“The Enlarged iPod Touch”
When Apple unveiled the iPad in January 2010, the first reaction from most of us was one of ridicule. “It’s only a bigger iPhone / iPod Touch” is what I first thought. In a way, I was right, but the iPad was much more for most of its target user base.
It was a huge hit; Apple has sold more than 40 million iPads to date, generating more than $25 billion in revenue from its tablet business. It revived the almost dead tablet industry, which many had tried and failed to do before. Scores of Android tablets have been launched since the iPad’s launch, but most of them have failed miserably. Android for tablets – Honeycomb – was a major disappointment. Other tablet platforms did even worse. HP was forced to discontinue webOS as no one wanted to buy the HP TouchPad, not at the price it was originally launched at. Even the Blackberry Playbook by RIM has been a failure.
With the iPad, Apple has offered the best tablet experience, at a surprisingly (by Apple standards) low price. For an entire year, no one was able to beat Apple on price, which enabled Apple to capture a majority market share in the exploding tablet market with virtually no serious competition.
The Winners and the Losers
Apple has been the obvious winner, ringing up billions of dollars in sales, thanks to the iPad.
ARM has been another major winner. With the iPhone in 2007, and the iPad in 2010, Apple redefined two industries – smartphones and tablets. Even the standard smartphones and tablets available these days are much more powerful than the average computer was a decade ago. We now have quad-core tablets and dual-core smartphones, all of which have one common factor – ARM.
Most desktop and notebook processors are based on the X86 architecture, and are made by Intel. However, Intel’s chips have traditionally been power guzzlers, which is something you absolutely don’t want in any mobile device.
Almost every mobile chip is based on ARM’s reference designs, and manufactured by Qualcomm, Nvidia or Texas Instruments. Intel hasn’t yet been able to crack the mobile processor market. Its Atom processors failed miserably when it came to efficient power consumption and performance. It’s working on a new set of processors for tablets, and is trying to push the Ultrabook onto consumers, as an alternative to tablets. It even launched a $300 million fund to encourage manufacturers to build ultrabooks.
Microsoft has been another casualty of the tablet revolution. It was late to the smartphone party with Windows Phone, and won’t be launching Windows 8 until mid-2012, leaving the market open for Apple and Google to conquer.
It has also been affected indirectly by the growing popularity of tablets. Desktop sales in the last couple years have almost plateaued, and even notebook sales have slowed down considerably.
As Windows sales account for a major portion of Microsoft’s revenues, and are directly linked to global desktop and notebook sales, Microsoft has seen a slump in its revenue growth in the past few quarters, which is expected to continue until the launch of Windows 8, which will run on tablets as well as computers.
According to a recent report by Bloomberg, even DRAM manufacturers have been facing losses as sales have decreased in lockstep with notebook sales.
On the other hand, flash memory manufacturers like Samsung have seen a jump in revenue, as flash memory is being increasingly used in tablets, smartphones and notebooks (thanks to the popularity of the MacBook Air, many notebook manufacturers have starting using SSDs).
Tablets may very well be the future of computing. Desktops are almost dead, and notebooks are becoming more and more like tablets – increasingly slim, portable and fast with flash storage and excellent battery life.
Winners: Apple, Samsung & ARM
Losers: Intel & Microsoft