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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. 

• 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

Before 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. 

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). 

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.

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. 

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?

The 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.

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.

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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Cutting-edge technology is expensive enough as it is; why overpay for the stuff that’s not a good value? Laptop Magazine’s Avram Piltch breaks down some of the worst all-time bargains in tech.

Hate gallery view? Go ahead and check out the post in one page here.

 

Laptopmag.com brings you in-depth reviews of the hottest mobile products, the latest tech news, helpful how-to advice, and expert analysis of the latest tech trends.

Microsoft Surface RT ($619 w/ Touch Cover)

How would you like a brand new convertible with a one-of-a-kind retractable roof for the reasonable price of $22,000? There’s just one catch. You must pay an extra $10,000 for the convertible roof you saw highlighted in all the commercials.

At its $499 base price, Microsoft’s first tablet costs the same as the fourth-generation iPad, the well-established leader in the tablet market. The attractive Surface has a worse screen than the iPad, it lasts 5 hours less on a charge and, at launch time, had only a handful of decent apps for its nascent Windows RT operating system.

However, you may want the Surface because of its heavily-advertised Touch Cover keyboard, a must-have accessory that will set you back an extra $119, even though it costs Microsoft only $16 to manufacture. That’s $619 for a new, unproven tablet which trails the $499 market leader in most ways.

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Voodoo Envy 133 ($2,099 – $3,299)

One of the most anticipated products of 2008, the .7-inch thin Envy 133 notebook was supposed to inspire its name in all of your friends. But at a starting price of over $2,099 that jumped up to $3,300 when fully configured, this 3.4-pound notebook was far too light on performance and specs to justify its heavy price.

The high-end Envy 133 configuration featured a modest 1.8-GHz Intel Core 2 Duo CPU, just 2GB of RAM and 64GB of internal Flash storage that copied files so slowly it was more of a Solid State Park than a Solid State Drive. Worse still, the notebook lasted just 2 hours and 32 minutes on a charge, making this ultraportable not very portable at all.

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Cisco umi ($599 Plus $24.99 a Month)

Psst. Come over here. I have a copy of this week’s Village Voice newspaper that I’d like to sell you for just $25. What? “It’s free,” you say? Well, my version has slightly sharper print so I’m sure you and millions of others will be more than willing to pay my premium.

Cisco applied this perverse logic to its 2010-era umi home telepresence system, which cost an eye-popping $599 for equipment plus $24.99 a month to provide a slightly better video chat service than competitors like Skype and Google offered for free. With the umi, which was short for You / Me, you could hook up a camera to the top of your TV and either talk to one of the five other umi users — or with your friends on Google Talk who were paying nothing at all.

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Sony VAIO P Series ($899)

Back in 2009, netbooks were as hot as the Jonas Brothers, and everyone wanted to get in on the action. On the low end, non-computer companies like Sylvania (yes, the light bulb people) were making their own versions of netbook. On the high end, Sony tried to reinvent the genre with its 1.4-pound, 8-inch VAIO P.

At first glance, the VAIO P was an engineering marvel. The system was thin and narrow enough to fit into an overcoat pocket while providing premium features like a bright 1600 x 768 pixel display and 3G connectivity. However, with super-sluggish performance, mediocre battery life and a stiff keyboard, the notebook wasn’t good enough for extended use. At $899 and up, the value just wasn’t there when the best premium netbooks at the time cost $499.

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Apple Lisa ($10,000)

In the early 1980s, few people had seen a computer with a graphical user interface. Xerox had been experimenting with GUIs since the 1970s and launched its Xerox Star 8010 in 1981, but it was Apple’s Lisa that finally brought windowed operating systems to the mainstream in early 1983.

Unfortunately, for the privilege of rolling a mouse around Lisa’s 12-inch, 720 x 360 black-and-white screen, you had to pay a cool $10,000 ($22,000 in 2011 dollars) and put up with a pair of unreliable “Twiggy” floppy drives that used their own proprietary 860K disks. At the same time, you could buy a brand new Apple IIe, the leading home computer, for just $1,395, a Compaq Portable PC for $3,590 or an original PC for far less.

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Nokia Booklet 3G ($1,720 Over Two Years)

Subsidized netbooks with two-year 3G contracts were always a bad idea, but never more so than with the 2010 Nokia Booklet 3G. For $299 and a commitment to give AT&T $60 a month for two years ($1,720), unsuspecting shoppers got an attractive but incredibly incapable 10-inch netbook.

Perhaps Nokia and AT&T thought the Booklet’s Macbook-esque aluminum chassis would distract consumers long enough that they would make it through the return period without noticing the system’s glacial 4,200-rpm hard drive, painfully slow Atom Z530 processor or cramped keyboard.

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DIVX ($499 Plus $4.50 per Disc)

How would you like to pay $500 just for the right to pay another $4.50 every time you want to rent a movie? That was the premise behind DIVX, a late 1990s movie rental system designed by someone who had watched too many episodes of “Mission Impossible” and loved the idea of self-destructing media.

