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How Tablets Will End The PC’s Dominance In The Enterprise Market

Source: https://intelligence.businessinsider.com/welcome

The personal computer has met its match: the tablet. Ever since Apple launched the iPad in 2010, tablets have undermined the market for laptops and netbooks, and PC sales have been flat.

Through all this, PCs managed to maintain one stronghold: the enterprise market. But even in the enterprise, the tablet has now risen to challenge the PC. 

There is no longer any doubt that tablets are making inroads as work devices. The question is how the tablet advance will unfold. Will tablets create a brand new market for a “third device” that employees will use together with their PCs and smartphones, or will tablets cannibalize PCs by replacing them? 

The answer is that both trends will occur. 

  • Tablets will become a new third device for workers who already have company-issued PCs and mobile phones. These workers will use the cloud to sync their data across devices.
  • Tablets will completely replace PCs for many workers such as sales staff that don’t require the processing power of stationary, desktop PCs. 
As tablets push into the enterprise, there will be new business opportunities for certain well-positioned players in the mobile ecosystem.  
  • The enterprise is Microsoft’s main opportunity to challenge Apple and carve out a place for Windows 8 as a mobile platform. 
  • As tablets proliferate in enterprise settings, developers and startups will find a deep and lucrative niche for new apps. Currently, few developers are leveraging tablets’ natural advantages as employee and productivity tools. 

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The Tablet Market In Numbers

biifBefore we get into the specific role of tablets in office settings, let’s take a look at the overall tablet market and compare it to the PC market.

Worldwide sales of tablets hit 65 million in 2011, according to BI Intelligence estimates.

Sales will double this year to between 122 and 135 million units. By 2016 manufacturers will ship between 283 million and 442 million units.  

Here’s a table compiling our own and other firms’ tablet shipment estimates and projections: 


 Global Tablet Shipments (In Millions)      2011      2012      2016   
BI Intelligence 65 135 442
Forrester 56 n/a 375
IDC 71 122 283
Gartner 60 122 369
Average 63 126 367

In all, three quarters of a billion tablets will be in use by 2016, according to Forrester analyst JP Gownder

This compares to 2 billion PCs in use, but it took the PC market more than 20 years to accumulate an installed base of 750 million people, according to Gownder. Tablets are on pace to accomplish the same feat in only six years. Just like their cousin, the smartphone, tablets are moving into our lives at a very fast clip.

Tablet Growth In The Enterprise

It is much harder to determine how many of these tablets are being bought by companies for distribution to their employees. But by all accounts, enterprise purchases will be a huge driver of tablet sales. 

BII_TabletsE_CIOS1

While Forrester estimates that 12 percent of employees globally are already using tablets for work, a good percentage are using their own device, not one bought by their company.

Companies, meanwhile, are becoming open to buying tablets for their employees. 

A Morgan Stanley survey of CIOs in April 2012 found that two-thirds of them were already purchasing tablets for employees. (See chart to the right.)

The same survey also asked what percentage of employees would receive company-purchased tablets. CIOs reported that 9 percent of employees were being issued tablets, but that the proportion would rise to 14 percent by April 2013 (see chart, below). 

BII_TabletsE_CIO2

In September, Apple CEO Tim Cook said that 92 percent of Fortune 500 companies are testing or deploying an iPad, so it’s safe to assume that most enterprises are at least exploring how tablets fit into to their workplace, even if they aren’t yet buying them by the thousands.

Employees are certainly asking for tablets. In 2012, for every three smartphones employees requested, they requested one tablet, according to a recent survey of 1,500 IT managers sponsored by Cisco

As for how many total units companies will really buy, there’s a wide array of projections. 

  • Infinite Research estimates enterprises pu! rchased 14 million tablets in 2011. Enterprise demand will grow to over 96 million units in 2016 (or about one-quarter of tablet sales).
  • McKinsey is more conservative about the weight of enterprise sales, predicting that business adoption of tablets will drive about 4 percent of total tablet growth to 2016.  

Whatever the growth drivers, Apple’s iPad and its iOS operating system (shared with iPhones) will continue to own the tablet market, at least for the next few years.

But tablets running on Windows 8 are expected to pick up momentum by 2015 or 2016, in no small part thanks to enterprise adoption.

The Windows Opportunity

In 2016, tablets running on the Windows 8 operating system will command about 10 percent of the overall tablet market, according to a forecast from IDC.

