Features

End-of-year report on Tablet, by Canalys: "ink-blots on copybook"

Canalys research has spent nearly 18 months researching the Microsoft "Tablet" PC design, and has monitored the 12 months since the launch. End of term report? Too much ink spattered about, too much mess.

The figures after the first year are, quite simply, "not quite a celebration," commented the report - Tablet PCs represent less than 1% of the total notebook market.

Canalys has covered far more, in its survey, than we can print here; but one thing it should emphasise, is the need for Tablet software to run on non-Tablet hardware. Right now, it's a ghetto device.

"There is clearly an opportunity for vertical solutions specialists. We are starting to see the first signs of some significant customer wins, but these are largely confined to the US and in a limited number of sectors, for example healthcare," summarises Canalys.

The worst news, for Microsoft, comes in the grain of hope that Canalys holds out: "Companies looking to solve very vertical, or occupation-specific problems in the different European markets will be looking for providers who understand their particular technical, operational and legal requirements," says the report. "It is imperative that Microsoft actively supports and encourages these developers."

It's intended sympathetically; but that's not what Microsoft wants to hear.

The biggest problem that Microsoft has, is that Tablet Edition of Windows XP is a completely different piece of software, as far as customers are concerned, from XP Pro. It's an added burden on support, helpdesk, installation and maintenance.

From Microsoft's viewpoint, there's virtually nothing different about Tablet Edition. It is Windows XP pro, plus a few bolt-on goodies - speech recognition, the touch-sensitive screen, and a few "ink" primitives and, of course, handwriting recognition. The bulk of the code remains identical.

But for a large corporation, support costs of its PC fleet are measured in the number of disk images it has to maintain. Big customers want all notebooks to run the same software. To do that, Tablet edition has to be mainstream. And what Canalys is saying, effectively, is "Forget it. It's niche."

A telling statistic in the list is the first below:-

- HP is leading Tablet PC vendor, with 31% of market, followed by Acer at 23%, then Toshiba and FSC

- 91,950 Tablet PCs shipped in EMEA, from November 7th 2002 launch to end of Q3 2003

- Just under one-third of the products shipped so far are in the slate form-factor

- Key notebook vendors - Dell, IBM, Sony - still noticeable absentees from the segment

- Vendors will need Microsoft's help to make substantial progress in 2004

HP's position at the top of the list is not due to any particular brilliance of design or marketing. Everybody in the industry knows that it has been spending its first year "seeding" the market - providing evaluation Tablets to potential buyers. Without mincing words, it gave two machines away to anybody who looked as if they would go on to order thousands.

But they haven't ordered thousands. Why not?

"Microsoft still isn't doing enough to help Tablet PC vendors - particularly in Europe," said Canalys director and senior analyst Chris Jones. "Rather than pricing the Tablet PC OS at a premium, adding to the vendors' costs and the end-user price, it should be doing the opposite: subsidising the vendors to help them get the market up and running."

Canalys published its five key recommendations for Microsoft back in July, namely:

Subsidise the price of the operating system, below that of standard Windows XP, for at least two years

Establish a dedicated EMEA Tablet PC marketing team and fund advertising, demonstrations, exhibition attendance and loan equipment

Provide substantial co-op marketing funds to OEMs: persuade the existing ones to remain in this market and attract new participants

Consider funding the cost of widening the product portfolio of existing vendors, so they will experiment with additional form-factors

Make a big push to increase awareness around the next OS refresh

Conspicuously, Microsoft has not done this. Perhaps, sensibly, because there are still problems with the Tablet that Microsoft can't overcome by spending advertising dollars. The hardware isn't built by Microsoft.

The vendors have not done an excellent job of translating the design into hardware. To be fair, most have been baffled by contradictions in the design requirements. A good tablet has to be light - people will hold them for long periods. But it also has to have excellent battery life. That has forced designers to do two things: first, make the display very small, and second: make the processor slower.

Neither tactic has succeeded. Even with a tiny screen, the weight of the battery means nobody has made the Tablet light enough, even with a Crusoe chip, a small battery has not compensated for slow processing.

Put that next to the newest, Centrino-powered notebook families, and the Tablets have mostly looked crap.

