There has been intense speculation in the global media this week that Nokia will launch its first Lumia tablet with a Microsoft operating system at Mobile World Congress (MWC) in Barcelona, Spain, between February 25th to 28th, 2013.

Following extensive channel checks by our Tablet & Touchscreen Strategies (TTS) service, we understand Nokia will not unveil a tablet with a Microsoft operating system at this year's Mobile World Congress (MWC).

We believe Nokia's strategy will be "smartphones first" for MWC this year.

And rightly so. Nokia will want to expand its Lumia smartphone range and solidify its growing leadership of the global WP8 market. 

Tablet fans will need to be a little more patient!

According to the latest research from our Tablet & Touchscreen Strategies (TTS) service, global tablet shipments reached 25 million units in the third quarter of 2012. Apple iOS slipped to 57 percent global market share, allowing Android to capture a record 41 percent share.

Peter King, Director at Strategy Analytics, said, “Global tablet shipments reached 24.7 million units in Q3 2012, rising a sluggish 43 percent from 17.2 million in Q3 2011. Demand for tablets slowed due to ongoing economic uncertainty and consumers holding off purchases in anticipation of multiple new models, like the iPad Mini, during the upcoming Q4 holiday season. Apple shipped a disappointing 14.0 million iPads worldwide and captured 57 percent share in the third quarter of 2012, dipping from 64 percent a year ago. Apple’s slowdown allowed the Android community to make gains and Android’s global share of the tablet market now stands at a record 41 percent.”

Neil Mawston, Executive Director at Strategy Analytics, added, “Android captured a record 41 percent share of global tablet shipments in Q3 2012, jumping from 29 percent a year earlier. Global Android tablet shipments doubled annually to 10.2 million units. No single Android vendor comes close to Apple in volume terms at the moment, but the collective weight of dozens of hardware partners, such as Asus, Samsung and Nook, is helping Google’s Android platform to register a growing presence in tablets.”

Other findings from the research include:

• Global tablet shipments grew just 43 percent annually in Q3 2012, compared with 289 percent annually in Q2 2011. This was the weakest growth rate since the modern tablet industry began in Q2 2010;
• Microsoft captured a niche 2 percent global tablet share in Q3 2012. The imminent release of the new Windows 8 operating system will likely drive Microsoft tablet volumes higher during the Q4 2012 holiday season.

Exhibit 1: Global Tablet Operating System Shipments and Market Share in Q3 2012 [1]

[1] Shipments refer to sell-in. Numbers are rounded. The definition of tablet does not include e-book readers.

As we suggested over four months ago, Apple today announced the iPad Mini family. With a screen size of 7.9 inches, 7.2mm thick, 0.68lbs in weight, it is as thin as a pencil and easy to hold in one hand. A quick spec list is; Dual Core A5 processor, 1024 x 768 (same pixel count as iPad2), FaceTime HD camera, 5MP iSight camera on the back, LTE in the cellular versions, Lightning connectors and 10 hours battery life.

The configurations are much the same as all the earlier versions, starting with a 16GB Wi-Fi only version for $329 and $459 for the cellular version, and then running at $100 increments through 32GB and 64GB. The Wi-Fi versions start shipping on November 2nd and the cellular versions about two weeks later.

So, apart from the price being maybe $30 higher than we first anticipated, there are no real surprises, and these devices have long been factored into our forecasts.

The big question now, of course, is how consumers will make purchase decisions on the current range of hot 7 inch tablets; these include the Google Nexus 7 ($199 for 16GB), the Kindle Fire family (7 inch Fire HD at $199, 8.9 inch Fire HD $299), the B&N Nook HD 16GB at $229). All these devices will be available in November; each has both its strengths and its weaknesses. To those who study the purchase, the ecosystem will be important ? should I go for an iPad app device (275,000 available) or, should I go for a newer technology where there are less apps, or some of the apps were designed for phones, or should I not worry about apps and content at all and just save $100 or so? What about size, the 7 inch device is neat and fits in my jacket pocket, but I get a lot more screen real estate (approximately 35%) on a 7.9 inch, important when it comes to surfing and so on, even if it will not fit in my pocket?