BII_TabletsE_ConsumerPLatform

Some consumer surveys point to potential for even larger Windows gains. For example, twenty-five percent of consumers said they intended to purchase a Windows 8 tablet in a Morgan Stanley survey from 2012. 

Of course, this Morgan Stanley survey focused on consumers, and not enterprise users.

It was also conducted well before a spate of mixed reviews for the Surface, Microsoft’s own tablet designed to showcase Windows RT, the tablet version of Windows 8.

Nonetheless, th! e survey shows that Windows remains a strong name with consumers. That’s important for the enterprise market because through the influence of Bring Your Own Device programs, employees have clout in deciding what hardware their companies adopt and support. 

BII_TabletsE_Features

If Microsoft plays its cards right, Windows 8 could grow fast beginning in 2016, because by 2016 many companies will have fully depreciated their Windows 7 PCs and be ready for an upgrade. 

If the enterprise version of Windows 8 proves popular with businesses, Windows 8 tablets could become a popular device to replace the old PCs.

However, between now and 2016, Microsoft needs to improve its tablet offering in three ways: 

  1. Fine-tune the Windows 8 interface to be more intuitive and less buggy.
  2. Fill its Windows 8 store with enterprise apps that make better use of the touchscreen.
  3. Add more enterprise-specific features to Windows 8 and integrate them more tightly with Microsoft’s server and commercial cloud products.

Let’s assume Microsoft makes these improvements, and also continues to leverage its strengths as a distributor of Windows and the dominant Microsoft Office suite, which includes PowerPoint and Excel. (Even if Office becomes available on iPads, Microsoft can still offer Windows tablets that better integrate Office into the operating system.) 

Enterprise adoption of business-friendly Windows 8 tablets would help cement tablets as a replacement for PCs for office workers. 

Meanwhile, enterprise success for Windows 8 tablets means more enterprise developers will need to write more custom applications for the platfo! rm. A fe w enterprises have already begun. For instance, Rooms to Go, a furniture retailer with $1.3 billion in revenue, developed a Windows 8 app for its showroom that lets salespeople on the sales floor help customers on the spot, rather than marching customers back to a Windows workstation. 

(See section below, “Apps For The Tablet Workforce,” for more on enterprise tablet apps.)

Tablets vs. PCs?

Global PC And Tablet ShipmentsThe influx of tablets into the enterprise has already hurt the PC market, particularly the low-end, low-power netbook market.

PC shipments have basically been flat since the iPad launched the tablet market in 2010

IHS, a market research firm, has predicted that about 349 million PCs would ship overall in 2012, down from 353 million in 2011.

“Not since 2001 — more than a decade ago — has the worldwide PC industry suffered such a decline,” wrote IHS analyst Craig Stice.

But there’s a clear limit to how much the tablet can erode the PC market, even if Windows 8 enterprise tablets are a wild success, at least within the next three years. Some professions will need a more powerful computer than a tablet. These are the same professions who still use high-end desktop computers today: graphic designers, analysts, computer programmers, and so on.

Interestingly, the upswing in tablets in the enterprise could eventually have a boomerang effect and help! the des ktop PC market grow again.

Forrester analyst Frank Gillet foresees a day when workers will want a more powerful desktop machine parked at the office, and use a tablet as a portable device that syncs to the desktop, and to apps and documents stored in the cloud.

“Eventually tablets will slow laptop sales but increase sales of desktop PCs,” he writes. “That’s because many people, especially information workers, will still need conventional PCs for any intensely creative work at a desk that requires a large display or significant processing power.”

This will hold true until there’s a major breakthrough in battery technology (which researchers are working on). Until then, there will be a trade-off between power and battery life for tablets, with most tablet makers opting for battery life over power.

Tablet-Only Employees

Just like there will be a lingering need for some professions to use high-end desktop PCs, other professions will have no use for a PC at all.

Companies that were early to tablets are making plans for a certain proportion of tablet-only employees.

SAP Sanjay Poonen

Take German enterprise software company SAP, for example. The company began buying thousands of tablets in 2010. Today it has a fleet of 18,000 iPads and 4,000 Android tablets, mainly the Galaxy Tab and Galaxy Note, says Oliver Bussmann, SAP CIO. SAP is also currently testing about 50 Windows 8 tablets.

