Why Tablet PCs Haven't Gone Mainstream

In 2002, Bill Gates predicted the majority of PCs shipped by now would be tablet PCs, but their numbers are still just a fraction of the market and account for less than 2 percent of all laptop computers shipped.

While tablet PCs are accepted in increasing numbers by medical personnel, insurance adjusters and other vertical users, why haven't they gone mainstream?

Analysts cite at least eight reasons why tablets haven't done better, including their higher cost compared with standard laptops (up to $300 more), problems with touch technology and handwriting recognition software, and a shortage of suitable applications.

Recognizing those problems, tablet PC makers recently introduced new second- and third-generation devices in both the convertible and slate form factors. More new models are expected later this year running the Vista operating system, which will eliminate the separate Tablet PC Edition in Windows XP and the resulting inefficiencies, analysts said.

"Tablet PCs remain a niche product in the marketplace, used predominantly in vertical applications," said Leslie Fiering, an analyst at Gartner Inc. in a recent conference presentation. The tablet PC's "appeal to horizontal, mainstream users will continue to be minimal" because of higher costs, an "immature" touch interface and other factors, she added.

Fiering, who started following tablet PC trends at their introduction in 2002, makes the strongest condemnations of tablet PCs of five analysts interviewed for this story, but she also offers the greatest optimism.

In an interview, Fiering said she is still "bullish" about what the tablet PC can become. "It's important technology which is slow in coming," she said. "A lot of things have to fall in place, but it's real."

The tablet PC market has tracked fairly closely to Gartner's forecasts, although well behind what Gates was hoping for. Microsoft Corp. predicted sales of 1 million tablets in all of 2003, she said, while Gartner predicted sales of 230,000, about 5,000 higher than actual shipments, she said. That 1 million mark was finally reached in 2006.

Several analysts said they have had to consistently revise their forecasts downward for tablet PCs. About 18 months ago, market research firm IDC forecast 7 million tablets would ship in 2010, and last year revised the number down to 5 million, said IDC analyst Richard Shim. Gartner expects the 5 million mark to be hit in 2009.

IDC puts total tablet PCs at only 2 percent of all laptops that shipped last year, a number that might exceed 3 percent this year, Shim said. Other analysts said the amount is less than 2 percent.

"The forecasts have definitely been reduced since they first came out," Shim said. "A lot of hype has been built ... by Microsoft."

Slowness in sales of tablet PCs means nothing to many happy users, however. For example, at the Altoona, Wis., police department, two Lenovo ThinkPad X41 Tablet PCs have been in use inside police vehicles since 2005, and the department is planning to add as many as 15 newer models in the next year, said Officer Dana Brown, manager of the department's technology initiatives.

"There was a $200 premium over a standard laptop, but we wanted the versatility, and it has definitely paid off," Brown said. "We're getting away from the keyboard ... Tablets are more than a niche for law enforcement."

Proponents aside, here are eight reasons why tablet PCs haven't moved into the mainstream.

1. The price is too high.

Compared with a typical laptop, a tablet PC can run from $200 to $300 more, meaning most tablet PCs run from US$1,200 to $1,800, depending on functionality, Fiering said.

Gartner predicts that the price differential will not come down in 2007 and might not come down in 2008, depending on the prices of screen digitizers, the technology behind the screen that turns a touch from a finger or a stylus or the electronic impulse of a special pen into data that can be stored.

Fiering said that digitizer prices have proved "remarkably stubborn" and have not dropped as components tend to do in the PC industry over time. Part of the problem is that suppliers have not geared up for massive production, held back by fears that the market might not do as well as predictions, Shim said.

Even with higher prices, tablet PCs have sold a little better in vertical markets than earlier predicted, said Roger Kay, an analyst at Endpoint Technologies Associates Inc. in Framingham, Mass. In settings such as health care or manufacturing, tablet PC users have found using a pen or a finger to check boxes on a standardized form is easier, eliminating the need for the keyboard, he said.

