Abstract

MIC Perspective

Product Differentiation between Tablets and Notebook PCs Diminishes, Competition Intensifies

At Computex 2012, it is observed that branded vendors view Microsoft's next generation OS Windows 8 as a tool to end Apple's dominance in the tablet market and to stop further market erosion of notebook PCs caused by tablets. Looking at the industrial design of ultrabook PCs running on Windows 8, several branded ultrabook vendors not only focus on lightweight design of the products but also combine functions of tablets, aiming to offer complete touchscreen feature of Windows 8 OS. Therefore, notebook PCs can deliver productivity applications as well as convenience of Metro UI to users. Product design differences between tablets and notebook PCs are thus disappearing.

As regards competition and replacement effect among tablets and traditional notebook PCs running on Windows 8 (x86 architecture), Windows RT (ARM architecture), Apple iOS series, and Android series, at the present stage, it can be seen that development of Windows RT is still uncertain as Asus was the only branded vendor releasing Windows RT-based tablet at Computex 2012. Therefore, tablets adopting Microsoft's platform will mainly be x86 Windows 8 devices in the short term.

Windows 8 to Deliver Lightweight Design, Tap Demand for Enterprise Applications

In the enterprise application segment, x86-based Windows 8 tablets have price advantages when comparing with notebooks such as ultrabook PCs. The tablets are also equipped with productivity applications and emerging man-machine interface such as the Metro UI. It is projected that Windows 8 OS will be appealing to users with relatively high demand for enterprise applications. Comparing with Apple iPad series products and Android devices focusing on multimedia applications, Windows 8 tablets are likely to create market differentiation in terms of enterprise applications. Windows 8 tablets are less competitive than notebook PCs as regards computing performance. However, as Windows 8 tablets feature enterprise applications with price advantages, it is projected that the products are likely to erode market share of entry-level notebook PCs.

Windows 8 tablets, however, are less likely to pose threats on Apple iOS series and Android-based tablets in terms of multimedia applications. Windows 8 tablets have no unique multimedia applications. Moreover, as regards tablets adopting Intel core i series or Clover Trail platform, the x86 architecture-based end-market products still consume more power than ARM-based devices. Furthermore, price tags of end-market products are unlikely to decline with the use of Intel chipsets. Therefore, as Windows 8 tablets do not offer longer standby time compared with ARM-based tablets and have no price advantages, it is anticipated that the Windows 8 tablets will be less competitive in terms of multimedia applications.

Generally speaking, it is forecasted that traditional notebook PC and ultrabook PC vendors will focus on mid-range and high-end enterprise applications, aiming to secure their positions in the enterprise and consumer markets. Windows 8 tablet vendors will emphasize on productivity applications and emerging man-machine interface in a bid to foray into the lightweight enterprise application market; while Apple iOS series tablets will continue to lead the multimedia application market, followed by Android series products.

Microsoft to Aggressively Enter Tablet Market, Windows RT Crucial to the Company's Future Development

As regards Windows RT, only three tablet branded vendors are rewarded Windows RT certifications. The current Windows RT tablets developed are used for demonstration purpose only, and the devices do not have Office, one of Microsoft's important tools, built-in. It is thus anticipated that Windows tablets will face difficulties when attempting to expand market shares in 2012 and in the first half of 2013. Not so many application processor suppliers can provide supports for Windows RT, and some processors adopting Cortex A9 dual-core fail to deliver optimized performance for the OS. To satisfy demand for relatively high resource software from Windows RT, the three processor suppliers have accelerated time-to-market schedules of Cortex A15 dual-core/quad-core chips. It can be seen that Microsoft and the suppliers all aim to expand their product portfolios with the release of Windows RT.

Windows RT tablets are projected to be sold at prices similar to iPad owing to several OS and hardware support factors. It is expected that not until the second half of 2013 when more tablet vendors releasing Windows RT tablets and more suppliers offering Windows RT-supported processors will the OS experience an increase in market share and further erode market share of high-end Android tablets.

Appendix

Glossary of Terms

List of Companies