The Apple iPad has created a completely new device category for the wireless electronics industry. The launch of over 30 new tablet models by consumer electronic firms at the Computex show in June signalled that the industry firmly believes that this device format will attract much-needed new customers and create new revenue opportunities. This new phenomenon is timely for mobile operators because the combination of mobile-broadband-enabled smartphones, laptops and notebooks is failing to compensate for the declining revenue from narrowband services.
We share the view that tablets will perform well. Mobile operators can exploit the market push coming from major consumer electronics companies (such as Apple, Dell, Huawei, Lenovo and Qualcomm) to great effect. These devices can offer users a truly personal, high-quality content consumption experience, combining a rich Internet browsing experience with high-quality video and book-reading applications in a convenient form factor. Although not essential for personal content consumption, they should appeal to a significant proportion of users who want to carry as few multimedia devices as possible when on the move. As a result, we expect tablets to become substitutes for netbooks, which offer similar functions, but a less-satisfactory user experience. Tablets’ lack of a physical keyboard and support for voice services limits their use as a work or content-input device. Hence, spend on them will be discretionary, rather than necessary – even in advanced economies. This will limit the size of the tablet market and the pace of the market’s development. However, the convenience of the form factor will nonetheless drive significant market growth.
The desire to carry these slimline devices will drive demand for mobile broadband (MBB) services among tablet owners. Most tablets are likely to be both cellular- and Wi-Fi-enabled. We forecast that almost 24 million tablets will be sold in 2011, and about two-thirds of them will be connected to the Internet using MBB connections (see Figure 1).
![Figure 1: Sales of tablets, and active MBB-enabled tablet net additions and installed base, worldwide, 2010–2014 [Source: Analysys Mason, 2010]](/PageFiles/16145/Figure_1.gif)
Figure 1: Sales of tablets, and active MBB-enabled tablet net additions and installed base, worldwide, 2010–2014 [Source: Analysys Mason, 2010]
Mobile operators should benefit from the growth of the tablet market in two ways:
- At a service level, MBB-connected tablets should promote incremental growth in transport revenue for operators. As handset penetration is approaching saturation in mature telecoms markets, mobile operators are seeking new areas of service revenue growth. Smartphones and MBB-enabled PCs and laptops have provided good incremental growth to counter falling voice and messaging revenue. Tablets, as a new device category, will provide an uplift to this revenue stream.
- Mobile operators that have direct distribution channels also have the opportunity to enhance margins through the sale of tablets through those channels. For some time, many operators have been offering MBB-enabled laptops and netbooks through such channels. More-advanced operators have expanded this capability to include other consumer devices, such as media centres and in-car navigation packages. The plethora of tablets coming onto the market will provide new opportunities for operators to increase revenue through established distribution assets.
Tablets will also provide mobile operators with an opportunity to create and deliver new multi-device tariff plans. As operators seek to reduce churn and tie customers into their services, we anticipate that this is an inevitable move.