It is perhaps a pity that the other tablets did not have an iPad Mini free run, so that they could get established. As it is, yes they will all sell some, their aggressive pricing will definitely appeal to budget restricted buyers and ensure that they do get some market traction, but given that the market leader, who has already sold 100 million iPads, has now entered the 7 inch arena, the bar has been raised again for Google, Amazon and B&N.

Rumors are emerging that Google will co-produce a Nexus Android tablet with Quanta and WonderMedia that will retail for under US$100 in Q4 2012. If the rumor is correct, it is likely to be available to entry-level consumers in developing and perhaps developed markets in Q4 2012.

Three initial points of analysis from our Tablet & Touchscreen Strategies (TTS) service:

1. Android is engaging in a race to the bottom on pricing. Google wants to force down Nexus pricing to attack rivals like Apple;

2. The profitability of such an ultra-low-price Nexus tablet is going to be modest at best;

3. The usability of such a low-price WiFi tablet will be questionable. Compromises will inevitably be made on component quality to minimize costs.

More analysis of ultra-low tablet sales by region can be viewed by clients here.

The Wall Street Journal is reporting today that Apple is rumored to have ordered global production of 10 million Apple iPad Minis for delivery in Q4 2012. That is a number which chimes broadly with this report we published on our Tablet & Touchscreen Strategies (TTS) service back in June 2012. The rumors of an 8-inch iPad Mini have been circling for some time and the hype is now starting to reach fever pitch as an expected October / November launch approaches. For sure, an entry-mid-level WiFi tablet market is rapidly emerging in both developed and developing countries. For example, Amazon Kindle Fire and Google Nexus 7 are actively targeting US consumers with smaller screens, while Micromax is beginning to gain solid traction across India with several 7-inch models. Will the iPad Mini launch with 3G cellular connectivity as a differentiator? Probably not, due to cost reasons, but it will almost certainly be tetherable to 3G hotspot cellphones. More analysis of cellular tablets, and tablet sales by display size, can be viewed by clients here and here.

Tablets used to be simple; they were slates, flat devices born to demonstrate the joys of touch computing. At IFA in Berlin, vendors tried to change our thinking, we were faced with a plethora of different shapes, form factors and definitions. Some of the terms used to describe tablets at IFA included; sliders, convertibles, detachables, hybrids, pop-ups, binders, swivels, dual displays, clamshells...the list goes on. One thing for sure is that there is going to a blurring of the lines between some of these Tablets and some Ultrabooks hitting the markets soon.

Multiple vendors mostly from the traditional PC/Notebook space displayed products which they hope will break through the clutter in the tablet and Ultrabook space. These include Toshiba, Lenovo, HP, Dell, Samsung to name just a few. Our IFA show report summarizes the product announcements and targets for these new devices.

Vendors in their quest for some differentiation from the sea of slate products have innovated and should be commended for not simply copycatting slim slates but:

How do tablet buyers feel about deviating from the mother ship design paradigm?

and, Will consumer, business buyers accept alternative form factors?

Out Tablet and Touchscreen (TTS) service has recently completed new primary research with tablet owners and buyers in UK, France, Germany, US, China and Japan in which we asked users about different form factors as well as their interests in a range of accessories including attachable and Bluetooth keyboards.

While carrying cases and sleeves are almost universal, the attach rate and interest in other accessories varies significantly by vendor and country. For example docking stations have 1.5 to 2X higher attach rates on Apple devices than other vendors in Western markets. Interest in keyboards though is consistently high single digit/low double digit across countries.

The following chart from the US market offers a positive potential picture (depending on pricing) of course for different form factors in the tablet/ultrabook categories.