After buying a $500 DIVX Player, you could then purchase any of about 400 movies on disc for about $4.50. A mere 48 hours after you watched the film, it would expire and you would have to throw away the disc or pay another $3.25 for another 48 hours. Circuit City, the leading seller of DIVX players and discs, touted the new technology as a convenience that would help you avoid late fees. However, the player was $100 more than a regular DVD player and the discs were more expensive than renting a film at the store.

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BlackBerry PlayBook ($499)

Research in Motion Co-CEOs Mike Lazaridis and Jim Balsillie must have been eating some psychotropic blackberries when they laid out the MSRP for the company’s first tablet in spring 2011. At $499 – the same price as the industry-leading iPad 2 – the BlackBerry PlayBook provided a significantly smaller screen and an operating system so half-baked that it didn’t even include native email support at launch.

Within a few months, the price of the PlayBook had dropped dramatically. Today, you can get one for just under $180, which is still too expensive. Much-better 7-inch Android devices like the Nexus 7 and Amazon Kindle Fire cost around the same price and have a far better selection of apps.

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Motorola Laptop Dock ($499)

A dual-core smartphone is already more powerful than an older PC, so why not use it as one? That was Motorola’s thinking when the company launched the Laptop Dock, a keyboard / screen combo that turned the Atrix 4G handset into a notebook runnin, the browser-centric Webtop OS.

At $499 by itself, or $300 when bought together with the Atrix, the 11.6-inch Laptop Dock cost the same or more than a full-fledged Windows 7 netbook that could run all of your software. Considering that its cramped keyboard was worse than those on most netbooks, Motorola’s dock was one of the biggest rip-offs of 2011.

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AT&T VideoPhone 2500 ($1,599)

Today, anyone can conduct an online video chat for free, using Skype, Google Talk, FaceTime or any of a dozen other solutions. But back in 1992, we didn’t have broadband Internet or HD webcams. So when AT&T released the VideoPhone 2500, a standard landline handset that could send and receive video, the world took notice . . . of its whopping $1,599 price.

Considering that it both sent and received video on a sluggish 19.2bps modem, the VideoPhone 2500′s 10 frame-per-second performance was pretty impressive for the time. However, to use the device, you needed your friends and family to buy it too, something few consumers were willing to do.

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Apple Macintosh G4 Cube ($1,799)

How much extra would you pay for sexy? If you were a Mac maven in 2000, Steve Jobs thought you would spend $1,799 for the PowerMac G4 Cube, a tiny cube-shaped version of Apple’s PowerMac G4 desktop. Unfortunately, at that price, the Cube was a square peg trying to fit into the round hole of Apple’s product line.

At the time, consumers could pay $1,000 less and get an iMac, which came with a monitor included. Creative professionals who had the money to spend preferred to buy a PowerMac G4 tower with better performance and the ability to upgrade.

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Motorola Xoom ($1,079 Over Two Years)

When they released the first true Android slate in early 2011, Google and Motorola were a year late to the party and yet they wanted hundreds of dollars more than Apple’s belle of the ball.

At a time when the iPad 2 cost $499 with Wi-Fi, or $629 with contract-free 3G service, the Motorola Xoom launched at $599 and required you to sign a two-year contract with Verizon at a minimum of $20 per month ($1,079), or $799 sans contract. While the cheaper iPad 2 had access to thousands of apps, at launch, the Xoom had a measly 46 tablet-optimized apps.

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IBM PCJr ($669 to $1,269)

A stripped-down chip off the old block, 1983′s IBM PCJr (PC Junior) would have been overpriced at any cost. At $1,269 with the absolutely necessary floppy drive ($669 without), the PC Jr. was quite a bit cheaper than full-fledged IBM PCs of the time, but about on a par with the Apple IIe and far more expensive than home-computing competitors like the $200 Commodore 64 and $150 TI-99/4A.

Unfortunately, with its horribly stiff chiclet keyboard, slow performance, and a slew of compatibility issues that kept it from running popular PC programs, the JR wasn’t worth the premium. That year, I arrived at computer camp earlier than the other kids, just so I could grab a seat in front of a real PC rather than this awful offspring.

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OQO Model 01 ($1,899)

In launching the world’s first 14-ounce Windows PC, OQO’s 2004 Model 01 was a true trailblazer. However, even by early 21st century standards, the Lilliputian laptop’s 1-GHz Transmeta CPU, 20GB hard drive and 256MB of RAM provided sluggish performance. Meanwhile, the tiny keyboard just felt awkward.

Considering that you could get a fully functioning laptop for hundreds of dollars less, it was hard for most consumers and business users to imagine buying this severely neutered novelty for such a high price.

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Newton MessagePad 2100 ($1,000)

By 1997, Apple had improved the software and solved a lot of the handwriting recognition problems on its Newton PDA. Perhaps because of these improvements, the company felt it could price its grayscale handheld at a whopping $1,000, more than some PCs cost.

At the same time, the PalmPilot Personal cost just $299. Yes, the Newton had a better processor, more storage and a larger screen, but none of these features justified spending $700 more, even during the Internet bubble.

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