The temperature of tablets: How the mobile industry is responding to the iPad

With the iPad, Apple (NASDAQ:AAPL) has laid down yet another challenge to the wireless industry's incumbents. The book-sized gizmo, now past 2 million shipments in just two months, represents a new device category for consumers, a chance for additional data revenues for carriers and a slap in the face to handset makers already struggling to stanch the rise of the iPhone.

Apple has shipped more than 2 million iPadsSo how will the world's cell phone and smartphone makers--Nokia (NYSE:NOK), HTC, Motorola (NYSE:MOT), Samsung, Acer and the rest--respond to Apple's new iPad challenge? Are tablets the next battlefield in the mobile war, or will the wireless industry's handset makers cede the arena to Apple and its PC brethren like Lenovo, Archos, Asustek and others?

Long tale of the tablet

The HTC Advantage is one of many devices sitting between laptops and smartphones.To be clear, tablets are nothing new to the world's entrenched handset vendors. Players both large and small have been dabbling in the bigger-than-a-cell-phone, smaller-than-a-laptop market for years. After all, Nokia released its Booklet netbook last year (and its N800/900 Internet Tablets and Communicator devices before that), Palm toyed with its mini-laptop Foleo device, and HTC once boasted of its unique Shift and Advantage devices (HTC even designed a specialized tablet for the U.S. Census). Indeed, just weeks before Apple unveiled the iPad, Motorola showed off a prototype Android tablet running over LTE.

So tablet-style gadgets are by no means new to wireless. What is new, however, is the possibility that major profits can be reaped from the sale of the devices, as highlighted by Apple's iPad.

A moving target

But what exactly is a tablet? And how can the market be defined and measured? The world's leading analyst firms have been struggling with that very question, and many have had to rework their approach to the tablet market in the wake of the Apple iPad.

"We consider the iPad the inaugural addition to the media tablet category," said Susan Kevorkian, program director for mobile media and entertainment at research firm IDC. The firm defines media tablets as having a lightweight operating system like iOS or Android and a 7-12 inch color screen. Tablet PCs, on the other hand, sport "full" operating systems like Windows and run an X86 processor.

Kevorkian explained that tablet PCs have been around for decades, and are used by workers in a variety of vertical markets, but newer media tablets are geared toward the mass market and entertainment purposes.

IDC forecasts vendors will ship 7.6 million media tablets in 2010, and 46.7 million in 2014.

Sarah Rotman Epps, an analyst with Forrester, said the research firm is reworking its own forecast for tablet sales in the wake of the massive success of the Apple iPad. Epps said Forrester define tablets as devices featuring an integrated screen for touching or stylus input, as well as cloud connectivity via WiFi or cellular. The screen? 5-12 inches.

"We think of tablets as multimedia, multi-functional devices," she explained. "We see cannibalization coming mostly at the expense of netbooks, as the tablet market grows."

ABI's Jeff Orr bemoaned the difficulty in covering the tablet market.

"The media tablet market is so early--and there's only one outlet to talk about, Apple--that it makes my job really difficult," he said. To frame his research, Orr tackles all gadgets, gizmos and devices between laptops and smartphones--since that is the space of such massive upheaval. "The market is evolving in between" laptops and smartphones, he said.

Nonetheless, ABI currently uses the same "media tablet" nomenclature to describe iPad-like devices, and defines the gadgets as intended for entertainment and media consumption rather than communications. The screen? 7-12 inches. The forecast? Eight to ten million this year, 40-50 million in annual shipments three years from now.

"It's so early" in the tablet market, Orr said. "It's still an experiment."

How is the mobile industry responding to the iPad?

In struggling to meet user demand, Apple has shown the light on the market potential for tablets. Indeed, 69 percent of U.S. online consumers own more than one PC--evidence, according to Forrester, of pent-up demand for additional computing devices.

"Consumers are not taught to want tablets until companies like Apple teach them," noted Forrester's Epps. "Tablets will become their other computer."

Will the wireless industry incumbents--Nokia, HTC, Motorola, Samsung and the rest--respond to the opportunity? Or will they take a wait-and-see approach? Click below on each vendor to take their tablet temperature. Those at the hottest end of the gauge are imminently poised to jump into the tablet game, while those lower down may be a little more hesitant.

Samsung's tablet temperature

HP's tablet temperature
Motorola's tablet temperature
Acer's tablet temperature
Nokia's tablet temperature
Dell's tablet temperature
HTC's tablet temperature
Sony Ericsson's tablet temperature


ABI's Orr noted that last year's recession cut into many of the research-and-development programs among the world's equipment vendors, both big and small. Thus, many don't have the essentials in place to tackle the tablet market with appropriate speed.

"Rather than introducing those products in the spring period, they may be introduced in the fall," Orr said.

But, as IDC analyst Will Stofega pointed out, vendors both large and small need to begin thinking about the tablet market now because today's emerging markets will be tomorrow's developed markets--and consumers primed by PCs and smartphones likely will begin looking for their next electronics fix.