BlackBerry CEO Thorsten Heins made news this week with his claim that tablets will be dead in five years. “Tablets themselves are not a good business model,” he claimed in an interview.
As Techcrunch wittily responded: “BlackBerry CEO Thorsten Heins Says Tablets “Not A Good Business Model,” Evidently Forgetting About iPad.” As I recently blogged, Apple’s iPad is the growth engine of its entire business so far in 2013, growing 65% year over year. Meanwhile, shipments of Android tablets have found their footing, particularly for Samsung, ASUS, and Amazon, growing in shipments so far this year.
So tablets certainly represent a thriving business model today. More importantly, the tablet will grow into a must-have computing device for much of the world by 2017.
The penetration of tablets into the consciousness of information workers, IT professionals, business people, and consumers only continues to grow. Much as with smartphones, tablets are increasingly taken for granted as a device one will have in one’s life.
Take, for example, information workers: We surveyed 9,766 global information workers about their preferences for which operating system they would like to use on their (next) work tablet. We also gave them an out: “I don’t plan to use a tablet for work.”
In the original ‘Jurassic Park’ movie (which will be 20 years old this June), the young girl Lex Murphy (played by Ariana Richards) asks Dr. Alan Grant (played by Sam Neill) what happened to the dinosaurs. Dr. Grant replies with the thesis from his academic works (as quoted here):
Many scientists believe the dinosaurs never really died out 65 million years ago. These scientists believe dinosaurs live on today -- as birds. The dinosaurs were too large and their food supply is too small, so the dinosaurs became a likely example of natural selection -- in short, they were forced to adapt or perish.
The personal computer already experienced a large tectonic shift, evolving from velociraptor to sparrow in just a few years. Back in 2007, end user computing looked very different from today: It was a simpler world of form factors, operating systems, and ecosystems. Even so, in 2007 we predicted:
By 2012, the industry won't include just two form factors, laptops and desktops, but five or more form factors that are universally viewed as differentiated products.
We were correct, and computing “biodiversity” bloomed: smartphones, tablets, laptops, desktops, eReaders, phablets, or adding in form factors that peaked and fell quickly (like netbooks). In fact, we are living in an era of unprecedented experimentation – a flowering of myriad computing form factors attempting to carve out their own evolutionary pathways. The descendants of the velociraptor include a wide array of connected devices, each blazing its own trail.
In recent research, I have laid out some similarities and differences between tablets and laptops. But the tablet market is growing ever more fragmented, yielding subtleties that aren’t always captured with a simple “PC vs. tablet” dichotomy. As Infrastructure & Operations (I&O) professionals try to determine the composition of their hardware portfolios, the product offerings themselves are more protean. Just describing the “tablet” space is much harder than it used to be. Today, we’re looking at multiple OSes (iOS, Android, Windows, Blackberry, forked Android), form factors (eReader, tablet, hybrid, convertible, touchscreen laptop), and screen sizes (from 5” phabletsand to giant 27” furniture tablets) – not to mention a variety of brands, price points, and applications. If, as rumored, Microsoft were to enter the 7” to 8” space – competing with Google Nexus, Apple iPad Mini, and Kindle Fire HD – we would see even more permutations. Enterprise-specific – some vertically specific – devices are proliferating alongside increased BYO choices for workers.
Technology’s value to a business derives at least in part from its ability to increase productivity. The 1987 Nobel Prize winning economist Robert Solow demonstrated that technology increases the productivity of both capital and labor to create economic growth.
Some technologies radically reshape productivity. Take, for example, the cotton gin (1792), which fundamentally transformed labor. A quote from Wikipedia claims: “With a cotton gin, in one day a man could remove seed from as much upland cotton as would have previously taken a woman working two months to process at one pound a day.” By profoundly increasing worker productivity, the cotton gin revolutionized both the textile and agricultural industries.
We’re living through several technological revolutions of our own right now – in, for example, cloud services, mobility, and big data. One technology that leverages all three to some extent is the tablet, a device I follow very closely.
