Tablet computing: a new frontier of fragmentation

The arrival of Apple’s iPad has provoked huge levels of interest from consumers, telecoms operators, application developers, content providers, and the press. The market potential of the iPad and the wave of competing devices from other manufacturers to follow looks likely to be significant.

Nonetheless the introduction of tablet devices to the market adds yet another layer of fragmentation to an ecosystem that is already overburdened with competing platforms, standards and technologies. So how can Ovum’s developer survey help us minimise risk in a fragmented ecosystem?

The iPad is a solid opportunity but has limited scope for carrier differentiation. The iPad’s initial sales have been strong: Apple has sold 3.27 million iPads globally since its US launch at the beginning of April, and the device is now available in 19 key geographies in North America, Europe and Asia-Pacific.

 For telecoms operators, the 3G version is a solid opportunity to sell data connectivity, of which there are a number of available market propositions. These include pay as you go, post-paid SIM-only and the bundling of data add-ons into customers’ existing handset or wireless broadband contracts. This is a good revenue opportunity with minimal risk attached to it and it should be taken seriously. There is limited scope for differentiation through operator applications and services, however, so market competition will be led by data pricing and network quality.

As with the iPhone, operators are unable to customise the iPad beyond making their own applications available in the iPad App Store. In most markets they will not be acting as iPad retailers or subsidising the iPad, while contracts will typically be short term (month-to-month).

Standing out from the crowd will require iPad alternatives. In our view, many operators will find this frustrating and will be keen to deploy their own applications and services on tablet devices. The good news for these operators is that not everyone will want or be able to afford an iPad. Opportunities for device and service-based differentiation will arrive with competing tablet devices featuring other, more open software platforms.

As yet there have been few official announcements of tablet devices, although many of the major PC, CE and handset vendors have been making noises about launching tablets for several months. We can expect a wide range of devices and form factors from many manufacturers, with varying levels of platform customisation by OEMs and operators hoping to stand out from the crowd. The most likely software platforms include Android, webOS, MeeGo, and Google’s forthcoming Chrome OS. There have also been mumblings about Microsoft, RIM, and Sony entering the market, so the task for developers and service providers trying to choose which devices to target potentially becomes very complex.

The number three spot is still up for grabs

Of the leading smartphone platforms, only the iPad (iOS) and Android platforms have so far seen confirmed tablet devices. As yet there is no clear third contender in the tablet market.

RIM has not announced plans to build a tablet based on BlackBerry OS. Microsoft is launching Windows Phone 7 at the end of 2010 and has announced strict form factor requirements that do not currently include tablets. Palm’s webOS is way behind in smartphone market share, and no new devices have yet been announced following Palm’s purchase by HP (although HP has indicated that it plans to introduce webOS tablets). There have been rumors of a Google tablet based on Chrome OS – heavily geared towards web applications – but nothing concrete.

 MeeGo, as a hybrid of Nokia’s Maemo and Intel’s Moblin Linux platforms, is still very much under development and does not yet have a market presence. Nevertheless, MeeGo has a potential advantage in that its application environment is based heavily on Qt – also a key component of the Symbian platform – which could potentially ease cross-platform application development and leverage Symbian’s strong global market share. MeeGo will also attempt to harness the Linux developer community.

New device category adds complexity to developer landscape

Any of these platforms could feasibly be used in tablets, should the platform owners wish. However, until actual devices appear there is little information to justify strategic investment decisions in particular platforms. What is not in doubt is that they will add a new layer of device fragmentation on top of the complex mobile development issues that already exist in the well-established smartphone space, where the problem is already severe.

Fragmentation in any device category forces developers to make bets on where to invest their resources to maximise return on investment, and also for operators and content owners hoping to support the most popular tablets. A developer working on three versions of an app (for example for iPhone, Android, and BlackBerry) may soon have to support twice that number with the arrival of many new tablets.

Fortunately, most tablet platforms – current or probable – are heavily based on existing smartphone platforms, which is an advantage for many developers (relative to adopting a new platform) due to consistencies in programming methodology, APIs, and UI framework.

It is therefore likely that many smartphone developers will produce tablet versions of their apps if their preferred platform gives them the option. Nonetheless, they will still have to manage the large variations in the user experience across devices within each software platform: despite the platform similarities, a mid-range handset with a threeinch QVGA screen has significantly different capabilities, uses, and UI requirements than a ten-inch tablet optimised for media consumption.

Ovum’s developer survey helps us pick probable winners

Operators and OEMs hoping to launch successful tablets should assess the strength of the developer ecosystem supporting each tablet platform. Lessons here can clearly be learned from the smartphone world: the most popular smartphone platforms are all supported by strong developer communities, which is a trend that is likely to transfer to the tablet market.

Ovum’s survey of mobile application developers gives clear indicators of where the most successful communities are gathering and, as a consequence, signals of what could happen in the tablet market.

The survey shows that mobile developers are clustered around two groups of platforms: iPhone, BlackBerry, and Android on one side and Windows Phone on the other.

Moreover, most developers are willing or able to support three platforms – indicating that similar developer tactics may well hold for tablets.

 iPad and Android are the clear early leaders

This clearly favours the two tablet platforms that already appear to be assured of significant market share: iOS and Android. Both already have a strong presence in the smartphone space, enabling many developers to transfer much of their existing code base with relatively little pain.

For developers who are not already writing applications for these platforms, the availability of tablets may provide some extra incentive to switch.

This is already happening. The iPad is naturally benefiting from the strength of the iPhone platform and it is already becoming clear that it has a strong application ecosystem springing up around it. Many iPhone developers have already decided to produce iPad-specific versions of their apps – in many cases sold as a “premium” or “HD” version of the app with a higher price.

The iPad should therefore be the first tablet to support for most developers and operators: it has a large and energetic developer community, a proven application store model, and most importantly the iPad has shot to an early market lead in the category. It represents a minimal deployment risk for operators and developers alike.

The strong recent growth in Android’s smartphone market share, the growing appeal of Android devices comparable to competitors, and the likely emergence of Android-based tablets early in the second half of 2010, indicate that Android will probably form the second choice for tablet application developers (given the lack of BlackBerry and Windows Phone tablets).

What does this mean for operators and content providers?

The big question remaining for operators is whether it is worthwhile investing time and resources into differentiated tablet products, and to what degree it is worth customising these devices.

For operators with experience creating their own customised handsets, the temptation will be strong. However, most contemporary operatorbranded handsets are focused on low-end customers, or on delivering experiences on mid-range handsets that attempt to imitate the highend handsets.

In contrast, there isn’t really a low end for tablets: although OEMs will aim to produce lower cost devices relative to the iPad, these are still the equivalent of mid-range smartphones rather than feature phones. Successful tablet devices entering the market will necessarily be supported by an existing developer ecosystem and a range of thirdparty applications, often managed by a vendor or platform owner.

Consumers will be expecting a high-end experience, but there are very few operators capable of competing with major vendors and platform owners when it comes to offering a desirable high-end user experience. The cost and complexity of creating a truly differentiated tablet user experience will be prohibitive for most network operators.

The option of providing basic data connectivity for whichever tablets customers bring to the network is the obvious minimal risk strategy in an uncertain market, and will be suitable for addressing the long tail of niche devices from smaller manufacturers and platforms. Providing reasonable and flexible data pricing plans will be key here.

Ovum defines a tablet as being a device with a color LCD screen of 5–12 inches, without a keyboard, with web browsing and multimedia functionality, and not running a full desktop PC operating system. We do not include dedicated e-reader devices in this definition.