The rapid rise of the tablet as consumers' preferred multi-media consumption device, as a technology object of desire and fashion statement, and as the latest enterprise creativity (and productivity) tool are all widely chronicled phenomena. But digging below the headlines, what is the real appeal to consumers and enterprise users of this new class of 'connected' device? What are some of the key innovations in applications, services and hardware that could make this love affair enduring? And what opportunities and challenges do these developments present to mobile operators?
The tablet's 'connect on the go' attributes - easy portability and near-instantaneous boot up thanks to lightweight, smartphone-derived operating systems (OS) - coupled with a rich visual experience and natural gesture-based inputs have quickly made tablets the default gadget for casual browsing at home and the local coffee shop, and a versatile platform for the office. It has also become an essential travel accessory for many business and pleasure users, replacing the ubiquitous laptop at a fraction of the weight and space. No doubt the degree of personalization possible - i.e., the ability to load your tablet with any number of clever and engaging apps to suit your personal/professional interests and needs - is a big part of this appeal. Multi-screen TV/video experiences such as HBO-GO, ESPN3, Sky-Go, Netflix and many others are ideal for the tablet form-factor too.
Both Forrester Research and ComScore recently observed that tablet users spend more time browsing the web and are more inclined to spend money online compared to smartphone and laptop/PC users. The Economist reckons this is because tablet owners tend to be more affluent, and the immersive tablet experience creates greater buying impulses. ComScore's research affirms this point (at least in the US): as of August 2011, nearly half of tablet owners belonged to households earning $100K or more. This demographic represents a lucrative opportunity for mobile operators, advertisers, content providers and others serving the demand for personal connectivity.
Enterprises are aggressively adopting tablets for several reasons including the wide range of business applications for gesture-based technology, signature capture, image generation and markup, etc. Another compelling attribute is the ability to use off-the-shelf hardware with a consumer (read: rapidly falling) cost curve. But probably the most important attribute is the desire of enterprise users to have the same light, portable and versatile platform at work as they do at home. Apple's CEO Tim Cook claims over 90% of the Fortune 500 are testing or deploying iPads now, as are a number of major hospitals around the US. On the content side, HTML5-based platforms like Pressly, Zite and Flipboard are helping redefine online publishing by enabling content owners to quickly convert their publications into tablet-friendly multimedia websites supporting the analytics, full screen ad insertion, e-commerce, mapping and other essential functions associated with traditional websites. During their iPad app launch this week, Facebook took time to extoll the cross-device value of HTML5 to their mobile platform strategy. These developments underscore the influence tablets are having across numerous industries and the growing importance of these devices to enterprise business models.
Another self-reinforcing tablet trend is the staggering breadth of available apps and the rate of proliferation of new ones for the two most popular smartphone/tablet OSs - Apple's iOS and Google's Android. Convenient online app stores, low prices, 'freemium' apps with in-app purchase options and seamless downloads have turned these purchases into a frictionless process and therefore a more spontaneous (and frequent) activity for consumers. Behind this vibrant market is a healthy ecosystem of hardware, OS, application and service delivery developers, many coming from the mobility industry, who have turned the traditional personal computing platform and OS development models upside down and ushered in an era of much more agile development, faster product launches and faster updates. The spider chart from market intelligence firm Asymco cleverly illustrates how this new approach is compressing time-to-market at the same time it is helping expand the total market opportunity.
So what opportunities and challenges do these developments present to mobile operators in particular? Although the majority of tablets sold to date have been Wi-Fi only (notwithstanding Apple's original 3G-enabled iPad launch in 2010), if mobile broadband has taught our industry one thing it is that mobility is a big value-add for consumers. The freedom of high-speed Internet access virtually anywhere without the need for a Wi-Fi hotspot is compelling to many users. But mobile operators will have to continually improve their 3G/4G service coverage, capacity, quality - and capabilities - in order to attract new users and significantly expand the population of connected devices on their networks.
Mobile cloud computing is one capability operators are pursing to broaden their offerings and deliver integrated 'smart pipe' services for all types of connected devices. Tablets and smartphones - really apps in general - are becoming heavily dependent on cloud-based services. Music, video streaming, IP videoconferencing, social media, social gaming and personal storage are all benefitting from (and driving) this shift to the cloud. And this dependency will only increase in the future. Letting people (and businesses) store their content in the cloud and retrieve it from anywhere and any device is a liberating and empowering proposition. A number of mobile operators including SingTel with their "intelligent utility" private cloud platform, Telstra with their Connected Clouds concept for enterprise customers that spans fixed and mobile, and T-Mobile parent Deutsche Telecom, are already aggressively expanding their mobile cloud capabilities specifically to capitalize on this accelerating demand in the enterprise.
From an operator perspective, two medium-term hurdles to widespread adoption of connected tablets are capturing a larger piece of the sales channel and bringing down device costs. Recent analysis by ABI Research revealed that operators only represented 13% of all tablets shipped during the first half of the year as customers presumably opted for a visit to their local brick-and-mortar outlet to touch and feel these new devices before making a purchase commitment. As ABI points out, operators need to quickly translate their success marketing smartphones and all manner of wireless accessories into more effective in-store and online tablet campaigns if they expect to capture a larger piece of this pie.
In the same research report, ABI Research estimated only 36% of tablets sold in North America included built-in cellular connections through the first quarter of 2011. Early adopter consumers and enterprise users no doubt comprised the bulk of these sales. The good news is Android-based, 3G-equipped models are appearing on the market every month at retail prices well under $500. And Apple's strategy of value-pricing earlier product generations as they launch successors presages a 3G iPad under $500 before long. Most importantly, in contrast to the PC and mobile industry's failed attempt a few years ago to embed 3G radios in low-end netbooks and laptops, the tablet provides everything that was missing back then: a superior interactive experience due to greater computing power and graphics - and compelling apps! These dynamics will likely spur significant numbers of people and firms to make the mobile tablet plunge over the next few years. Juniper Research estimates the balance will shift substantially by 2016 when models with 3G connectivity are expected to comprise over half of all tablet sales worldwide.
But perhaps the biggest remaining hurdle to wider consumer adoption is resistance to having separate 3G/4G subscriptions for their smartphones, home PCs - and now tablets. A recent operator survey conducted by Strategy Analytics suggests that consumers with multiple devices are hungry for a single data plan to connect all of their devices. They cite Rogers Wireless, Bell Mobility, Telefonica Spain and Proximus Belgium as examples of service providers already offering multi-device plans. In the US, AT&T has widely hinted at offering multi-device 'family' plans that would draw from a pool of shared data; Verizon Wireless has announced their intention to launch similar multi-device plans. Given the expected growth of data traffic from tablets, what better way for operators to create stickier customers than by offering all-in-one plans?
Bringing all these trends and market dynamics into perspective, tablets are quickly assuming a role as an essential but supplementary multimedia consumption device rather than a direct smartphone or laptop replacement. If all the stars continue to align, these connected tablets promise to drive another surge of rich-media broadband traffic over mobile networks in coming years and may even eclipse smartphone and laptop users in terms of bandwidth consumption. So tablets represent a significant business opportunity and challenge for service providers. Mobile operators with robust networks, innovative enabling services, compelling device offerings and attractive multi-device service plans - anchored by a comprehensive data optimization strategy - will be in a good position to reap the bounty.