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The tablet-smartphone showdown

Lezette Engelbrecht
By Lezette Engelbrecht, ITWeb online features editor
Johannesburg, 10 Jun 2011

There was a time when the PC was king and the humble phone was a mere accessory. But impatient, sociable, on-the-go consumers have changed that, and now even the granddaddy of PCs, Microsoft, is looking to soak up some of the new kid's shine.

Smartphones have surpassed their computing counterparts on the sales side and the IDC recently readjusted its forecasts for worldwide PC shipments. Following a somewhat lacklustre first quarter, it now estimates growth of 4.2% this year, down from an expected 7.1% in February.

Following the runaway success of Apple's iPad, tablets have entered in the mobile computing ring with renewed vigour, sidling up to smartphones for market share. As a result, tech companies are experimenting frantically with forms, designs and services to try come up with the gadget that will gain the edge in today's race for mobile computing mastery.

According to the Forrester report 'What the post-PC era really means', product strategy has undergone a complete overhaul.

The firm points to the unveiling of the iPad 2 in March, where Apple CEO Steve Jobs announced the company now gets a majority of its revenue from 'post-PC devices', such as the iPod, iPhone, and iPad.

“When the CEO of the largest-market-cap technology firm in the US starts referring to its 'post-PC' product portfolio, alarm bells should sound for product strategists at all firms designing technology and content experiences.”

Forrester defines the post-PC era as “a social and technological phenomenon in which computing experiences become ubiquitous, casual, intimate, and physical”.

But Forrester doesn't foresee the death of the desktop or laptop anytime soon. It predicts that even in a mature market like the US, PC sales will grow significantly over the next five years.

”It does mean, however, that those older form factors are joined by newer form factors that support consumers' and workers' desire for ubiquitous, casual, and intimate computing experiences.”

Hannes Fourie, IDC senior analyst for systems and infrastructure solutions, says the firm predicts that smartphones will overtake notebooks as the primary computing device globally as soon as 2016.

“This means more smartphones will be used as business tools than notebooks. However, one needs to understand that the traditional notebook will also be replaced by other new form factors like media tablets, which will play a big role in shaping the future of computing devices.”

In this corner - smartphones

The buzz around smartphones has been palpable, following a stream of new releases and big moves in the mobile industry. From Nokia teaming up with Microsoft, to Intel's plans to introduce chips for tablets and smartphones, every player from hardware manufacturers to software developers are muscling in on this rapidly growing market.

Research firm IDC's survey of smartphone shipment data for the first quarter of 2011 shows worldwide sales grew by nearly 80% year-over-year.

This growth is set to continue, with smartphone shipments headed for the one billion mark by 2015, according to market research firm In-stat.

Allen Nogee, a principal analyst with the firm, says a powerful browser, wide variety of apps, easy to navigate user interface, and good keyboard or touch-screen are some of the critical factors that drive smartphone success.

According to the IDC figures for Q1, Apple, Samsung and HTC led the way while Nokia and Research In Motion (RIM) lagged behind.

RIM recently announced it's retiring its BlackBerry OS and will migrate its smartphones to QNX, the platform it acquired and has been developing for its PlayBook tablet, during 2012.

According to Gartner's analysis of worldwide market share for mobile devices in Q1, this migration will make RIM's devices more competitive with consumers and unify its tablet and smartphone user experience. The firm adds, however, that RIM faces the challenge of attracting enough developers that can innovate around the platform.

Carolina Milanesi, Gartner research VP of Consumer Technologies & Markets, says Android and Apple's iOS continue to dominate the platform wars.

The big news in Q1, however, was Nokia's strategic alliance with Microsoft on Windows Phone 7, and the retirement of Symbian, says Milanesi. “This will precipitate a rush from competitors to capture Symbian's market share in the mid-tier.

“The smartphone and tablet markets are not zero-sum games, so there is room for multiple platforms to grow - but none of these platforms showed great prospects in QI,” she adds.

Another trend making waves in the smartphone world is the rise of mobile commerce. Already hugely successful in places like Kenya and Japan, mobile money is marking a shift in the way people pay for goods. Recently, near-field communications technology (NFC) has given the trend even greater impetus, with heavyweight Google announcing plans to enter the mobile payment market.

The search giant introduced Google Wallet and Google Offers at the end of May, which combines a coupon service and online purchasing with the ability to pay by waving one's phone over a terminal. The first phone with this capability is the Android-based Nexus S, and Google said all future Android phones will contain NFC chips.

According to Jean-Noel Georges, Frost & Sullivan's global programme director for ICT in the Smart Cards group, if a secure element is added to this device to secure transactions such as payment, it will be the ideal tool to get market share of the banking cards market.

This is the case for Google, he says. With the help of data available on the user's mobile phone (research words, location features, payment solutions) the company will be able to collect information on their purchasing behaviour.

