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Industry Forecasting

We are now witnessing one of the largest technological transitions in the last few decades as tablet devices are rapidly gaining market share at the expense of PCs. Tablet devices first appeared in the 1990s but they never succeeded in making serious inroads until Apple redefined the tablet category with the revolutionary iPad just as it defined music industry with the iPod. Apple had already sold 15 million iPads by the time it introduced second generation iPad 2 (Apple). Because of its focus on both design and functionality, Apple succeeded in convincing the customers that the tablet technology has finally matured to a level where its performance comes close to PCs while providing better portability and experience. Steve Jobs famously declared last year that the end of personal computer is near its end and will be replaced by the tablet (Harvey, 2010). If the recent events are any indication, Steve Jobs was right on the mark. In a recent move which is rarely seen in other industries, HP recently announced its intention to exist the personal computers and smart phones market despite being the largest global seller of personal computers (The Daily Mail, 2011).

Tablet will continue to gain share at the expense of personal computers and netbooks over the next five years. Even HP’s CEO Leo Apotheker has admitted that consumers’ computing habits are changing which may explain a decline of 17% in HP’s PC sales between May and July this year (Goldman, 2011). At the same time, tablet devices will continue to see improvements in performance and speed which will make them near perfect substitute of personal computers and also further speed up their adoption for work purposes. Intel, the world’s largest semiconductor chip manufacturer has also jumped at the opportunities presented by the emerging tablet market. Intel’s actions are an attempt to protect its share of personal computing which will be defined by tablet devices in the near future. The company is launching a processor named Oak Trail which has been designed to cater to the tablet market (Nicholas, 2011).

Tablets are also gaining share because they are succeeding in changing consumer habits. A recent survey by the NPD group revealed that consumers are using tablets more and more for email, internet browsing, and social networking and at the same time these tablet users are decreasing their use of personal computers for the above mentioned tasks. The survey also revealed that a significant proportion of smart phone owners find tablet experience to be better than smart phones because of bigger screens yet less weight than personal computers  (Garza, 2011). New York based ABI Research claims that tablets will become mass market products this year with 50 million shipments worldwide (Mobility Feeds, 2011).

Tablet is also going to gain mainstream acceptance because media and software companies have also embraced the tablet as the future of computing and are creating apps and content. Most major newspapers such as Wall Street Journal (WSJ) already offer tablet subscriptions and Reuters pointed out earlier this year that WSJ’s paid subscriptions on tablet devices has already exceeded 200,000 while the subscription base was only 50,000 about a year ago (Reuters, 2011). Virgin Group has even launched a tablet-only magazine named Project (Newsy, 2010).

Thus, as tablet devices continue to improve in functionality and their prices come down as a result of economies of scale, they will increasingly replace personal computers. At the same time, the embrace of tablet computers by content providers as well as software makers will also increase the appeal of tablet devices. Tablet devices are more intuitive and convenient which may explain why consumers have readily embraced them. Tablets have also been acknowledged by the largest technology companies such as Intel and HP who are always in touch with inside news. This just proves that tablets have succeeded in altering consumer habits to such an extent that the industry has been forced to take notice and adapt its operations accordingly.