Interest level in alternative tablet form factors

So what is the outlook for tablets/ultrabooks in form factors other than the iconic slate? SA does see a future for such devices with some variance across Asia and W. Europe as well as US. We have just published a forecast in our Tablet and Touchscreen service of tablet sales by screen size Tablet Sales by Display Size Forecast and we will shortly be publishing one by form factor, but we do see alternate form factors especially the convertibles capturing high single digit share of sales over the next few years.

There will be significant changes in the tablet market in the next 1-2 years in terms of:

% sales in display sizes both bigger and smaller than the de facto standard 10 inch.

Significant activity in both entry tier and premium tier priced devices

The OS battles with Windows having the potential to capture one in six sales.

The market and value share taken by Chinese and Japanese vendors.

Our Tablet & Touchscreen analyst team will be happy to discuss these items and the supporting reports and forecasts published in the service with clients. Contact us at #tts@strategyanalytics.com

Amazon has just announced their expected range of new goodies. The existing Fire tablet was cleared out last week and now we know the replacements. Jeff Bezos told us that customers are smart "Why? Because they're (other tablets) gadgets, and people don't want gadgets anymore. They want services that improve over time. They want services that improve every day, every week, and every month. Kindle Fire is a service."

Now, when you are a company with an ecosystem as big as Amazon, you can afford to say that, we all know that the Fire tablet is a vessel to deliver Amazon video, music and shopping services and that's where they make their money. "We want to make money when people use our devices, not when they buy our devices." Bezos noted during the event.

This is very different from Apple; their pricing policy is not designed to maximize the average sales price of a particular product, but to maximize the enterprise earnings of Apple as a firm.

Interestingly, in the latest financial reports, Amazon forecast a third-quarter operating loss, albeit on massive revenue. They're going to spend to build the infrastructure and capacity to deliver the products and services that they feel the consumer wants, let's just hope for them that consumers buy their Fires in great quantities and drive those new services revenue, which is much more profitable than their traditional online retail business. Otherwise, the plan will backfire horribly.

So, what is the new tablet proposition?

A Kindle Fire HD, 16GB 7 inches. $199. £159.

A Kindle Fire HD, 16GB 8.9-inch model $299.

A Kindle Fire HD with 4G LTE wireless , 32GB 8.9-inch model $499

The LTE version comes with a very attractive new data plan for the US. 250MB a month, 20GBof cloud storage, $10 Amazon credit, all for $49.99 per year.

Limited amount of data at 250MB but great price.

So, this is the next stage in connected devices, hardware prices that most OEMs can only dream of, but revenue streams driven by a content ecosystem that is second to none.

Now we know the products, we know the launch dates, which is November 20^th for the 8.9 inch models, and next week for the 7 inch version. What we don't know, is the other 'E'. In our TTS Service, we have spent the last two years talking about the 2 'E's; one is the ecosystem and Amazon passes that test easily, the second 'E' is the experience - how does the consumer feel when they pick up the Fire and start to use it. The first Fire failed the 'Experience' test; in the coming days and weeks, we hope to get our hands on the new Fires and see if they have overcome their shortcomings last time; if they have, then they will be a force to be reckoned with, but only of course in the regions that have rolled out the Amazon Appstore which is now available in the U.K., Germany, France, Italy and Spain as well of course, the USA.

Early reports suggest this generation of Kindle is much improved on the first gen, but one unannounced piece of news may concern some potential buyers - all new versions of the Kindle Fire and Kindle Fire HD will have ads and sponsored screensavers built into them as now is noted on the Amazon website and there is no option to opt out of them. For some, it's not a huge deal but for others it could cause them to look for another device.

At the same event, Amazon also launched three new Kindle reader models - $179 for 3G, $119 for Wi-Fi, and old Kindle gets a slight upgrade and a $69 price. The key standout here is a new Paperwhite display, offering a much enhanced reading experience. They are natural progressions and definite improvements. The key question is 'is Amazon cannibalizing its own reader market with Tablets, consigning e-readers to the niche market?'