The leading applications that benefit from a tablet PC are for clipboard replacement and handwritten annotation, Fiering said. Filling out forms for inventories, surveys or patient care has proved the most popular.

Also, insurance adjusters, contractors and students can use tablets to take notes. For example, nontext input for college chemistry or math majors who use symbols and formulas has been popular, Fiering said. Note-taking is also important in work situations. Salespeople and doctors, for example, must interact with another person, keeping eye contact while writing instead of typing on a keyboard.

Still, the price premium for tablet PCs is a real problem for further adoption and not helped by the fact that conventional laptop prices have come down in recent years, Shim said. When first introduced, tablet PCs cost as much as $800 more than a laptop, compared with $200 to $300 today, which shows there has been some improvement, he noted.

2. Touch technology hasn't caught on.

Despite the advantages of handwriting and touch to some vertical market users, touch technologies with a finger or a special electronic pen used in tablet PCs have not caught on in the mainstream.

The main reason they haven't caught on is that the keyboard is already widely used and is growing more acceptable to use every day, said Ken Dulaney, another Gartner analyst. "Many people have learned to type out of school," he said. Text messaging and instant messaging only contribute to the willingness to use keys for input, several analysts said.

Also, touch technologies in early tablet PCs have not been that accurate, unless the application is forms-based with boxes to check, Shim said. Touch also has not been promoted by vendors.

"Touch is intuitive, but there's so much more that we could do with it, and not enough applications have been written to take advantage of touch," he added. "Typing is a well-accepted input system, and keyboards are here to stay. We seem to become more and more attached to them."

3. Handwriting recognition software is not up to speed.

"If you write with a page of chicken scrawl, it ain't going to work," Fiering noted.

The software that can be used to turn handwriting into text is not fully accurate, meaning that if your handwriting is sloppy, the text recognition will be poor, Kay added.

Microsoft's Vista operating system is supposed to help with autocompletion of handwritten words but will not help with poor handwriting, meaning that handwriting recognition will not be a key driver of the tablet PC technology, Fiering said. Doctors and salespeople who take notes with tablet PCs are basically interested in saving their handwritten notes for their own use later on, not converting them to text, she explained.

But even saving handwritten notes can be a problem, Dulaney said. He recounted a time when he tried to impress colleagues at a meeting by taking handwritten notes on a tablet and then sending them around quickly to everybody afterward. "What they said back was, 'Thanks Ken, but I can't read your handwriting. Next time, type your notes.' "

By contrast, Brown said character recognition in the ThinkPad X41 Tablets has been "very good," when police officers have to write short descriptions on a form, perhaps one or two paragraphs.

"You have to train the software to recognize the handwriting," he noted. Primarily, having a tablet PC that takes handwriting input in the cramped police cruiser dashboard area means not having to provide added space for a keyboard. (The X41 is a convertible, which means the touch screen can be pivoted and placed on top of the keyboard, saving space over a fully opened laptop.)

4. Until Vista, tablet PC hardware needed a special operating system called Windows XP Tablet PC Edition.

Until Vista, users needed Windows XP Tablet PC Edition to use such functions as handwriting recognition and touch screen. This has meant that a user would face the annoyance of not being able to write in a password to start working, Fiering said. The user would have to type or tap in letters and symbols of the password first before getting to the handwriting capabilities. With the new Vista Business Edition, the tablet capability is integrated, and if the PC is enabled to take touch or pen input, the OS will recognize it, she said.

Vista will also improve navigation for tablet PCs, allowing flicks of the pen to scroll, go back, delete and undo, Fiering said. For example, a user can paste an item into a document or delete text with the flick of a pen. Because of these improvements with Vista, Fiering said, tablet PCs will improve somewhat in popularity.

5. Tablet PC form factors have improved, but still not enough.

Tablet PC screen sizes can only be so big or the machines will weigh too much for users to want to carry them, Dulaney noted. But having a larger screen is something many users want for greater space to take notes.

