The Tablet Trend: Focus on ‘Use Cases’ (AAPL, HPQ, AMZN, INTC, ARMH, QCOM)
As pundits argue whether or not tablets will replace notebook PCs and wonder if anyone will successfully challenge Apple’s (AAPL) dominance in the market, Next Inning Technology Research Editor Paul McWilliams calmly advises his readers that the headlines are focusing on the wrong issues. The key issue for any new technology is how it addresses what McWilliams calls “use cases.” While McWilliams is quick to state tablets fulfill some use cases currently supported by notebooks, he thinks the real story for tablets is only beginning to emerge and, once it does, we’ll see that the vast majority of its use cases are new and unique.
“The important thing to understand about any new technology is what use cases a tablet creates, expands, and/or manages better than other alternatives,” said McWilliams in his recent report on the emergence of the tablet as a legitimate computing/entertainment platform that will create increased consumer demand beginning with the current generation.
McWilliams, whose model portfolio has outperformed the S&P 500 by a ratio of over seven to one since 2002, believes analysts and other market observers who are casting the emergence of tablets as a battle against notebooks are failing to understand how tablets are establishing their own position in the market as media consumption platforms rather than computing platforms.
“One of the more daunting challenges in home entertainment is to bridge the gap between TVs and the Internet (computing), and the tablet is proving perfectly suited to finally fill that need,” McWilliams said. Tablets are also much less intrusive in one-on-one business interactions. The form factor makes tablets even easier to use in casual settings than notebooks. McWilliams likes to use his tablet to read an article while sitting on his deck and keeps it handy when watching TV so he can quickly look up related content or have a distraction from commercial interruptions.
Hewlett-Packard’s (HPQ) recent decision to abandon its webOS initiative and have a $99 fire sale of its TouchPad tablets provided an important look at the tablet market, McWilliams believes. An aftermarket for the TouchPad has emerged in which the TouchPads are commanding $200 to $250 for a platform that buyers know won’t be extended.
“That tells the Android community out there that there is a price point that is somewhere above this threshold that should get the attention of tablet buyers,” McWilliams said. Interestingly, HP has decided to make one last run of the TouchPad – some suggest this is simply to exhaust component inventories, but who knows; maybe they are having second thoughts.
While Next Inning believes Apple will continue to dominate the tablet market, stronger competitive platforms will drive new growth in the market. It is believed Amazon.com (AMZN) will soon offer a tablet at about $300, and Vizio has created a tablet designed as an extension and direct interface with its popular TVs that would also serve as a much more user-friendly universal remote with even greater functionality and at approximately the same price as a high-end universal remote.
McWilliams believes that consumers will make any tablet versus PC buying decisions based on which platform will best address the use cases most important to the specific user. There will also likely be a reemergence of the “convertible” PC platform that allows users to disconnect a notebook display from its keyboard and use it as a tablet. These convertible tablets would differ from previous versions primarily in that they would have their own low power processor, potentially an Intel (INTC) Atom core, or an ARM Holdings (ARMH)-based system-on-a-chip like the Qualcomm (QCOM) Snapdragon.
To read McWilliams’s report “Tablet Use Cases to Expand Emerging Market,” and additional thoughts about future macroeconomic trends and investing in tech sector companies, please come to www.nextinning.com for a free 21-day evaluation period with absolutely no obligation.
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