Tablet PCs: Doomed from the start?

Warning: If a rant about Microsoft offends you, do not read this article!

Thursday, March 1, 2007

In 2001, Bill Gates shared his vision of the Tablet PC at the Comdex trade show. At the time, there were big hopes and predictions for this product segment’s success. In fact, Bill Gates personally predicted “within five years, I predict that it will be the most popular form of PC sold in America”. It’s now well more than 5 years later, so this article will take a look at the Tablet PC’s progress to date.

Bold predictions…

“The PC took computing out of the back office and into everyone’s office,” said Gates. “The Tablet takes cutting-edge PC technology and makes it available wherever you want it, which is why I’m already using a Tablet as my everyday computer. It’s a PC that is virtually without limits — and within five years I predict it will be the most popular form of PC sold in America.”
http://www.microsoft.com/presspass/Press/2001/Nov01/11-11Comdex2001KeynotePR.mspx

On the surface, when leaders of companies present new products, a certain amount of marketing speak is expected. The intention is to create enthusiasm for the new product. However, when the CEO of the most successful (financially speaking) company in the PC industry makes such predictions, they tend to carry a little more weight. After all, this was the same person that authored the book entitled “The Road Ahead” back in 1995. With that said, one would think the Tablet PC would be a huge success by now, right?

Cold reality…

While the most recent statistics aren’t readily available, the total number of Tablet PC sales was under 1 million units (worldwide) in 2005. In terms of a percentage, that accounts for 1.5% of all “notebook” PC sales.

“Tablet PCs accounted for just 1.5% of notebook PCs sold worldwide last year, IDC now says, and makers shipped nearly 1 million Tablet PC units in 2005″
http://www.tabletpc2.com/Archives/2006%20Archives/News-Archive-%20February-2006.htm

In terms of sales statistics, Tablet PCs are typically lumped in with the laptop / notebook segment. From a technical perspective, they are very similar.

Does 1.5% sales percentage sound like a success or even remotely resembling Bill Gates’ prediction? No? Well, it gets worse. The 1.5% figure was just a percentage of Tablet PCs with regards to all “notebook” sales. This puts the total Tablet PC sales well under 1% overall.

Worse yet, even that number is artificially high. Tablet PCs now come in different formats. The Tablet PC form that Bill Gates was specifically referring to is called a “slate tablet”. Since the introduction of the Tablet PC, it’s clear that this form is popular to nobody other than Bill Gates. So, Tablet PC makers have resorted to what they call “hybrid tablets” which are essentially just like regular notebooks, except they have Tablet PC characteristics such as the ability to use a stylus to write on the screen, etc. So, when we’re specifically referring to the Tablet PC in the pure meaning of the word (in slate form), the sales figures are actually significantly lower yet.

“Slate tablets accounted for 24% of all tablet shipments in 2005,…”
http://www.tabletpc2.com/Archives/2006%20Archives/News-Archive-%20April%202006.htm

That means roughly 250,000 Tablet PCs (in slate form) were sold in 2005. Yet, in 2005, 208 million PCs were sold in total.
http://news.com.com/PC+market+surged+in+2005,+will+settle+in+2006/2100-1003_3-6028454.html

Likewise, the true Tablet PC sales percentage was about 1/10 of 1% ( or 0.1%). I think it’s safe to say that Bill Gates’ prediction was something of a failure. In all fairness, I haven’t seen sales data for 2006, but I’ve seen nothing that would indicate any significant change in the status of the Tablet PC’s success.

So, why mention this now?

People make bold predictions all the time of what will happen 5 years from now. Since nobody really knows the future, it’s easy to take these predictions with a grain of salt. However, when someone is going to write a book about “The Road Ahead” as if they are some sort of visionary, they sort of deserve a fair dose of criticism for being wrong.

Anyway, the Tablet PC issue has come into focus recently when a small company, Axiotron, developed a Mac Tablet for sale and demonstrated it at the 2007 Macworld event in January. This company basically takes an existing Mac notebook and modifies it into (slate) tablet form.
http://www.axiotron.com/index.php?id=modbook

From a software perspective, this wasn’t much of a stretch. Mac OS X already has all of the necessary technology built in such as hand writing recognition, input device support, etc. Apple pioneered much of this work with the Newton product (first PDA on the market) and later enhanced it through Apple’s Inkwell technology.

