC manufacturer in the world, sold 100,000 units during the year, only about 5%of the sales of its notebooks during the same period of time.

That is really not an encouraging result for the product, which looks like a slate. Because of that, critiques are surging across the industry, which mainly include the following aspects:

- Weak promotional efforts from Microsoft:

Manufacturers blame Microsoft for the discouraging market performance, saying that its budget for the product marketing is too little, and it has not introduced any large, sustainable marketing program. Some even mock the product as "an abandoned child" of Microsoft.

- High price

A general opinion is to compare the tablet PC with the notebook, as they are both portable computers with similar LCD displays. Currently, the price of the tablet PC, which is higher than that of the notebook, is regarded an obstacle to the sales.

Some manufacturers are trying to lower the cost by using cheaper operating systems (Microsoft charges high license fees for the tablet operating system), others by squeezing money out of the LCD panel, for example, introducing tablet PCs with smaller sizes.

In addition, the handwriting recognition input is the biggest selling point of the tablet PC. Added together, the costs of the operating system, the panel and the handwriting recognition input system account for 40% of the total. Manufacturers believe that if they could save more money out of those three parts, maybe the tablet PC could still have a chance to spread over.

- Handwriting recognition input is not the selling point

In February (2003), I wrote an article about the tablet PC, "Tablet PC - Love and Hatred Story between Keyboard and Display". In the article, I expressed my concern on this ambiguously positioned product, as many manufacturers did not even know whether it should have a keyboard or not.

The handwriting recognition input, which was advocated as the highlight of the product, did not turn out to be a selling point. According to a MIC study, at the present time, handwriting recognition input is something "nice to have", not something "must have". Therefore, it could not be a driving force for purchase activities.

Of course, manufacturers are welcome to make improvements according to those shortcomings. But the question is: will consumers be willing to buy once the price drops, even to the extent below that of the notebook? Is price the prime consideration of consumers?

The following figure shows a number of user groups in terms of high-tech marketing. Generally speaking, innovators and early adopters are the first ones to try a new product. But please note the part marked "Gap". If this gap is not crossed, the high-tech product will stand still at a small niche outside the mass market.

If the figure released by Mr. J.T. Wang is correct, the tablet PC is still in that small niche, incapable of crossing the gap into the mass market. With the current speed of market growth, it is not expected to accomplish this task within the next few years.

Ironically, compared with the notebook, which is developed for the business use, the tablet PC, with its handwriting recognition input, is a product intended for the mass market. How comes that a product that is supposed to have crossed the gap long ago be stopped before the mass market?

In general, what the innovators and early adopters care about most is the functions of a product. If the functions could satisfy their particular requirements, they would buy pretty soon. To cross the gap, price cut could be an option. Yet if the functions are too special, mass consumers will not be interested even if there is a price cut.

It is for that reason that the PDA and notebook have been limited to the business community and unable to reach the mass market so far. Who will carry a computer for all day? Who are so busy that they have to use the PDA to arrange for their agendas? At least not mass market consumers.

The tablet PC is often compared with the notebook. Obviously, manufacturers are aiming at business people too. The problem is, such people could buy the notebook, which is even cheaper, and does not have the particular requirement for the handwriting recognition input. (it's mush easier to use the keyboard, isn't it?)

A price cut could affect only those business people. At least when the tablet PC is selling at the same price of the notebook, the chance for business people to buy it will increase. But even so, the tablet PC only crosses Gap B in the following figure.

If the tablet PC successfully opens the business market, could it cross the other gap into the mass market? I am skeptical about that very much, because price cuts are barely effective (they are still more expensive than the desktop) and the demand is nowhere in sight (who will carry a computer all day?).

I saw an advertisement of Acer before, showing two young westerners carrying tablet PCs in a visit to aboriginals in Taiwan's mountain areas, writing and painting along the way. The beautiful images were once much admired throughout the cyber space. This was the original spirit of the tablet PC: "use computers in a more natural way".

It seems today, however, a lot remains to be done, otherwise, the tablet PC will stay behind the gap for a long time. Even if the sales increase, that would be somewhat a share from the notebook market, and the size of the entire portable computer market has not increased. (
2003/11/30 - By Digitalwall.com - Way to
China Internet/Telecom )

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How Did Tablet PC End up in Failure - 2003/11/30