Employees with certain jobs, such as sales staff or SAP employees that work on customer websites, are issued a tablet of their o! wn choos ing.

Today, the tablet is an additional device that complements a PC, says Bussmann, but “we see more and more users” who don’t need their PCs once they get a tablet.

He says the tablet-only employee will never be 100 percent of SAP’s workforce “but I think in the next 12 months, certain user groups” will get tablets instead of PCs, such as salespeople.

As the company deployed all those tablets, the IT team started building apps for them and now has “50 mobile apps internally deployed,” Bussmann says.

SAP is a software development company, so some of this app development was a matter of eating its own dog food, meaning using the mobile tools internally that it wants to sell to customers. But even so, SAP’s experience demonstrates a trajectory many other large companies will take. For instance, one of the internally developed apps lets sales reps access SAP’s internal data about the customer, as well as relevant information about a customer from social media and news reports.

That way, as sales representatives “enter a customer meeting, they are always up to date,” Bussmann says.

Beyond SAP’s own workforce, the company also sees clients adopting tablets, and SAP wants to support all their clients’ tablet choices, according to the head of SAP’s mobile division, Sanjay Poonen. 

“We want to be a Switzerland-style player,” and support iOS, Android tablets, and Windows 8 tablets, he says. 

Over the next three years, tablets will become a common tool in the workforce. They will be used for more than just checking email, looking at a web page, reading a document, or carrying a presentation. They will become a new class of business tool on par with a laptop, and a good percentage of employees won’t want, or need, anything more.

Apps For The Tablet Workforce

Once employees own a tablet, even if they bought one themselves, they are likely to use it for work.  For instance, 21 percent of owners of the http://w ww.businessinsider.com/blackboard/ipad-3″>iPad 3 say they use it for work, and, across iPad owners generally, 13 percent say they use it for work, according to Consumer Intelligence Research Partners.

As tablets in the enterprise reach critical mass, more software and cloud services will be developed specifically for the tablet platform.

Today “most tablet apps for the enterprise, which are few and far between, aren’t that interesting,” says Ping Li, a venture capitalist with Accel Partners.

Li says he sees an influx of startups working on enterprise apps designed exclusively for the tablet.

He offers as an example the spreadsheet, which is one of the most used, most popular enterprise apps of all times. But using it on a tablet with a touchscreen is difficult “because Excel is not designed” for a small touchscreen, he says.

Apps that address that problem are just one idea. “There’s lots of opportunity.”

(In an effort to meet this challenge, Microsoft’s new version of Office has tried to make its enterprise apps, including Excel, touch-friendly.)

Tablet-specific apps have already begun to transform certain industries and certain roles within every enterprise.

For instance, tablets are replacing paper catalogs in the pharmaceutical industry and the food distribution industry.  Even as of 2011 most salespeople in these industries would still travel door-to-door with printed binders. Today they use an elect! ronic ca talog on an iPad, and tablet-specific order-entry software.

Tablets have also changed retail point-of-sale (POS) systems. It has become a new device that retail clerks can use while they roam the floor working with customers. It is capable of doing everything from checking on inventory to ringing up the purchase.

BII_TabletsE_Revel

POS systems like those offered by LightSpeed, Revel Systems, ShopKeep, and POSLavu replace a PC-based cash register with a tablet.

THE BOTTOM LINE

  • One-tenth of enterprise employees are already being issued company-owned tablets. 
  • Hundreds of thousands of employees may become mobile-only as PCs are phased out for certain job functions. 
  • Microsoft’s quest to create a tablet platform via Windows 8 will succeed in part thanks to enterprise preference for Windows. Windows 8 will lend impetus to a new wave of development focused on enterprise tablet apps. 

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Wednesday, December 12th, 2012 news No Comments

Android Market Share Flattens In The U.S.

Source: http://www.businessinsider.com/android-market-share-flattens-2012-6

Business Insider Intelligence a new research and analysis service focused on mobile computing and the Internet. The product is currently in beta. For more information, and to sign up for a free 30-day trial, click here.

After an amazing two-year run, it looks like Android’s U.S. market share is beginning to flatten out, according to comScore’s April smartphone market share numbers. Android’s share dipped slightly from previous month, and has been losing momentum throughout 2012. Apple, meanwhile, has been the big winner so far this year.