There is a vocal minority that wanted Apple to come out with such a product. Now, they have something along the line of what they’ve been asking for. I’m not exactly expecting any sort of high volume of sales for this product. First and foremost, it’s more expensive than it has to be because the product starts off with the purchase of another product (a Mac notebook) and is then modified at additional cost. But, even if the product were less expensive, what would reasonable sales expectation be? Using a few basic assumptions such as Apple’s overall market share is in the 3 – 4% range and that the tablet form’s popularity would be equally proportional to the overall PC market, basic math would tell you the following. 250,000 (most recent annual Tablet PC sales number) x .03 (Mac market share) = 7,500 units. Let’s be generous though. Since Apple has been rising in popularity, let’s say the number of units they’d sell would be 10,000. If Apple were to come out with a Mac based computer that sold only 10,000 units annually, it would be considered a complete failure and cost Apple money (for research, marketing, distribution, etc.) in the process. Now, for a small company that modifies existing products such as Axiotron, that’s probably more then they’re prepared to handle.

In addition, Steve Jobs has already gone on record as saying Apple was not interested in doing a Mac Tablet.

“First, he said, tablet computers were not a big enough market for Apple to spend its limited resources chasing. And even if the market grew, it would not reach a size to be of interest. The form factor was all wrong. Apple was more interested in defining markets than trying to catch other companies that were busy trying to create a market for questionable products.”
http://technology.guardian.co.uk/weekly/story/0,,1981815,00.html

Conclusions…

The Tablet PC, in either Windows or Mac flavor, is one of those items that people think are cool products in concept. However, “cool in concept” does not necessarily translate into something that is practical or something that provides a distinct advantage. That is, while the Tablet PC may be a fun toy to play with as a diversion, it’s not a product that’s likely to replace PCs in any other form factor.

So, why is Microsoft’s Tablet PC a failure? The obvious answers are that of the form factor not actually being practical, cost, technology issues, etc. But, sometimes you just have to look at the company that is championing this device. Is Microsoft an innovative company? Historically, the answer is a definite “no”. Microsoft has never successfully created a new market for anything that I’m aware of, with the possible exception of the anti-virus market. Even that was done indirectly. Nearly every product they’ve produced has been done before. This is true for office productivity products, operating systems, features within these products, etc. Even when it comes to hardware, the same applies. Microsoft wasn’t the first with keyboards and mice. xBox was not the first game console, Zune copies the iPod and others, etc. So, what happens when Microsoft tries to do something innovative? We end up with the Tablet PC (a market failure) and of course, there was Microsoft “Bob”.

This article may sound like a long rant about Microsoft and to some degree it is. I should note that there are several Microsoft products I do like very much. However, I’m very put off by the arrogance of Bill Gates. As a leader of a technology company, I understand why he speaks at various computer related functions. But, by writing his book, “The Road Ahead”, he’s cast himself as some sort of visionary in the likes of someone like Steve Jobs. Gates’ expertise is in the form of business acumen rather than as a visionary bringing us cutting edge products.

Microsoft’s success has largely been due to unfair business practices (such as software bundling, unfair exclusion of competitors, not to mention what they are currently trying to do with regard to virtualization software). Their on-going success is due to the monopoly they’ve maintained over the years. Microsoft is best when they identify an existing emerging market, and then pour all of their resources into competing with their leading competitor. They can generally afford to undercut their competition for a while until they’ve achieved market share dominance. “Innovation” is just not in Microsoft’s DNA or corporate culture, despite their widespread use of the word. The Tablet PC, much like their “Microsoft Bob” product is an example of what happens when they do try to do something unique.

One can only imagine what’s coming next from Microsoft. Rather than something innovative, my bet is that they will continue to follow Apple again by entering the mobile phone market. In terms of operating system “innovations” Vista doesn’t bring anything to the table that’s not already in Mac OS X 10.4 (Tiger). I’m sure Apple’s release of Leopard this spring will give insight into the next release of Windows beyond Vista.

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13 Responses to “Tablet PCs: Doomed from the start?”

  1. 2010 – the year of touch computing « Observations from Hong Kong Says:

    […] PCs didn’t really catch on. Pundits like Steve Jobs of Apple Computer claimed the technology would never fly – that there was no need for such technology. Of course Steve Jobs should never be taken […]

  2. Nelson Leaks Says:

    Based on the recent history of the iPhone, i won’t be going out to buy the first tablet. I will wait for the product to improve and and also wait for the price to drop. Apples frequent to make changes to their products so I won’t have to wait very long. I’d love to know many people had buyers remorse after going to buy the first edition

    I tend to agree. I don’t usually get caught up on the hoopla that surrounds the initial release. The iPad looks like a nice 1.0 product, but it’s just that. An obvious omission is the front facing camera that is rumored to be included in the next generation iPhone for example. I’ll revisit the genre sometime next year after the software and iPad specific apps get to mature a bit. – Steve

  3. FanOfNone Says:

    This is a pretty ridiculous article. For one thing Microsoft does not make Tablet PCs, or any other PCs for the matter. Ironically Bill Gate’s predictions are coming true, but he was a little ahead of his time. The problem with these smaller form factors, both tablets and Netbooks is not the OS, but the hardware. Getting the components small enough and making them fast enough is what took so long. How was Gates wrong if his predictions are coming true? Jobs on the other hand not only did not have the foresight to foresee the future of tablet computing, he was dead set against it. He did a complete 180 when he announced the ipad – wow what a visionary… not.

