Analysis: Tablet PCs loom as sequel to netbooks

TAIPEI (Reuters) - Netbooks, take note.

A customer hold the new iPad tablet computer at its UK launch at an Apple store in central London May 28, 2010. REUTERS/Luke MacGregor

Hot sales of Apple’s iPad is attracting a growing group of developers to a new generation of stylish, multimedia tablet devices that could be the next big thing for on-the-go computing.

New tablet offerings from Taiwanese firms such as MSI and China’s Hanwang are on show in Taiwan this week at Computex, with models specializing in everything from reading books to taking pictures from a webcam fixed on the top of a bright touchscreen to general Web surfing.

Some say tablets could soon take sales from netbook computers -- the low-priced darlings - that debuted at Computex three years ago and were one of the PC industry’s few bright spots through the global economic slowdown.

“I have never seen a singular device that has captured the imagination of so many companies in the world,” said Huang Jen-hsun, chief executive of Nvidia, which has launched new processors to power tablets and laptops.

“It’s logical because it is about enjoying content,” said Huang, who was in Taipei to promote his company’s processors at Computex, the world’s second-largest PC trade fair.

Like netbooks, tablets are relatively cheap, drawing on lower-cost processors and software to often sell for $500 or less. Their prices are likely to fall further as sales grow.

Apple and other large players, along with their parts suppliers, are set to gain most, possibly at the expense of major netbook sellers including Asustek and Acer.

Tablet PCs may be especially suited for reading-type applications such as e-books and other applications that don’t require a lot of typing on a separate keyboard.

While tablets may not completely slay the netbook, research firm Gartner expects the new devices to significantly hit mini-notebooks starting in 2013 as tablet prices fall below those of mini-notebooks and functionality becomes comparable.

The most basic netbooks now sell for as little as $299, compared with the iPad’s $499 U.S. retail price tag.


The iPad has been wildly successful since its U.S. debut in April, with buyers storming Japanese and Australian shops last week to be among the first outside the United States to snap up the long-awaited device.

Gartner estimates mini notebooks will drop to 13.9 percent of the laptop market in 2014 from 18.6 percent in 2010. Rival IDC said media tablets will move in the opposite direction, growing by an average 57.4 percent every year in the same period.

That has caught the attention of Taiwan’s MSI and other big tech brands including Dell, Hewlett-Packard, Lenovo and Samsung, which are testing the waters with their own designs.

“I’m afraid that the fever on netbooks is gone,” Joseph Hsu, chairman of Micro-Star International (MSI), said at the show.

“New designs always create new value, that’s a sure thing,” Hsu said, standing next to a line of his company’s “Wind Pad” tablets that run Google’s Android operating system and has USB ports, a feature absent on the iPad.

As tablet sales rise, netbooks sales are set to fall.

Shipments of notebook computers leapt 43 percent in the first quarter, their highest year-on-year growth in eight years, driven by consumer demand for netbooks, Gartner said.

Hsu said new tablets and other higher-end laptops would drive MSI’s revenue up at least 20 percent this year.

Not far away from MSI’s booth, Aidata and Cideko were showing off iPad stands and holders to lure tablet buyers.

Up the production chain, analysts say touchscreen maker Wintek and battery suppliers Simplo and Dynapack are also charging up for a tablet future.

Still, Asustek was keen to point out the netbooks it pioneered may still have a trick or two left.

The company will ship new models from its Eee line of netbooks with a pre-installed, customized “Asus App Store” later this year via Intel’s online infrastructure.

The race for strong content -- one of Apple’s strong suits -- could ultimately determine who wins the day.

“iPad is a catalyst and we might can see another phenomenal success like netbooks did before,” said Bevan Yeh, a fund manager at Prudential Securities Investment Trust.

“The key will be how quick you can allow users to find a lot of apps on their devices in the future. If you are not Apple, what are you going to do to reach a wide audience?”

Editing by Doug Young and Anshuman Daga