Tuesday, April 30, 2013

The war for ecosystems

As Apple continues to dominate the tablet market, other players are jumping in to make the most of this episode of device convergence. Despite popular belief, this time too, the war is not for dominance in the hardware business. The one who can integrate ecosystem (hardware, software and content) successfully will have the last laugh

At 660F, San Francisco woke up to a cool morning on June 27, 2012. Home to the most awaited tech conferences around the world, the city has witnessed some of the most significant announcements that have changed the world of computing. That day was important for tablet lovers and online advertisers alike. Google, the leader in online search and display advertising business [96.4% of its revenues came from this source in FY2011] had stepped into the room of tablet sellers. The company announced the launch of the Android OS-based Nexus 7 tablet [manufactured by ASUS priced at $199] during its annual developers conference. Just a week back, Microsoft had joined the race with the Surface tablet. The word was out. With Apple sitting pretty with a 66.5% market share (CY2011 as per Gartner) – with the new iPad launched in March 2012 helping Apple deliver yet another record quarter in Q1, 2012 – and Amazon on a new high already with its low-priced Kindle Fire (with a share of 14% in 2011), the war to rule the tablet zone had got tougher.

Study the numbers, and you realise why Google’s interest in the tablet market is easy to understand. As per IDC, 17.1 million tablets were shipped during Q1, 2012 – a 120% growth y-o-y. Another encouraging forecast exists. Gartner claims that in CY2012, the count of tablets that will fly off the shelves will hit the 118.88 million mark – double as compared to last year (98.08% more to be precise).

Tablets are also growing attractive in the enterprise space. With this segment predicted to account for 35% of total tablet sales around the world by 2015 and with many workplaces expected to implement a BYOD (Bring Your Own Device) policy, the search giant sure found a good reason to invest in hardware. But optimism surrounding the green bot isn’t the only reason why Google got drawn into this game.

What was perhaps a bigger reason is the slower than expected rise of Android-based tablets. Last year, these tablets accounted for a 28.8% share of the market. This year, their portion is only expected to swell marginally to 31.1%. The fact that shipment of Android tablets, after having risen from the sub-3% mark to 44.6% in a span of just fifteen months (Q4, 2011) fell sharply during the course of a quarter to 32.0% (Q1, 2012; as per IDC) is bad news for Android [and a good one for the iPad (whose share rose 13.3% q-o-q to 68.0% in Q1, 2012)]. The shocking revelation that the Kindle Fire (which accounts for 54.4% of all Android OS-based tablet sales; as per comScore between December 2011 to February 2012) lost 12.8% market share in a span of a quarter to account for just 4% of global tablet sales in the first quarter this year meant Google – despite its disaster-laden history with Google-branded hardware – had to jump into the ring. Sounds desperate, but throwing in the towel – luckily or not – wasn’t an option. Not with Android. Not with tablets.

Onlookers claim that the search giant wants a big share of the tablet market. Some say it is gunning for Apple. Whatever it be, stakes in this fight has just gone higher.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
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