The fragmentation of the tablet marketplace may suggest that there’s a place for a range of business models.
Brian Riggs, who blogs (and occasionally waxes poetic) at No Jitter, also contributes to the house blog of his employer, Current Analysis--and I have to say, this is a pretty cool site, with a variety of contributors and new content from Current analysts on just about a daily basis. Brian’s first post for the Current blog was called, When Is a Tablet Not a Tablet?, and I think he makes an important point about the class of devices we're calling "enterprise tablets." These are devices like Cisco Cius and Avaya Desktop Video Device, and Brian writes of them:
"Communications-centric 'tablets' from Avaya and Cisco are more likely to supplement rather than substitute consumer tablets end users are bringing to the office. The Avaya and Cisco devices are more likely to replace traditional desk phones and video conferencing terminals, than more general-purpose consumer tablets."
This is part of a larger trend I think we're seeing in the tablet world, where a real fragmentation is beginning, as tablets get more special-purpose. The Amazon Kindle Fire, for example, is basically an e-reader-plus, and this is the right approach for Amazon to take. We tend to have tunnel vision that sees communications as the only reason to have a tablet--and certainly some connectivity is indispensible in just about any electronic device today. In fact, connectivity will probably be indispensible to just about any thing, as the potential for the "Internet of Things" starts to become evident. But connectivity for connectivity's sake doesn't have to be every device's purpose.
As a form factor, the tablet still is in the stage where it's really a variation on something else. Apple gave us the iPad as a kind of smartphone on steroids. But the Amazon approach is that of the e-reader on steroids. And that's a pretty good basis for a business model, considering that the Yankee Group has projected that e-book sales will surpass mobile app sales by 2013. In other words, the content for e-readers is really where the revenue is; the Kindle Fire as a device is a steal at $199. But it makes sense that Amazon is focusing on the content; he consumer mobile app was born commoditized, but the newest Stephenie Meyer "Twilight" book will never be a free download. (You could argue that free is still too much to pay for a "Twilight" book, but I digress....) And since Amazon is a vertically integrated provider, it has an interest in optimizing its device for books.
The same may be true for the enterprise providers, though their model is much less of a slam-dunk than Amazon's. When I talked to Cisco's Tom Puorro about the Cius, he discussed it as a portable device—one that lets you easily move between your various bases of operation (home, work, road) and keep the same communications interface. But using Cius as a true "mobile" tablet was less of a consideration.
The other factor is that Avaya and Cisco clearly have no intention of putting their tablets on the path to commoditization that consumer tablets are already on. Avaya's Desktop Video Device is heavy in every sense of the word, including when it comes to price. And while Cisco made a point of dropping Cius's list price to a level close to the iPad—sub-$700—that's not actually what you'll pay. As Doug Carolus demonstrated in this No Jitter post, by the time you add in user licenses and other requirements, you're near or above $1,000 to get the device on line.
The value proposition for enterprise tablets is as much on the "enterprise" as on the "tablet." That proposition is untested, to say the least. But the fragmentation of the tablet marketplace may suggest that there’s a place for a range of business models.
