Tablet Commerce: Amazon’s Tablet Heralds A New Phase In Tablet Product Strategy

My colleague Sucharita Mulpuru and I just published a substantial new Forrester report on tablet commerce, Why Tablet Commerce May Soon Trump Mobile Commerce. Basically, it’s huge already: In a recent study of 2,333 tablet owners fielded by Forrester and Bizrate Insights, we found that 47% of tablet owners report shopping and buying for something on their tablet, and an additional 13% say they’ve shopped on their tablet without buying. Even though smartphones far outnumber tablets, retailers surveyed by Forrester report that 21% of their mobile traffic comes from tablets. With tablets forecasted to reach one-third of US adults by 2015, tablet commerce only has one way to go: Up.

These findings suggest there’s a sea shift coming in tablet product strategy, which we see unfolding in three phases:

  • Phase 1 (2010-2011): Apple’s iPad catalyzes a media revolution. There’s no doubt that the iPad is used for more than just media — 20% of iPad owners report creating and editing documents on the device, for example, and the massive catalog of business, education, and other non-media apps attest to the iPad’s versatility. But our data shows that after email, media (playing games, watching videos, viewing photos, reading) are the most popular iPad activities. Apple has wrangled the best content from premium publishers, inspiring News Corp to launch an entirely new company just to produce an iPad app.
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HP TouchPad: A Necessary Risk, Uncertain Reward For HP's WebOS Strategy

Today HP launches the HP TouchPad, the first tablet based on HP's new operating system, webOS, which it acquired along with Palm exactly one year ago. HP's $1.2B initial investment in Palm, plus its additional investment over the past year to bring the TouchPad and its webOS smartphones to market, is a risky investment -- there's no guarantee that consumers will buy these products or that the consumer electronics market has room for another software platform. But the webOS investment is a risk HP had to take, in order to:

  • Compete with Apple. Apple owns its own hardware and its own operating system, which means it controls the experience to a greater degree than OEMs that make hardware for Apple or Google's software. With webOS, HP gets more control over the total product experience.
  • Differentiate itself from other OEMs making Android and Windows devices. HP wants to be more than a company that makes gray boxes running Windows. WebOS helps HP differentiate from the pack, but it's also an unknown to most consumers, and adoption is uncertain.
  • Hedge against PC cannibalization. In a recent Forrester report, we found that PC cannibalization from tablets has been modest so far but is likely to increase in the next six to 12 months. HP is the biggest PC manufacturer in the world, and it needs to adapt its product portfolio to avoid more disappointing quarters like this most recent one.
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