It takes two to tablet: the rise of the multi-tablet owner
Deloitte predicts that in 2012 almost five percent of tablets sold will likely be to individuals or households that already own a tablet, which equates to five million tablets16 worth between $1.5 and $2 billion in revenue. Although this represents a small percentage of total tablet sales, given that the tablet market is only three years old it likely marks the most rapid ‘multianything’ market penetration in history. It is also worth remembering that in January 2010, aside from the Predictions estimate, the most aggressive forecast for total next-generation tablet sales that year was one million units.
It took several decades after introduction for more than five percent of households to have more than one car, phone, radio or TV. More recently, over ten years passed before five percent of homes had more than one personal computer or cell phone.
The emergence of a multi-million strong cohort of users with two tablets in 2012 is part of a long-term steady increase in the number of computers used and owned per person17. Often called “scatter cushion computing” the main driver for multi-tablet individuals and households will be size, new form factors, price points and vendor business models.
The 75 million modern tablet computers sold since they launched in 2010 have clearly proven the demand for a device with dimensions and processing power somewhere between a smart phone and a laptop18. But thus far tablet demand has been largely homogeneous, even if the offer has been varied19: over 80 percent of all tablets to date have been roughly 10 inches in size, with a single LCD capacitive touch screen, weighing about 650 grams, Wi-Fi but no 3G radio, and an average selling price of about $60020.
In 2012, the supply of tablet choices is likely to become even more varied, and demand is likely to follow suit. As with smart phones, a category which now describes multiple types of devices21, tablets will become increasingly diversified by size, processor power, operating system and business model.
Size will be a key driver for multiple tablet ownership. There is likely to be a marked increase in the number and popularity of smaller tablets, ranging in screen size from five to seven inches22, with tens of millions sold by year-end, compared to a few million in all of 2011.
Purchasers of lower cost seven-inch tablets are likely to comprise first-time tablet owners, as well as existing 10-inch tablet owners simply wanting an additional smaller, lighter tablet that fits into a purse or pocket23.
Smaller tablets are likely to be used differently than their ten-inch equivalents, due to the reduced processing power that many smaller tablets are likely to have. Smaller tablets may be more frequently used for reading books, using apps designed for phones, showing photos to friends and family, and reading e-mail24. But smaller tablets may be less useful for browsing full versions of Web sites, flicking through magazines, reading business documents, analyzing data, writing documents, reviewing presentations, or watching long-form video.
Seven-inch tablets will likely mainly be sold at a lower price than 10-inch equivalents, from as little as $100, but more typically at $200. The principal impact of quality tablets at a lower price point will likely be a wider addressable market; however one group of purchasers of these lower-priced tablets will likely include individuals who have been issued a high-end, relatively powerful tablet for work purposes but who also want an additional tablet for private, home or family use.
The business model should also have an impact. A growing share of the tablet market is likely to be taken by devices with a purchase price that is at or below the manufacturer’s cost, with all margins being made on subsequent service revenues, in the forms of content purchases (predominantly books, games and music), subscriptions and rentals. Content owners (from music companies to handheld games publishers) and retailers may want to actively forgo hardware gross margins on smaller tablets as a way of encouraging existing customers to move to digital, lower-cost distribution models.
Another driver of multiple ownership will likely be enterprise deployment of specific tablet models that workers are required to use, instead of generally available tablets. Possible reasons for this deployment approach include greater security, better compatibility with existing operating systems, and improved ruggedness25.
Device vendors, content owners and connectivity providers should all get ready to respond to the rise in multi-tablet households.
Content owners should ensure that the content and services available are optimized for different types of tablets based on size, type, capabilities and target market. Tablet usability will be compromised if content is repurposed from existing devices such as smartphones and other tablets with different capabilities.
Just as customers have shown a willingness to purchase multiple variants of the same product for everything from smartphones to sweaters, demand for tablets will likely follow suit as the devices become more specialized. Any vendor that is able to offer seamless content sharing among families of devices – as well as a common user interface – is likely to enjoy a competitive advantage. Content owners should enable owned digital content to be accessible across all devices (to the extent that regulations allow it). This may well involve replication of data across devices, rather than assuming constant access to media in the cloud.
Network operators should expect a steady rise in tablet ownership, and evaluate the impact this will have on connectivity. Tablet utility will depend on connectivity: the more useful and used a tablet, the more bandwidth it is likely to consume. End-users will of course hope for faster bandwidth and bigger monthly data allocations, all at a lower price. The demands for faster bandwidth and more data are not necessarily impossible to accomplish if users shape their data consumption to align demand with network availability, rather than expecting on-demand service at all times. Users can and should be encouraged to download tablet content, such as magazines, TV programs and movies, during off-peak periods, ideally using Wi-Fi; data back-ups between tablets and other devices can be sent via short-range networks, such as Bluetooth and Wi-Fi Direct, bypassing the Web altogether26, yet still satisfying the need for connectivity. Operators should not assume that the places where tablet users want to connect will be the same as those for smartphone users, much in the same way that mobile data has a different usage footprint than mobile voice.
