Before iPad sales started to slow down in 2013, the vast majority of analysts were bullish on tablets, predicting the imminent replacement of mainstream computing (PCs) by tablets. I’ll just pick a few articles to illustrate my point;
- John Kirk on Techpinions, Jan. 2014: How The Tablet Made An Ass Of The PC
- Ben Bajarin on Techpinions, Jun. 2013: How the Tablet is Killing the PC
- Horace Dediu on Asymco, Dec. 2013: When will the migration from PCs be complete?
- Ben Thompson on Stratechery, Jan. 2014: WINDOWS 8 AND THE COST OF COMPLEXITY
Although the degree to which each analyst strongly suggested a glowing future for tablets varies, there was a very consistent theme that tablets were in the process of replacing PCs.
In 2014, declining iPad sales (and declining Android tablet sales shortly thereafter) proved that these analysts were completely wrong, or at the very least, overlooking a very important piece of the puzzle.
For the record, I was questioning the conventional wisdom that tablets were replacing PCs back in January and February of 2014, before most pundits noticed that iPad sales were flattening (1, 2, 3), so I think I had a pretty accurate sense that iPad growth wouldn’t be so easy. I even said in Jan 2014;
So what I sense is the possibility that tablets (as computing devices) may have hit a roadblock in adoption, and this is due to the potential market being actually much smaller than envisioned. Much smaller than the PC market.
Now that Ben Bajarin has become openly bearish(subscription required) on tablets, I think we should take a step back and look at the market from a birds-eye perspective. We should question whether we really understand what is happening.
Understanding the complexity of the tablet PC market.
The tablet market is extremely complex. PCs were first hired mainly to do increase office productivity, and later to connect to the Internet. Smartphones, despite being very complex in what they can accomplish, are essentially uniform in the value that they provide to their users. However tablets are very different. They can be very different things to different people. Let me elaborate.
Jobs where the iPad is already a good fit
- A corporate executive’s/sales rep’s communication device: By this, I mean a device that is hired to handle simple emails and messaging, leaning on the reading aspect more than writing. You could also add a bit of presentations and accessing corporate web-based dashboards.
- A home entertainment device: Current tablets allow users to view a variety of video content and also provide a wide range of video.
- A home Internet device: Current tablets, especially the iPad is used for a variety of common consumer Internet tasks like viewing websites, posting on Facebook, replying to messages, etc.
These are the jobs which already existed, and in which the iPad could already be considered mature. Because the value proposition was clear and obvious, these are the jobs which drove the initial tremendous ramp up of iPad sales. In particular, we know that the majority of iPad usage happened in the home and not at work. Hence it is likely that items 2. and 3. were the main drivers.
The problem is, these jobs were equally well served by smartphones as a) better software became available for smartphones (e.g. Facebook moving from HTML5 to native) and b) smartphones got bigger.
Jobs where the current iPad is not yet a good fit
There are also a number of tasks where the iPad is not yet a good fit, more often than not due to the fact that the market itself has not yet been established.
- A field worker’s device: This is something that Ben Bajarin has noted in several articles. In the field, many workers still carry around paper documents and fill in paper forms. There is non-consumption of IT in these workflows. Tablets will inevitably be the instruments that bring IT to these areas, but it will have to be accompanied by customised software solutions designed for the task.
- Organised education: Although there is a lot of educational software for tablets which parents use to help develop their children’s skills, iPads are still just starting to be used in schools. I’m sure that the US is the leader in this area, but I’m sure there are still a large number of children who are not able to use personal iPads or other computer devices at school. The situation is even worse in other countries like Japan. The hurdle here is not in the tablets themselves, but in finding the best way to utilise tablets in teaching and training teachers to use them, and obtaining budget. There is also a lack of good teaching material for the teachers to use. This is an emerging market for which tablets are very well suited, but it requires much more than just tech. We have to wait for a lot of other infrastructure to catch up.
- Hardware as a service: Tablets can serve as the gateway for a service. For example, a cable TV company can include a tablet in your contract which you can use to view TV anywhere in your house, or save locally to view during your boring train commute. This has also been discussed many times, but the point is, this requires cable TV companies and/or other content distributors to get on board. This kind of negotiation will always take a long time to happen.
- A full replacement for PCs: In the long-term, it seems totally obvious to me that we will not be using PCs. Back in the 1990s, we were using computers that could not multitask efficiently and would crash many times during the day. In the 2010s, we are still using computers that can suddenly be infested with malware and have to protect by installing 3rd party software, and which degrade in performance over time requiring a fresh install. Although current operating systems have come a long way in addressing these issues, it is clear to me that a new approach to PC security and consistency is long overdue, and that the sandboxing approach taken by mobile OSes will eventually turn out to be the better path. Just like how we transitioned from cooperative multitasking systems without adequate memory management (Windows 95 and classic MacOS) towards full multitasking and memory protection (Windows XP and MacOS X), it seems inevitable that we will move towards fully sandboxed OSes for the vast majority of users. However, the capabilities of iOS are not yet sufficient to fully replace PCs. This will take time, but we have already seen Apple slowly address issues, first with iOS 8 extensions and now with many features in iOS 9. Given the current rate of improvement, by iOS 15 or so, it is totally reasonable to expect iOS to be able to fully replace PCs.
- New jobs: When you look at the impact that smartphones have had on our lives, one can clearly observe that it has hugely increased our consumption of computing. We browse the Internet in situations where it was previously unpractical. We all put our schedules into electronic devices. We share huge amounts of photos. Tech is not about device A replacing device B. Instead, it is about technology being used in new ways. It is about the situations where we couldn’t use tech, being converted to those where tech makes a significant contribution. In the same way, we should not try to find areas where tablets may replace current devices; we should try to find the remaining areas where people are not using technology. These are the areas where tablets can shine. There is no shortage of these areas, but we have to keep in mind that there is often a good reason why they have not been penetrated by tech. We have to keep in mind that in many cases, non-tech issues will have to be solved before tech can come in. A prime example of such out-of-the-box thinking is the recent collaboration between Japan Post, Apple and IBM to bring iPads to Japanese senior citizens.
What this complexity means
Because the tablet market is so complex and has many independent jobs-to-be-done, the sales data that we are seeing is simply an aggregate value that tells you very little about what is actually happening. The decline in tablet sales does not necessarily mean that the long-term prospects are dim because these data do not expose nascent growth segments. It is very likely that we initially saw rapid adoption due to jobs in the first category (jobs where the iPad was already a good fit), but this market levelled out as smartphones evolved. On the other hand, I expect the jobs in the second category (jobs where the iPad is not yet a good fit) are just getting started. However, jobs in the second category were not previously associated with IT and hence there is often little infrastructure in place and no budget allocated. This means that it will take time for the second category to gain significant traction. At the same time, it is hard to gauge the market size of the second category.
What we can expect is that in the mid- to long-term, jobs in the second category will definitely start to gain traction. Furthermore, as long as Apple keeps the faith, tablets will improve to the point where they can fully replace laptops in not only the common tasks, but in virtually all tasks. What we do not know yet is what the size of the tablet market will be at this point in the future.
Naofumi Kagami 