    For starters, everything needs to be taken in context. Bill Gates made his famous prediction in 2001. I waited until 2007 (6 years later) to declare is prediction a failure. Yes, now that the iPad just came out and changed the game for what tablets are about, it would seem that I may be proven wrong. However, I disagree with your assertion which suggests Bill Gates was just ahead of his time. To this day, Gates is still pushing the notion of using a stylus with a tablet to take notes, etc. ex. http://www.engadget.com/2010/05/04/bill-gates-microsoft-pursuing-a-lot-of-tablet-projects-pen-b/ Clearly, his “vision” of a tablet is still a failure.

    Also, I disagree with your “it’s the hardware” claim as well. Gates’ “vision” was to use the exact same software as the PC (both OS and applications) along with a bolt on stylus input interface. Clearly, that’s another example of failure on his part. Yes, the iPad’s 10 hour battery life makes the argument for hardware, but the lean OS along with applications written specifically for multi-touch have been the key to the iPhone, iPod Touch and now the iPad’s success.

    Nearly everything he mentions about Microsoft’s innovation (or lack thereof) is also true about Apple. Apple did not invent the GUI, nor did they invent the MP3 player, nor did they invent the smart phone. It’s funny to note that when he mentioned the Zune he passes it off as a copy of the ipod, but what device did Apple copy? How about the MPMan, or the Rio? And when there is no Apple comparison he just brushes it of as “not the first” bla, bla, bla.

    Apple did not invent the GUI entirely. Neither did Xerox. However, many of the modern elements found in the GUI were invented by Apple. I won’t go into detail here, but I have an entire article discussing this at length if you’re interested in the facts. No, Apple didn’t invent the MP3 player either. However, they created the best MP3 player and combined that with the best jukebox software, iTunes, then brokered deals with the music labels and were first to offer digital downloads of Music. The only thing else available at the time was the failed subscription model. It takes vision and innovation to make the best products and tie them all together to create something that’s more than the sum of their parts. As for copying, yes, there were other crummy MP3 players at the time. I had an early RIO for example. However, nobody else had the big picture in place and nobody else was successful at selling MP3 players. Microsoft didn’t enter the market until they saw someone else making a boat load of money in the market. Aside from “squirting”, there was nothing original about the Zune (in fact it was just a rebadged Toshiba Gigabeat). Can you really compare what Apple did with the MP3 player and the market to what Microsoft did? Really?

    Also, nobody ever said Apple invented the smartphone. By your logic, once the first phone has been created, no further innovation is possible, right? Apple’s innovation with the smartphone is mostly by redesigning the interface concept. Whether you agree this is innovation or not is irrelevant. The fact is, EVERY phone manufacturer is scrambling to copy what Apple has done 3 years ago. Imitation is the most sincere form of flattery and it’s certainly an indicator of innovation as well.

    Let’s not forget that Microsoft Bob was a $99 software program. While the concept was decent – the implementation just wasn’t well thought out. The Apple Lisa was a huge flop along with the Newton. In fact Apple made at least ten awful products; each costing from hundreds to thousands of dollars (as was the case for the Lisa). Apple’s failures were on a grand scale, but he fails to mention that here.

    Sure, Apple has had failed products over the years as well. But “Bob” was both a bad idea and a bad implementation. Newton wasn’t commercially successful because of price. $1000 is to much to pay these days much less back then. However, the Newton concept spawned the entire PDA market not to mention serve as the basis for future tablets. Lisa… again, it wasn’t very practical to expect people to spend $10,000 on a personal computer… in the 80’s no less. However, back then, Apple was all about building the best possible device without compromise or consideration of cost. Obviously, in terms of sales, that’s a recipe for disaster. However, the Lisa was the first commercial computer with a GUI. It was a ground breaking device in its day by any measure. Again, can you really compare this with Microsoft Bob??

    He also mentions “unfair business practices” – what a joke, as if Apple is any better. Let’s see… Apple can bundle it’s browser with is OS, but Microsoft can’t? Apple can also bundle its ilife suite, its proprietary music player – itunes, its own media player, and the list goes on, and on. If that isn’t bad enough, Apple is thumbing its nose at Adobe – one of the first companies to embrace the Apple OS. Not only did Apple create a rival suite of photo/video editing tools to compete directly with Adobe, they are also bad-mouthing Flash and are not supporting it on any of its mobile platforms. Adobe actually wrote a custom set of APIs especially for Apple but just before the launch date Jobs changed his mind and left Adobe out in the cold. Sorry Mr Seidel, but you can say all you want about Apple and continue to be a puppet. I on the other hand will have nothing to do with Apple nor will I ever buy any other their over-hyped, over-priced, over-marketed, pseudo cool-factorized products.