There are lots of changes ahead in the tablet market starting with growth in 7 inch displays, stronger penetration on mid and low-tier pricing and rejuvenated OS competition with Windows 8 soon to be on deck. All these point to great choice for the consumer but intense competition for the vendors and service providers.

Finally, we have to wonder if a price war is on the verge of breaking out among major tablet vendors in the US. A price war is going to put pressure on Apple's juicy hardware margins and make it harder for Amazon and others to derive profits from Android tablets. We don't have long to wait to see how Apple react and how they position their new sub-8 inch tablets in the coming weeks. Watch this space.

According to the latest research from our Tablet & Touchscreen Strategies (TTS) service, global tablet shipments reached 25 million units in the second quarter of 2012. Apple rose to 68 percent global market share, its highest level for almost two years. Microsoft tablets remain niche, but attention is turning to the upcoming Windows 8 launches.

Global tablet shipments reached 24.9 million units in Q2 2012, jumping 67 percent from 14.9 million in Q2 2011. Demand for tablets among consumer, business and education users remains relatively healthy. Apple shipped a robust 17.0 million iPads worldwide and maintained its strong market leadership with 68 percent share during the second quarter of 2012. Apple continued to shrug off the much-hyped threat from Android and the iPad’s global tablet share is at its highest level since Q3 2010.

Android captured 29 percent share of global tablet shipments in Q2 2012, remaining static from 29 percent a year earlier. Global Android tablet shipments grew by more than half to 7.3 million units. Despite high expectations for companies like Amazon, Samsung, Acer and Asus, the Android community has yet to make a serious dent in Apple’s dominance of the tablet market. Unspectacular hardware designs, limited uptake of cellular models and a modest number of tablet-optimized services have been among some of the main reasons for Android’s mixed performance so far.

Other findings from the research include:

• Global tablet shipments grew 67 percent annually in Q2 2012. Demand remained relatively healthy, although this was the industry’s slowest growth rate since the finger-driven tablet market began in Q2 2010, as shipments of some Android and Apple products moderated slightly in a volatile world economy;

• Microsoft captured a niche 1 percent global tablet share in Q2 2012. The upcoming release of Windows 8 later this year cannot come quickly enough for Microsoft, so its hardware partners, like Dell, can start competing more effectively in the tablet space.

Exhibit 1: Global Tablet Operating System Shipments and Market Share in Q2 2012  [1]

It is being widely reported a top civil court in the United Kingdom has provisionally ruled that Apple will need to place a notice on its website for several months stating that some of Samsung's Galaxy tablets did NOT copy the iconic iPad's hardware design. The provisional ruling also requires Apple to place adverts in major national UK newspapers, like the Financial Times, to state the same claim. Only the UK, and no other country, seems to be affected at this stage. If the UK ruling gets implemented, this will be a small psychological win for Samsung, following some minor legal losses against Apple in other parts of the world recently, like the US. The UK is the largest tablet market in Western Europe, bigger even than Germany and France. We forecast the active installed base of tablets to grow over 100% in the UK this year. More details of that UK forecast, and 87 other countries worldwide, can be downloaded by clients of our Tablets & Touchscreen Strategies (TTS) service from this published report.

So far June is showing itself to be a news-filled month for tablet announcements. Microsoft announced it is entering the hardware space once again with the Microsoft Surface tablets. Available in both ARM and x86 architectures, the devices will bridge the gap between tablets and ultrabooks and unify the Windows experience across all mobile devices. Today Google announced the Nexus 7 as well as the Nexus Q and some updates to Google Play. Add to these rumblings in the blogosphere about Amazon’s next Kindle Fire and we have the making of an action packed, exciting summer tablet season!