As we argued in our special report on the platform wars, Apple has a developer network effect that gives them the edge in the mobile market share race. Consumers are ultimately drawn to phones with the most and best apps. Developers, in turn, follow the money, and currently make four times as much money on iOS.

Our special report on the mobile platform wars →

Three reasons why Android can’t monetize →

The search for a third mobile platform →

comScore monthly mobile market share

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Tuesday, June 5th, 2012 news No Comments

iOS Has 77% Traffic Share in France–Why That Matters

Source: https://intelligence.businessinsider.com/welcome

Smartphone Shipments

According to a report by analytics firm AT Internet, 77% of mobile device traffic in France comes from iOS devices. (Link, in French) This is only an imperfect proxy for device market share (if iOS device owners surf more, for example), but it strongly suggests that iOS is dominant in France among smartphones, a finding that squares with this Paris-based analyst’s anecdotal experience. 

Here’s why France shows such a lopsided result and why it matters for the rest of the world and the mobile platform wars: France was a unique market for iOS early on because French courts mandates that Apple offer its iPhone on all carriers. Remember: when the iPhone came out on AT&T in the US, Apple pursued a conscious international strategy of building a partnership with the largest carrier in each country. In France, courts saw to it differently, which means that the iPhone was offered from the start on all major French carriers. 

Why is this important? Because it goes to show that Android’s surge in market share that we’ve been witnessing was due more to Apple’s delays in bringing carriers on board than in consumer demand for the Android brand. And, in turn, it suggests that now that Apple has adjusted to offering the iPhone on many carriers, it will reap many advantages.

As we wrote in our special report on the mobile platform wars, we think the upside for iOS is underestimated because it benefits from a developer network effect, which is what matters. Now that Android doesn’t have a carrier advantage, that effect should be magnified. 

Read our note on mobile network effects →

Read our special report: Who will win the mobile platform wars? →

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Tuesday, May 29th, 2012 news No Comments

The Tablet Market Keeps Behaving The Way We Expect

Source: https://intelligence.businessinsider.com/welcome


Tablet ASPThere were no real surprises during Apple’s iPad announcement: it was a refresh, with a “retina” (i.e., very high resolution) display, 4G and slightly better stats overall, at the same price. 

The biggest announcement had nothing to do with the new iPad, but with the old one: the iPad 2 will now sell for $399.

This is a crushing blow to all tablet makers not called Amazon: they couldn’t make a tablet to rival the iPad 2 for $500, so $499 ups the game. There is still a market (though smaller) for the $199 Kindle Fire, and potentially a $299 iPad-sized version of the Fire, which is rumored to be in the works, but even Amazon should feel the heat.

And it confirms what we believe is the broad overall direction of the tablet market, which is lower prices and ubiquity. We forecast that the market will reach 500 million units by 2015, which is significantly more bullish than most other analysts we’ve seen. 

MORE:

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Thursday, March 8th, 2012 news No Comments

Social Gaming Revenue Will Blow Past $5 Billion By 2015

Source: http://www.businessinsider.com/social-gaming-revenue-will-blow-past-5-billion-by-2015-2012-2


In our report on social gaming out today, we forecast that the U.S. social gaming market, including smartphones, will more than double and blow past $5 billion by 2015.

We think this will happen because social games will break into the mainstream as new types of games reach new audiences, and because companies will get even better at monetizing.

Our report also includes an in-depth look at industry trends and exclusive interviews with top industry executives. Click here to read it → 

Social Gaming Revenue

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Tuesday, February 21st, 2012 news No Comments

Google is The Least Diversified Business In Tech (GOOG, AAPL, MSFT, EBAY)

Source: http://www.businessinsider.com/chart-of-the-day-google-is-the-least-diversified-business-in-tech-2012-2

We love this chart from Dan Frommer at SplatF.

He calls it the “Eggs In One Basket” index, because it charts out the largest source of revenue as a percentage for all the major tech companies. (Profits would be a different story altogether.)

Google gets over 90% of its revenue from one source: Advertising. The next closest is Amazon with product sales. But, Amazon’s product sales are a mix of goods, so it’s not exactly the same as relying on just advertising.

For now, this isn’t a big problem for Google. The online ad market is still growing, and Google can capture a lot of the market. But, if things were to change, or advertising were to slow down, then look out.