That wouldn't matter quite as much, but for the fact that the touch-sensitive (electro-sensitive, more accurately) display which is the key feature of the Tablet, adds a good $150 to the retail price.

As long as the market for Tablet PCs remains small (notes Canalys) there will be an understandable reluctance on the part of software vendors to develop applications specifically for the platform. Jones observes that there are two areas in particular that need attention.

"There is clearly an opportunity for vertical solutions specialists. We are starting to see the first signs of some significant customer wins, but these are largely confined to the US and in a limited number of sectors, for example healthcare. Companies looking to solve very vertical- or occupation-specific problems in the different European markets will be looking for providers who understand their particular technical, operational and legal requirements. It is imperative that Microsoft actively supports and encourages these developers."

The second area is ink. There are a few fun utilities, but nobody has seriously succeeded "in adding pen-based functionality and interface enhancements to the mainstream applications people already use on a day-to-day basis."

"Obviously Microsoft can do this itself in Office, but if the other big software vendors introduced upgrades that took advantage of the Tablet PC's features it would help increase awareness, interest and the overall credibility of the concept," Jones added. "While a handful of companies are offering packaged applications for the Tablet PC, they are typically not mainstream volume plays. As long as the Tablet PC is perceived as serving the needs of only very specific occupational groups it will be subject to long evaluation/sales cycles and low shipment levels."

That "one per cent of the notebook market" figure is the killer. It is also, of course, the opportunity: Canalys senior analyst Andy Buss points out that even a moderate crossover into the mainstream notebook market would provide a tremendous boost to the Tablet PC's fortunes.

Buss thinks that this will be difficult under the current circumstances. There just isn't the right choice, he observes.

"There is a fundamental problem in the range of products available. Not only are key vendors like Dell, IBM and Sony missing, but also the vendors that are present have a very limited offering, typically one or two models in the ultraportable class with 12.1" or 10.4" screens."

Buss points out that over 90% of notebooks ship with 14.1" or larger screens, and recommends that Tablet PC vendors add comparable convertible models to target the mainstream mobile professionals who demand a full size notebook, but would also appreciate the additional benefits of occasional note-taking and drawing using a pen.

"Most users do not spend all day standing up in a corridor. The smaller slate, convertible and modular Tablet PCs all have their place, but vendors, particularly those leading the notebook market, should not stop there. If the Tablet PC is to become a significant part of mainstream mobile computing, and we think it can be, then Microsoft needs to help its partners invest, promote, develop and expand their offerings."

Canalys could go a lot further. They're quite right: if you have a choice of a dozen notebooks from your major supplier, and only one (or maybe not even one) Tablet machine, you'll postpone decisions.

But there's an obvious way in to the "cross-over" that Buss is talking about. That is, to make a Tablet version available on all the more successful models of notebook.

If you take a successful, top-of-range notebook - even a semi-desktop replacement like IBM's T41 - it's clearly not a slate, nor suitable for standing in the road with, scribbling notes.

But if you're sitting at a corporate meeting, and you were to open the display right up, so that it lay flat on the table, it would be very convenient to be able to jot the odd aide-memoire on a touch-sensitive display.

All the notebook manufacturers have to do, is offer the touch-sensitive screen as an option, or upgrade on their standard models, and all Microsoft has to do, is sponsor this. "If you offer a Tablet version of a successful model, we'll cut the OS cost by X per cent" it should say.

The other innovation, would be a Tablet Pad; a peripheral for users of Tablet Edition on ordinary notebook and desktop PCs. It would be a sort of mouse, enabling the corporate buyer to specify a single operating system disk image. You wouldn't have the direct optical feedback of seeing your pen move on the screen, leaving black marks; but you would, at least, be able to take someone else's Journal or One Note document and scribble comments in the margin.

Until Microsoft has enough faith in Tablet Edition to make it the standard Windows XP variant, without charging extra, people are not going to feel happy about providing machines which generate data that the company can't handle. Ink is pouring out of the Tablets, and arriving on desktops which can't read it, can't manipulate it, and can't manage it.

It's a blot on Microsoft's copybook; and until it tides up its desktop, it can look forward to next term's report being equally scathing.