To keep the weight down, most tablets have 12-in. screens, and many models don't come with an optical drive as a result. None of the 12-in. models has a wide screen, Fiering said. Several manufacturers have introduced 14-in. screen tablet PCs, but they tend to be "heavy and unwieldy," and would limit a user's ability to carry the device to take notes as with a clipboard, Fiering said.

In earlier generations, mechanical problems were also evident, including problems with hinges on convertibles, Fiering said. Providing a latch that will work on the convertible models "still has defied all the hardware design engineers," she noted.

Many new second- and third-generation models are emerging, and Dell inc. is planning a convertible model in midyear, Shim said. Dell would not comment, but Shim said Dell's entry could dramatically improve sales of tablet PCs, if only because Dell has a reputation for its ability to flood the market with less expensive devices.

Dell's entry will also come about the time that miniature tablet PCs hit the market, including the 1-lb. OQO with a 5-in. touch screen. But both Shim and Fiering said ultramobile PCs, including tablet PC variants, will stay in their infancy for the next two years, partly because of high cost and relatively short battery life.

Hewlett-Packard Co., Lenovo Group Ltd., Gateway Inc., Toshiba and several other vendors offer tablet PCs, but "none are clear leaders and all are kind of running in last place," Shim said.

6. Tablet PC software for pen-enabled and touch applications has not been widespread, nor has it always been effective, until recently.

"The good news is that support for most key vertical industries and from major ERP vendors now supports tablet PC clients," Fiering said. Recently, more form application-creation tools have appeared. However, some typical PC applications, such as Adobe Systems Inc.'s Photoshop, don't fully integrate pen input, she noted.

7. Vendors of tablet PCs have largely failed to market the devices to consumers, focusing instead on vertical markets within the business segment.

"If vendors went after consumers, it would help" sales, Shim said. The value of touch screens, as an intuitive technology, needs to be marketed to consumers as well as mainstream business users, he said. Mininotebooks, such as the OQO, could be marketed to consumers who are also business professionals, possibly expanding the consumer base for tablet PCs.

8. Perceptions that tablet PCs have not done well in the market make it harder to persuade buyers to try them.

"There's a negative stigma about tablet PCs now. People think that once they've failed, they are a failure forever, and that's not necessarily the case," Shim said. "It's true that they haven't lived up to expectations, but that's not everything."

Microsoft was asked why its tablet PC has not reached the mainstream as hoped for five years ago, but a representative did not answer directly. Instead, the representative issued the following statement via e-mail:

"As users seek the benefits of mobile computing, Microsoft is enhancing mobile features for all notebook PCs, and Tablet PC functionality plays a key role in this vision. In particular, the Tablet PC gives users the flexibility to use multiple forms of input to interact with their PC in more natural ways and get more things done from more places than ever before. As the Tablet PC platform continues to grow, Microsoft expects to see Tablet PC functionality on all Windows mobile PCs."

Meanwhile, plenty of success stories are starting to appear, and Fiering said she has seen growing interest. "Tablet PCs have followed the typical Gartner hype cycle around new technologies, which means they go through a frenzy when first introduced to a trough of disillusionment" and, usually, a gradual upward climb, she said. "But they are still growing steadily."

Fiering said she used to hear of sales of tens of machines and then hundreds, such as nearly 500 Fujitsu LifeBook T4000 tablet PCs that are being used with campus Wi-Fi at St. Clare's Hospital in Weston, Wis., to collect, share and store patient data. Today, Fiering said, she is hearing of tablet PC orders by businesses topping 5,000 machines.

Even with such optimism, Fiering admitted there's a nagging question whether the tablet PC can become mainstream, and she counsels her clients about it. "I actually talk large business accounts out of buying tablets across the board, but if there's a particular problem to be solved with a particular work group, they're fine," she said.

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