Last week, ABI Research drew worldwide attention with its prediction that it was nearly tripling its forecast for the number of tablets sold this year (11 million). The ERB decided to probe a bit further and reached out to ABI senior analyst Jeff Orr (right). What follows is our email conversation on the subject:
THE ERB: Why do you think tablets are selling so quickly?
JEFF ORR: In developed telecommunications markets, there is interest from consumers to have a companion device alongside home computers – something that can reside in the living room or kitchen for quick information look-ups – glance at the personal email inbox, decide where to have dinner tonight based on reviews, or determine what is happening on a social network.
The projected 11 million media tablets shipped worldwide this year are comparable to the nearly 16 million netbooks shipped in 2008. Netbooks are also being used in developed markets for secondary devices primarily by consumers. ABI Research estimates that nearly 60 million netbooks will ship this year.
The value proposition for media tablets is still being tested by the market. Consumers buy desktop and laptop computers for productivity, while they buy smartphones for communications. The media tablet, based on a touch screen interface, is primarily being used for entertainment and the general consumption of web content. With perhaps only 4 million devices in existence worldwide today, a home slate relies on home broadband service and a Wi-Fi network. ABI Research found less than one-third of US households have a Wi-Fi network, for example. Alternatively, more costly media tablets are available that include a modem that connects to a cellular data network plus the monthly costs for access similar to a handset. These restrictions, along with limited consumer choice, have limited media tablets so far to a luxury item.
THE ERB: What tablet brands -- other than Apple -- do you expect to be on retailers shelves in Q4?
JEFF ORR: ABI Research expects most of the leading PC and mobile device OEMs to have media tablet products commercially available during the second half of 2010. They may limit the geographic availability during this year to focus on key markets, but expect availability in Western Europe, North America,
THE ERB: Do you expect prices to drop for tablets?
JEFF ORR: As competition increases, the average selling price (ASP) for a media tablet will naturally drop. Apple is typically one of the higher priced vendors in other product categories, and there is no reason to expect they will be a low-price leader in media tablets.
THE ERB: If so, to what levels?
JEFF ORR: Without most vendors actively offering products and pricing, it is difficult to guess what pricepoints will decline to as this time. Currently, prices for the iPad are about the same as entry- to mid-range laptop computers. This level cannot be sustained if the market is to grow. A mass market for media tablets (40-50 million shipped worldwide in a single year) is not expected until 2013. ASPs could be in the $250-300 range by that time –the ASP of a netbook today.
THE ERB: Given the predicted demand for tablets in Q3 and Q4, do you have any sense of the market for 2011?
JEFF ORR: ABI Research forecasts markets 5 years out. Depending on the number of competitive product launches that occur during the second half of 2010, their ability to attract an audience, and increased choices for consumers to select from, 2011 could see anywhere between 17 and 28 million media tablet shipments.