Google is partnering with Asus for its first Nexus Tablet, the Nexus 7 (pictured below). The Nexus smartphones have typically been high-end, best of breed devices aimed at competing with the iPhone while showing off an unaltered Android OS.  For full disclosure, I own the Galaxy Nexus and am thrilled with most aspects of the device so there does exist potential for a slight personal bias. But for the tablet, Google addressed the low tier with a $199 7” device. Google is clearly subsidizing a good chunk of the costs as Amazon did with the Fire with expectations to make the money back in content.

Despite its lower price it still has fairly impressive specs including 1280x800 resolution, Tegra 3 chipset, HDMI out, and weighs just 340 grams. It will also be running Android 4.1, referred to as “Jelly Bean.” Most importantly, battery life is on par with competitors at 9 hours. The Nexus Q, an Android computer for the home, was also introduced and looks to be a huge step for Google in entering the living room, growing the importance of its cloud solutions, and a better way to get onto the TV than its previous attempt with Logitech.

It appears as though Google is not replicating its Nexus smartphone strategy with the Nexus 7. Instead of focusing on the premium 10" market segment, it is going for the lower end 7” market segment. This is due to two factors: 1. Competing with Apple in the 10” segment has shown to be difficult at best. 2. The lower-end 7” segment offers a much larger opportunity for growth regardless of whether or not Apple comes out with a smaller 7” device as the 7" iPad will likely retail for a considerable amount more than the Nexus 7.  Furthermore, we see the low end of the market growing significantly more than the premium tier.  (For further information, please see our Forecast by ASP due out later this week).  There are only a handful of 7” devices with any significant traction and the Kindle Fire, one of the most popular devices in this segment, is only currently available in the US, greatly limiting its addressable market. The Nexus 7 will have much broader availability, giving Google a strong advantage in terms of global market share and therefor greater economies of scale. They also have economies of scope with their roots in the OS as well as experience in the smartphone market.

Google Play has also been updated with Magazines, Movies, and TV shows. The amount of media available on Google Play is tremendous and I believe Google needs to make a strong advertising campaign in order to get this across to consumers to overcome some of the stumbling blocks it had earlier along with the confusing recent name change.

Amazon is also rumored to have an upcoming announcement for the latest iteration of the Kindle tablet. There are many who believe this will be the previously talked about “Hollywood” tablet, a 10” device that will most likely be similar build quality to the Kindle Fire. It would likely need to retail at a significant discount to the iPad’s $499 intro price point in order to gain any traction. The other is possibility is that Amazon decides to upgrade its current form factor with improved specs and build quality and remain focused on the $200 price point. I believe this would be the better move for Amazon as it will have more success competing against Google at a similar price point than Apple at even a $100 discount.

Amazon continues to have a strong library of content but Google is quickly building its arsenal of eBooks as well as music, movies, and TV shows. For now, Amazon may continue to have an edge in content, if not in actual numbers, at least in consumer awareness. Google will most likely have an advantage in terms of hardware specs and build quality. Both companies offer a cloud storage service that will play a stronger role as the market develops, however, Google’s position is stronger as it operates across all devices, enabling a more consistent and unified experience from smartphone to tablet to desktop, a position that is furthered by the introduction of the Nexus Q.

So how will this play out? Amazon displayed an impressive level of sales in its first quarter in the tablet market but the enthusiasm for the device seems to have lost its flame. When Google partners with OEMs to manufacture its Nexus devices, they have historically been top quality and relatively successful devices. However, this time Google is changing its strategy a bit and clearly going for more quantity and market share. How well Google does depends not only on how well they continue to build out their ecosystem of eBooks and multimedia but also how well they market it. To date it has not been marketed well and the usability of the store falls quite a bit short of iTunes or even Amazon. I believe Google will have an advantage due to their hardware but only time will tell if they can gain traction with Google Play.

See Related Tablet Reports:

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=7483

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=7405

See Related Content Reports:

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=7493

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=7459