“They will have the opportunity to propose to you dedicated shops linked to your search or to the places you have been, to create a more accurate client database such as a 'Know your customer' methodology. So, clearly there is more business and revenue on the horizon,” adds Georges.

RIM has also upped its mobile payment focus with the release of devices with NFC capabilities, the BlackBerry Bold 9900 and 9930. The company is also said to be working on partnerships with banks and credit card companies to offer mobile wallet and payment facilities, although nothing has been confirmed as yet.

According to a recent survey by online retailer Kalahari.net, local consumers have grown more comfortable with mobile payments, as the mobile Web enters the mainstream in SA.

The e-tailer's Mobile Shopping Survey showed 51% of respondents access the mobile Internet daily, and Kalahari believes the consumers are ready for m-commerce. Of the more than 6 200 South Africans surveyed, 26% said they'd already made a purchase via the mobile Web, while 53% are considering it.

In this corner - tablets

Only a year or two ago, tablets were floating on the periphery of the consumer tech space, and the concept of media-rich, functional computing on-the-go hadn't been realised in one package.

Then everything changed.

A social and technological phenomenon in which computing experiences become ubiquitous, casual, intimate, and physical.

Forrester Research

According to Craig Cartier, ICT analyst at Frost & Sullivan, the tablet story really centres on Apple and the iPad.

“To give context to what a huge impact the iPad has had on the market, we need to rewind to 2009, when many in the industry were really puzzled about tablets and whether they had a future.

“At the time, tablets seemed too big to be conveniently carried (in consumers' pockets, for example), but too small to be useful compared to a laptop. All that changed with the iPad.

“In 2010, Apple's innovative device and marketing genius transformed the worldwide tablet market from one of tens of thousands of devices to tens of millions, and sparked more innovation in the industry as manufacturers across the globe rushed to compete with their own devices.”

Cartier notes that initial competition was mainly in the form of Samsung's Android-based Galaxy Tab, with many other device manufacturers quickly following with their own tablets, most of them also powered by Android.

“Though the second half of 2011 will be a key year to understand the strength of these Android tablets versus the iPad, initial indications have been that Apple remains a cut above the rest, and Frost& Sullivan expects that Apple will continue to dominate the tablet market in the near future.”

Indeed, a JP Morgan report reveals that apart from the runaway success of the iPad, which has sold more than 20 million since its release in April last year, tablet sales have declined by about 10% since early March.

In SA, the iPad has become a coveted gadget, with Incredible Connection reporting 70% of stock sold in three days when the iPad first became available locally. At the end of April, the iPad 2 went on sale, with similar fanfare.

Other tablets making the rounds include Samsung's Galaxy Tab, Acer's Iconia and the HTC Flyer, all of which run Android. Research In Motion is also gearing up to release its answer to the iPad, the Playbook.

Cartier says one of the biggest game-changing events in the market recently - Nokia teaming up with Microsoft - reflects the changing landscape of the mobile device world.

During the announcement of its partnership with Microsoft, Nokia CEO Stephen Elop observed that “The battle of devices has now become a war of ecosystems”, notes Cartier.

Among the five main ecosystems today - Google's Android, Microsoft's Windows Phone, Nokia's Symbian, RIM's BlackBerry, and Apple's iOS - Symbian is in trouble, losing customers in droves as Android gobbles up market share, notes Cartier. The Windows Phone has also struggled to gain a foothold in the market.

“With the Nokia/Microsoft partnership, both industry giants may have found a way to establish themselves in a powerful fourth ecosystem,” says Cartier.

“The successful execution of this partnership is key to both companies' success in the future mobile market.”

Winner takes all

When it comes to who will ultimately win the mobile device race, the IDC's Fourie sees no clear winner yet.

“At this stage, there is a place for both smartphones and tablet devices. It all depends what function the user needs to perform or what the user requires from the device.

“A CEO, for instance, would seldom create a document or file from scratch, so why would they need a full PC to function? They can do everything on a smartphone or media tablet. The same goes for sales or field engineers.

The battle of devices has now become a war of ecosystems.

Stephen Elop, CEO, Nokia

“That said, however, I believe there will still be task users that use devices in future similar to today's PC. This might be called thin clients, virtual remote desktops or even dump terminals. These users perform one task only and do not need the flexibility of a mobile device since they spend the whole day in the office.

“We are now seeing the emergence of all-in-one devices that enable you to call with your media tablet, or even insert your phone into your media tablet to merge the two devices into one.”

It seems that for now, no do-it-all device meets consumers' various needs. Gartner expects that users will look to share applications and experiences across devices, from smartphones to tablets and sometimes to notebooks. If Apple's' 'post-PC' vision is truly realised, however, consumers will at least be freed of the need to ever plug a device into a computer again, allowing users to be truly, functionally, mobile.

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