Primary and secondary tablets are likely to continue driving significant Wi-Fi traffic; hotspot providers will probably need to upgrade technology, deploy a denser grid of access points, and provision more and faster backhaul. Many hotspots were deployed at a time when tablets had not even been invented; demand for Wi-Fi connectivity will likely surge along with the growth in ownership of all types of mobile data devices.
Deloitte Canada, as referenced in videos, podcasts, or online materials related to TMT Predictions 2012, refers to Deloitte & Touche LLP, the Canadian member firm of Deloitte Touche Tohmatsu Limited.
16Figure for multi-tablet ownership volume and the total tablet market for 2010, 2011 and 2012 are estimates based on conversations with industry players, existing knowledge, and published industry estimates and forecasts, including: Apple to sell 149 million iPads in ‘15, researcher says, CNET News, 22 September 2011: http://news.cnet.com/8301-13506_3-20110077-17/apple-to-sell-149-million-ipads-in-15-researcher-says/, Tablet Demand and Disruption, Morgan Stanley Research, 14 February 2011: http://www.morganstanley.com/views/perspectives/tablets_demand.pdf, Media Tablet and eReader Markets Beat Second Quarter Targets, Forecast Increased for 2011, IDC Press Release, 14 September 2011: http://www.idc.com/getdoc. jsp?containerId=prUS23034011
17From a computer per continent in the early 1950s, to a computer per upper-quartile home in developed countries at the start of the millennium, to multiple smartphones among early adopters at the start of the decade, our lives are steadily, and seemingly inexorably, becoming immersed among a range of increasingly specialized computers. Just ten years ago, the personal computer was a multi-purpose, multi-tasking device that served a range of functions, from e-mail to playing games and from browsing to radio listening.
18Shipments of tablets in 2010-2011 have been estimated at 81 million. Sales are several million units less than shipments. Source: Apple to sell 149 million iPads in ‘15, researcher says, CNET News, 22 September 2011: http://news.cnet.com/8301-13506_3-20110077-17/apple-to-sell-149-million-ipads-in-15-researcher-says/
19For example in Western Europe, sales of seven-inch tablets in August 2011 were estimated at two percent. See: Why analysts can’t tell you how iPads are selling – so tell you about others, The Guardian, 25 November 2011: http://www.guardian.co.uk/technology/blog/2011/nov/25/apple-tablet-context-npd
20Prices refer to the advertised, unsubsidized prices to customers (before sales tax or VAT).
21According to research undertaken in January and February 2011 with 30,000 respondents across 15 countries, of respondents that owned or had access to a smart phone, about 27 percent of respondents owned, or had access to, more than one smart phone. For more information, see: Addicted to connectivity, Deloitte Global Services Limited, 14 February 2011, http://www.deloitte.com/tmt/mobile
22For example, see: Lenovo unveils three new Android tablets--5, 7, and 10 inchers, CNET, 29 November 2011: http://news.cnet.com/8301-1023_3-57332892-93/lenovo-unveils-three-new-android-tablets-5-7-and-10-inchers/
23Source: Samsung Galaxy Tab 7.0 Plus, PCMAG, 30 November 2011: http://www.pcmag.com/shop/product/samsung-galaxy-tab-7/899149998
24For a discussion on how smaller tablets may be used, see: Smaller, cheaper tablets could become a big deal, CNN Tech, 26 October 2011: http://www.cnn.com/2011/10/25/tech/gaming-gadgets/smaller-cheaper-tablets/index.html
25Specialized rugged tablets will also be launched in 2012: these will be for industrial use in most cases and are likely to have much higher prices. Source: Getac Releases World’s Smallest, Toughest Tablet, EON, 30 November 2011: http://eon.businesswire.com/news/eon/20111130006020/en/Getac/rugged/ tablet ; Motorola unveils rugged ET1 Android tablet for enterprise types (video), Engadget, 10 October 2011: http://www.engadget.com/2011/10/10/ motorola-unveils-rugged-et1-android-tablet-for-enterprise-types/; Panasonic Toughbook to address market void by delivering enterprise-grade Android tablet, Business Computing World, 20 June 2011: http://www.businesscomputingworld.co.uk/panasonic-toughbook-to-address-market-void-by-deliveringenterprise- grade-android-tablet/
26For further discussion, please see the 2012 Prediction: Bypassing the Web: alternative short range transmission solutions, Deloitte Global Services Limited