Tablets may ultimately cannibalize around 15 percent of the total PC market through 2014, which while material, doesn't deter the PC markets from seeing sustained growth over the next 5-years, according to RBC Capital Markets.
Our 15 percent cannibalization assumption is based on tablet pricing remaining about $500 for entry level tablets and pricing trending down inline with PC markets over the next five years, said Amit Daryanani, an analyst at RBC Capital.
The possible factors that could lead to the cannibalization of the PC by tablets are classified into consumer growth and enterprise growth, according to RBC Capital Markets.
From a consumer perspective, Daryanani believes there could be a material spike in unit sales if:
-- Tablet ASP's come down: If Tablet pricing can come down into the netbook range of $200-300 this could impact PC market. Without giving up too much of the tablet functionality and ease of use that could accelerate the process of tablets taking a bigger share of the PC market.
-- More compute: Especially as it relates to data creation requirements, Daryanani believes consumers would require and need more compute power than what is currently offered.
-- More memory: Current tablet models provide at most 64GB of memory. However for consumers who want to store more than just a few HD movies would need an external drive or some other storage solution, which again makes a tablet more of a companion device.
-- Flash: Support of adobe flash would enable more consumer adoption.
-- Printing: Easy access to printing or transferring the data from a smartphone would be another desirable feature.
-- Daryanani believes from an enterprise adoption perspective that a more robust security feature, MS Office support, integration/support of tracking mouse, and more compute power could spur adoption. Daryanani believes the most likely candidate to be competitive on a pricing standpoint is Hewlett-Packard Co. (HP), given its immense scale and an in-house operating system (WebOS).
From an enterprise perspective, Daryanani believes pricing may be a less material concern but factors that could drive further growth of tablets in enterprise markets would include:
-- Compute Power: More compute power than what is currently offered in tablets to manage and manipulate large spreadsheets, data bases and/or graphic designing. Essentially, if one is doing any level of data creation Daryanani believes they would need more compute than currently offered by tablets.
-- Document Fidelity: Portability of MS office documents into a tablet without losing the formatting or other edits is crucial for tablets getting deployed in enterprise environments, where MS office applications are omnipresent.
-- Mouse: A mouse is required for finer manipulation than what touch technology currently provides.
-- Security: A way for IT organization to secure your tablet and be able to wipe the tablet clean in case the device is lost/stolen.