Why tablets matter?

Kelvin Rowlette , President and General Manager

LOS ANGELES, CA March 17, 2011 – Because consumers have adopted them at an unprecedented rate.

Apple flexed its marketing muscles and showed off its design skills to reinvent a category that had never really taken off previously. It sold more than 17 million iPads in a year’s time, and now Apple Stores cannot keep the iPad 2 in stock.

The new iPad will continue to solidify Apple’s stranglehold on the tablet market, per Forrester Research.

The iPad 2 will claim 80 percent of the U.S. tablet market this year, according to Forrester’s projections.

Of the more than 24 million tablets that will be sold to U.S. consumers in 2011, at least 20 million will be iPads, per the research firm.

For now, Apple still defines the tablet market, with a product consumers will desire at a price that is hard to beat.

The iPod and iPhone had a phenomenal rate of growth, but even they have been eclipsed in the rate of adoption by the iPad, which has outpaced the forecasts of even the most optimistic of prognosticators.

However, it is not all about Apple’s iPad. A wide range of competitors are entering the market, from the Android-based Samsung Galaxy Tab and Motorola Xoom to the HP TouchPad and RIM’s BlackBerry PlayBook.

While only time will tell which, if any, of those competing tablets will be able to snatch market share from the iPad, what is clear is that the tablet category will be a highly competitive one with many formidable contenders.

Tablets are the emerging battleground in devices. The revived product category is driving revenues across various industries, from manufacturers and wireless carriers to publishers and marketers, according to Ovum, a research firm predicting robust growth for the category.

The iPad and other tablets are making netbooks irrelevant and starting to eat into the laptop category as well, notes mobile consultant Chetan Sharma http://www.chetansharma.com/usmarketupdate2010.htm. The device has caught on with many enterprises, which are giving out iPads to their workforce instead of laptops or netbooks, he notes.

Tablet adoption among small- and medium-sized businesses is also growing exponentially.

Recent research AMI-Partners found that SMBs that have embraced mobility generated 40 percent higher revenue growth over the last year compared to those who did not. As the mobile workforce trend continues, mobile devices, including tablets, will play an integral part in supporting these employees.

But really it is all about the way that consumers have embraced the touchscreen tablet to make it the media-consumption device of choice for early-adopters, a trend that will sooner rather than later spread to the mass market.

That trend in user behavior has been a boon to publishers and media companies, which have turned to various monetization tactics ranging from free and ad-supported to metered and subscription-based.

For example, Ad Age http://adage.com/article/mediaworks/time-warner-cable-ipad-app-lets-subscribers-watch-live-tv/149421/ recently reported that Time Warner Cable launched an iPad app that lets its subscribers watch live shows on their tablet at no extra charge in their home using a cable modem authorized by the cable.

Publishers such as News Corp., The New York Times and Time Inc. have explored various paid content models, while Medialets claims that rich-media advertising on tablets, primarily the iPad, have regularly achieved click-through rates exceeding 10 percent.

While what we have seen so far from the tablet category has been astonishing, but what is most amazing is that we have only scratched the surface of tablets’ full potential. The best is yet to come.