What’s incredible about this chart is how diverse Microsoft is from a sales perspective. Its most dominant business group, Office, only accounts for 30% of sales. Read more on the chart from Frommer here →

chart of the day, revenue source by percentage for tech companies, feb 13 2012

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Tuesday, February 14th, 2012 news No Comments

How Apple’s Business Completely Changed

Source: http://www.businessinsider.com/how-apples-business-completely-changed-2012-1


What a difference a few years makes. Four years ago, Apple analysts fretted over iPod shipments and computer sales when an earnings call rolled around. All the early chatter is now focused on whether surging iPhone and iPad sales will even be enough to meet soaring expectations.   

The iPad, only a rumor two years ago, accounted for 24% of revenue last quarter. The iPhone, meanwhile, has jumped from 10% of revenue at the beginning of 2008 to 39% last quarter–and nearly 50% at the beginning of last year. With the tablet market still in its infancy and huge opportunities still available in mobile, the shift in Apple’s revenues has only just begun. All of which should futher underline the changing nature of their business: Apple is essentially a mobile computing company. 

Which is not to say the rest of the company isn’t growing. Mac shipments were up 20.7% year-over-year in the fourth quarter, according to Gartner–even as the rest of the PC market fell 5.9%. It’s just that they have not kept up with the astronomic growth of the company’s mobile products.

See our preview of Apple’s earnings here→

Apple Revenue Breakdown


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Tuesday, January 24th, 2012 news No Comments

How Apple’s Business Completely Changed

Source: http://www.businessinsider.com/how-apples-business-completely-changed-2012-1


What a difference a few years makes. Four years ago, Apple analysts fretted over iPod shipments and computer sales when an earnings call rolled around. All the early chatter is now focused on whether surging iPhone and iPad sales will even be enough to meet soaring expectations.   

The iPad, only a rumor two years ago, accounted for 24% of revenue last quarter. The iPhone, meanwhile, has jumped from 10% of revenue at the beginning of 2008 to 39% last quarter–and nearly 50% at the beginning of last year. With the tablet market still in its infancy and huge opportunities still available in mobile, the shift in Apple’s revenues has only just begun. All of which should futher underline the changing nature of their business: Apple is essentially a mobile computing company. 

Which is not to say the rest of the company isn’t growing. Mac shipments were up 20.7% year-over-year in the fourth quarter, according to Gartner–even as the rest of the PC market fell 5.9%. It’s just that they have not kept up with the astronomic growth of the company’s mobile products.

See our preview of Apple’s earnings here→

Apple Revenue Breakdown


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Tuesday, January 24th, 2012 news No Comments

You Won’t Believe How Big This Profitable 5-Person Startup Is

Source: http://www.businessinsider.com/you-wont-believe-how-big-this-profitable-5-person-startup-is-2011-11


adrian constantin tv links

We recently met with Adrian Constantin, the founder of video startup TV Links

TV Links is a video aggregator and search engine, serving up videos from hundreds of sites, similar to US startup Clicker.

It’s not the most innovative business in the world, but here’s what you should know about it: it’s bootstrapped, profitable, it claims 37 million monthly unique visitors, and it has only 5 employees

TV Links is not just impressive, it’s interesting because it’s a combination of two important trends: globalization, and the extreme capital efficiency of online businesses. 

Globalization: the company has developers in Romania, servers in Spain and in the US through Amazon, and most of its users coming from the US, UK and Canada. 

Extreme capital efficiency: the company basically outsources everything: hosting, advertising and even some development. 

TV Links’ one weak spot is that it gets the vast majority of its traffic from Google and so will live and die by SEO. But the company has ambitious plans; it’s even starting to produce its own original video. 

We once wrote that Instagram is the future of startups in part because of its extreme capital efficiency: it has over 10 million users and half a dozen staff (the other reason is distribution via app stores and social media). TV Links is another example of this extreme capital efficiency; unlike Instagram, it gets distribution through the more “traditional” medium of search engines, but unlike Instagram it’s also profitable. 

This new reality has broad implications beyond startups. If you’re wondering about the sky-high valuations of companies like LinkedIn or Twitter, part of your calculus should also take into account the fact that it’s now possible to build these very efficient businesses with huge global markets, something which wasn’t possible 10 years ago when “clouds” were still things in the sky and the internet population was counted in millions, not billions.

We will see many more of these ultra capital-efficient, globally-distributed online businesses in the future. 

MORE: Why Instagram Is The Future Of Startups →

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Wednesday, December 7th, 2011 news No Comments

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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