CES Craze: Tablets, Tablets and More Tablets!

At this year’s Consumer Electronics Show (CES), tablets are king.

In fact, according to the hosting organization, the consumer electronics industry is expected to grow by 4% this year after a 1% fall last year, despite the fact that many categories — including LCD TVs, Blue-ray players and home audio systems — are expected to keep slipping.

Instead, tablets and smartphones should provide the stimulus, accounting for 40% of all consumer electronics purchases for 2013. Revenue from tablets is pegged for 25% growth on the year, making the category even hotter than smartphones.

Manufacturers recognize the demand for tablets and realize that Apple (NASDAQ:AAPL) is no longer invincible in the category. Although the iPad had the tablet market to itself when released in 2010 (at one point that year claiming 95% of the global market), it’s now on the verge of slipping below 50% market share.

That’s thanks largely to Google’s (NASDAQ:GOOG) continual improvement of the Android operating system (which powers the majority of non-Apple tablets), along with the success of smaller and cheaper tablets from the company and Amazon (NASDAQ:AMZN). In addition, Microsoft (NASDAQ:MSFT) is now in the fray with a new tablet operating system — Windows RT — and its own Surface tablet line.

Plus, in a maturing market where consumers are no longer fixated on having a dominant “it” model, there’s more opportunity for newcomers to break in. And when a market grows as rapidly as the tablet one has (tablet ownership in the U.S. rose 32% in just eight months last year, which doesn’t include the holiday shopping season), niches open up and give companies the opportunity to offer a specialized product and have it be profitable.

In Las Vegas, we’ve seen the reaction to this new tablet market opportunity. While Apple doesn’t display at CES and Amazon, Google and Microsoft already trotted out their new hardware in the fall, virtually every other consumer electronics manufacturer was displaying their own version of the device.

For example:

  • Privately held Vizio, apparently not satisfied with its efforts to disrupt the TV market over the past few years, was displaying its first tablets: 7-inch and 10.1-inch Android models.
  • Gigabyte Technology, a Taiwanese company better known for producing motherboards, was displaying a pair of high powered Windows 8 tablets. The bigger of the two is a 2-pound, 11.6-inch model with 64GB to 256GB of Flash storage, 7-8 hours of battery life, HSPA+, a 1080p IPS display, kickstand and magnetic keyboard. At $1,000 it’s meant for professionals and could give Microsoft’s own Surface Pro (whenever it’s finally released) a run for the money. (Gigabyte S1185 Tablet right, image from Electronista).
  • There was also a slew of tablets aimed at kids, with modest specs, grippy handles, lots of padding and parental controls. Young’uns are a huge market now that prices are coming down and app stores are filling up with educational software and casual games. Even Polaroid is getting in on this game with its imaginatively named “Kids Tablet,” a $149.99 7-inch model that comes preloaded with Barnes & Noble’s (NYSE:BKS) NOOK e-reader and bookstore software. (Polaroid Kids Tablet below, image from Polaroid).

  • Then, there were the extremes: Panasonic’s (NYSE:PC) 20-inch tablet with 4K resolution; the $1,700 Lenovo 27-inch “multitouch table” that runs Windows 8 and weighs in at 17 pounds; the  $1,300+ Razer Edge Pro gaming tablet; and the PaperTab — a 10.7-inch tablet with a flexible display that’s a collaboration between Queen’s University (in Canada), Plastic Logic and Intel (NASDAQ:INTC).

Heck, even computers — as PC-makers attempt to stay relevant — are being impacted by the tablet craze. A perfect example is the Asus Transformer AiO, an all-in-one PC that incorporates an 18.5-inch HD tablet as the computer display. The computer has its own CPU and hard drive which runs Windows 8, but push a button (or undock it if you’re feeling strong) and the 18.5-inch tablet is running Android Jelly Bean using Nvidia’s (NASDAQ:NVDA) Tegra 3 chip.

It’s an interesting approach that pushes convergence without sacrificing the PC, but the result is a bit of a monster. Two different operating systems from two different companies doesn’t exactly sound like a recipe for seamless integration and a happy user experience. (Asus Transformer AiO PC, image from CNET).

Regardless, based on what’s been shown at CES, it’s going to be interesting to watch how both the computer and tablet industries progress in 2013.

From my perspective, the things to watch for will be the iPad’s dwindling market share (Apple will remain the single biggest tablet maker, but 2013 will be the year it officially no longer dominates the category), what happens with Windows Pro tablets and the future for the plethora of choices now available. Consumers may be more willing to choose tablets from other companies, but stores only have room on their shelves for so many different vendors.

The PC/tablet hybrid is something I find particularly fascinating. To me, this has some potential once the rough edges are smoothed out, but I only see two camps capable of pulling off that kind of convergence: Apple (that Asus Transformer would make an awesome iMac/big iPad combo) and the Windows 8 camp. For it to work, you need top-notch hardware design and a smooth transition between the two operating systems. While Asus has put together some nice hardware, throwing Android in the mix as it did with the Transformer AiO isn’t going to cut it.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2013/01/ces-craze-tablets-tablets-and-more-tablets/.

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