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.
Technical Conclusions 