    Regarding the bundling of a browser, there are a couple differences. First, Microsoft incorporated the browser into core functions of the OS. Apple didn’t. You could remove Safari from the Mac and it would still be functional. You couldn’t do that with Explorer. Further, Microsoft had a monopoly market, Apple wasn’t even close to that. Likewise, your comparison doesn’t hold up.

    You claimed that Apple bundled iLife, but I’ll bet you can’t even name a competitor to these applications, can you? When your market is as small as Apple’s, you have to fill in the gaps yourself sometimes.

    Regarding Adobe, Apple created Final Cut Pro as a response to Avid embracing Windows and threatening to leave the Mac market. It had nothing to do with Adobe. In fact, Final Cut Pro and Adobe Premiere weren’t even competitors as the two products were in two different leagues. Final Cut and Avid were at the top tier, Adobe Premiere was a middle tier product and iMovies was the low end consumer product. Soon after, Adobe dropped Premiere on the Mac. It wasn’t until fairly recently that Adobe came back to the Mac with Premiere Pro which is a more competitive product.

    As for Flash, you are making this into some sort of personal vendetta Apple has against Adobe. Jobs’ “Thoughts on Flash” was a response to all of the media criticizing Apple for their decision to not support Flash on the iPhone. When Apple actually spells out the rationale behind their decision, you call it “bad mouthing”. Okay then, exactly which part of Jobs’ letter do you disagree with? Do you disagree that Flash is proprietary technology used to control content on the web (which is supposed to be open)? Do you disagree with Flash’s history of poor performance? Do you disagree with Flash’s history of poor security? Do you disagree with Flash’s history of poor stability? Do you think people will know or even care if their app / browser crashes because of Flash? No, all they’ll know is that it crashed on the iPhone. Do you disagree with the notion of supporting Flash holds Apple hostage to updates from Adobe? Do you disagree with the fact that code written in Flash will be slower than native apps? Do you disagree with the notion that Flash is the lowest common denominator and will not make use of each platform’s unique capabilities and APIs? Huh? If so, let’s hear your argument rather than simply calling me a puppet as you’ve resorted to. – Steve

  4. Reminiscing on Bill Gates 2001 Tablet PC Prediction - by Web Design Company 352 Media Group Says:

    […] of sales. Other users and those in business have yet to take to the form-factor in a big way." Tablet PCs: Doomed from the start? (Technical Conclusions 3/1/2007) "Does 1.5% sales percentage sound like a success or even […]

  5. The iPhone 5 & iOS 5 Prediction thread Says:

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  6. PlusGadget Update Says:

    […] very careful never to call a “tablet” at all. Where Gates’s devices were criticized for their clunky pen-centric “overlay” on top of plain old Windows XP, size, poor […]

  7. Microsoft And Samsung Try To Make Bill Gates’s Tablet Dreams Come True | Tablet OS News and Info Says:

    […] very careful never to call a “tablet” at all. Where Gates’s devices were criticized for their clunky pen-centric “overlay” on top of plain old Windows XP, size, poor […]

  8. Microsoft And Samsung Try To Make Bill Gates’s Tablet Dreams Come True | EyeLawView Says:

    […] amazing iPad, which it's very careful never to call a "tablet" at all. Where Gates's devices were criticized for their clunky pen-centric "overlay" on top of plain old Windows XP, size, poor performance and […]

  9. Microsoft And Samsung Try To Make Bill Gates's Tablet Dreams Come True | Fast Company Says:

    […] amazing iPad, which it's very careful never to call a "tablet" at all. Where Gates's devices were criticized for their clunky pen-centric "overlay" on top of plain old Windows XP, size, poor performance and […]

  10. Microsoft And Samsung Try To Make Bill Gates’s Tablet Dreams Come True | Games and Me Says:

    […] very careful never to call a “tablet” at all. Where Gates’s devices were criticized for their clunky pen-centric “overlay” on top of plain old Windows XP, size, poor […]

  11. Microsoft And Samsung Try To Make Bill Gates’s Tablet Dreams Come True | Amazon Tablet Info Says:

    […] very careful never to call a “tablet” at all. Where Gates’s devices were criticized for their clunky pen-centric “overlay” on top of plain old Windows XP, size, poor […]

  12. tablet Says:

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