Imminent Shakeout for Tablets, Maybe Mobile OSs

It is evident that the mobile tablet form factor will be a winner for a long time. It provides an enhanced user experience, especially for entertainment enthusiasts. These devices also make it possible for business people to leave their laptops and netbooks behind, making life out of the office easier.

In Mel Brooks’s 1981 motion picture “The History of the World Part I,” Brooks, playing Moses, descends from Mount Sinai holding three clay tablets containing God’s Commandments. Approaching the gathered Israelites, he begins to announce he has Fifteen Commandments. Suddenly his declaration is interrupted as one of the tablets falls from his grasp and shatters on the ground. Recovering with aplomb, he continues his proclamation saying he has brought to his people God’s Ten Commandments.

I couldn’t help thinking about this moment in film while walking the show floor at CES. Guestimates—and they are just that because with everything going on at CES, who had time to accurately count them—put the number of tablets on display at anywhere from 80 to more than 100. Many of these devices are or will be wirelessly-enabled or designed to use wireless devices as modems. So the question running through my mind is, how many will be dropped and shattered during the shakeout that will take place over the next year?

Wirelessly-enabled tablets are not new. AT&T launched the Eo Personal Communicator in 1993. Small by computer standards, but larger than most people wanted to carry and certainly not pocket-sized, it was an early shot at combining wireless connectivity with a slimmed-down computing device. Priced between $1,500 and $3,000 depending on how many “extras” you wanted, the product was short-lived. AT&T killed it in mid-1994 after blowing a reported $40-$50 million on the venture.

Apple’s iPad has successfully resurrected the concept of mobile computing beyond the smartphone format. And as with any huge success, it has attracted a plethora of imitators and a few with something more to add to the genre.

At CES there were many offshore, mostly Asian-based and relatively unknown companies showing tablets. Where they will be in a year is anyone’s guess. But regular followers of technology shows understand and appreciate the churn of exhibitors on the floor from year to year. So of the hundred tablets available for preview, let’s forget about—no let’s not even consider 75 to 80 of them. These dogs just won’t run.

Among the tablets that caught my eye was RIM’s PlayBook. It’s much smaller than an iPad, so it’s even more portable, though not pocket-friendly. Yet its smaller size should not be a deterrent to business users who love their BlackBerrys but want a larger screen. And its functionality is terrific. It will attach to your existing BlackBerry for wireless connectivity and it runs on a new operating system RIM acquired in early 2010 from QNX Software Systems that is pretty slick. The end result is that the PlayBook is a morphed gaming and entertainment device that supports business users with the benefits they enjoy on their BlackBerry handsets.

Motorola’s Xoom runs on the new Android 3.0 Honeycomb operating system designed by Google exclusively for tablets, extending Motorola’s commitment to the ever-growing open Android ecosystem. A lot of consumers like this idea. Android has the opportunity to grow a fan base similar to that of the Apple-heads out there. More proof of the shift to Android are Samsung and Dell, both launching Android tablets, and NEC’s future dual-screen Cloud Commander. ASUS International is covering its bet by announcing three tablets running Android and only one on Windows 7.

As the Android wave continues to take global market share in the mobile space and Apple’s iPad OS holds its own, one has to wonder what the future will be for Microsoft in the tablet arena. Microsoft’s silence about its future plans for a Windows-based OS to run tablets was deafening. While quite a few tablets running Windows 7 were announced during the show, Windows Phone 7 or Windows Mobile 7 devices were no-shows at the party. Regardless of the version of Microsoft’s wireless OS, Windows has lost its appeal to many consumers. It fell behind when it failed to provide anything as exciting as Apple’s iPad or Google’s Android operating systems. Many industry insiders are questioning Microsoft’s strategy and its viability in the mobile market. If RIM’s new tablet OS can keep BlackBerry fans in its corral, Android continues its global upsurge, and Appleites remain attached to their technology tree, Microsoft may find itself scrambling to stay relevant in the mobile computing world.

It is evident that the mobile tablet form factor will be a winner for a long time. It provides an enhanced user experience, especially for entertainment enthusiasts. These devices also make it possible for business people to leave their laptops and netbooks behind, making life out of the office easier. However, only a handful of devices will survive the imminent shakeout and we believe the winners will be the major embedded OEMs that incorporate Android’s operating systems and reliable and cost-effective wireless data connectivity into their machines, Apple’s iPad and its second-generation versions, and RIM’s PlayBook.

Robert C. Chapin

Bob Chapin is an analyst partner in Andrew Seybold, Inc. specializing in industry strategic marketing and market research.