Tablets drive worker productivity through a variety of vectors. One of those vectors is portability. In our Forrsights Hardware Survey, we asked IT decision-makers who either support tablets today or plan to support them soon why they would do so. IT decision-makers’ #1 answer, at 62%? Because tablets are a “more portable form factor than the traditional laptop.” This response eclipsed end user preferences, ease of use considerations, and other possible answers.
Today the European Commission fined Microsoft €561 million ($732 million) for failing to live up to a previous legal agreement. As the New York Times reported it, “the penalty Wednesday stemmed from an antitrust settlement in 2009 that called on Microsoft to give Windows users in Europe a choice of Web browsers, instead of pushing them to Microsoft’s Internet Explorer.” The original agreement stipulated that Microsoft would provide PC users a Browser Choice Screen (BCS) that would easily allow them to choose from a multitude of browsers.
Without commenting on the legalities involved (I’m not a lawyer), I think there are at least two interesting dimensions to this case. First, the transgression itself could have been avoided. Microsoft admitted this itself in a statement issued on July 17, 2012: “Due to a technical error, we missed delivering the BCS software to PCs that came with the service pack 1 update to Windows 7.” The company’s statement went on to say that “while we believed when we filed our most recent compliance report in December 2011 that we were distributing the BCS software to all relevant PCs as required, we learned recently that we’ve missed serving the BCS software to the roughly 28 million PCs running Windows 7 SP1.” Subsequently, today Microsoft took responsibility for the error. Clearly some execution issues around SP1 created a needless violation.
“Hello, I’m J. P. Gownder, and I serve Infrastructure and Operations professionals!” That’s my new greeting to Forrester’s clients. (I borrowed – aka “stole” – this opening line from my excellent colleague, Laura Ramos, who recently rejoined the Forrester analyst ranks herself).
After eight years in a variety of roles at Forrester, I’ve joined the Infrastructure and Operations (I&O) team as a Vice President and Principal Analyst. I’ll be collaborating with analyst colleagues (please see below) on I&O’s forthcoming Workforce Enablement Playbook. I&O pros face the constant challenge of empowering their companies’ workers with devices and services to make them successful in their jobs… as well as navigating the growing challenge of employees who choose to bring their own technology to work instead.
More specifically, I’ll be researching at least five issues pertinent to I&O pros:
I was at an industry conference recently, standing in the booth of a large PC maker while being indoctrinated with the latest word: "You can manage it with existing tools!" - a marketing director beamed, as he waved a new Windows 8 tablet under my nose. He seemed so happy I thought for a second he might grab my hand and drag me skipping through the tradeshow floor followed by a troupe of merry singing penguins, like a sort of demented convention center edition of Mary Poppins.
Product strategists struggle with the issue of value all the time: What constitutes a revenue-maximizing price for my product, given the audience I’m targeting, the competition I’m trying to beat, the channel for purchase, and the product’s overall value proposition?
There are tools like conjoint analysis that can help product strategists test price directly via consumer research. However, there’s a bigger strategic question in the background: How can companies create and sustain consistently higher prices than their key competitors over the long term?
The Mac represents a good case study for this business problem. Macs have long earned a premium over comparable Windows PCs. Though prices for Macs have come down over time, they remain relatively more expensive, on average, than Windows-based PCs. In fact, they’ve successfully cornered the market on higher-end PCs: According to companies that track the supply side, perhaps 90% of PCs that sold for over $1,000 in Q4, 2009 were Macs.
Macs share common characteristics with Windows PCs on the hardware front – ever since Apple switched to Intel processors about four years ago, they’ve had comparable physical elements. But the relative pricing for Macs has remained advantageous to Apple. At the same time, the Mac has gained market share and is bringing new consumers into the Mac family – for example, about half of consumers who bought their Mac in an Apple Store in Q1, 2010 were new to the Mac platform. So Apple is doing something right here – providing value to consumers to make them willing to pay more.