Tablet market gearing up; Android gaining market share

The PC manufacturers are for some tough time ahead. In fact, even if your main business is centered around making Laptops, be ready to face some rough weathers going ahead. Why? Here is the reason - according to latest report from market intelligence firm ABI Research named Media Tablets, Ultrabooks and eReaders Research Service, in 2013 approximately 150 million tablets (up 38% year-over-year) are forecasted to ship globally worth an estimated $64 billion (up 28% from 2012) in potential end-user revenues. This is mainly because of  convenience and mobility benefits afforded by tablet 

As far as the market share of operating systems is concern, the tide is slowly turning in favor of Android. About 60% of last year's tabletshipments used Apple's iOS operating system software while 37% were based on Google's Android OS (or development forks of Android, such as found on Amazon's Kindle Fire slates). The remaining 3% OS share consisted of Windows (Windows 7, 8, or RT), BlackBerry Tablet OS, and unidentified OS implementations.

Growing appetite for mobile data and suggested approach for India

Growing appetite for mobile data globally

Juniper has published it’s latest report on Mobile data traffic forecasts. As per them, the total mobile data traffic will exceed 90,000 Petabytes by 2017. What is more interesting is that 60% of this data will be offloaded to Wi-Fi networks and only 40% of the data generated by mobile devices will be carried through the cellular network by 2017. The report also emphasizes the roll that the small cells are going to play going forward.

Mobile data growth – Indian scenario

India today is on the verge of data revolution and in the current decade, data will transform the Indian telecom industry the way voice did in the previous decade. Indications are that data contribution from 2G will continue to rise, and 3G and LTE adaption will augment this growth. while the telecom industry in the rest of the world obtains 35-50% revenues from non-voice services, India derives only ~15% of sales from non-voice/ data services. Projections by UBS for major telecom players in India indicate that the non-voice revenues are going to be ~30% of total revenues for these players by 2020. These projections may well be surpassed if India is able to achieve a good broadband penetration backed by the recent policy pronouncement on National Broadband Plan.  As against the current broadband subscriber base of 14.68 million, the National Broadband Plan envisages provision of 160 million broadband connections (22 million DSL, 78 million cable and 60 million wireless broadband) by the year 2014. It is likely that the share of wireless broadband may be much more than the expectations as, like other countries, in India also; the data revolutions will piggy back on wireless broadband. 3G and Broadband Wireless Access (BWA) are expected to aid the growth of economy by boosting broadband growth.

Nokia Siemens Networks (NSN) M-Bit report indicates that mobile data usage in India has grown at 54% growth in 7 months and is likely to double every 12-14 months. This report can be accessed at http://www.nokiasiemensnetworks.com/sites/default/files/document/india_mobile_data_-_mbit_index.pdf . Evolution of data services in China provides some insight for the potential for the data segment growth for India. Data service revenue constitutes 30.6% of total service revenue in China as compared with 12.6% in India in FY11, giving an indication for strong data services growth trajectory in India in coming years. Credit Suisse estimates that over the next three years, data could more than double in size to a US$14 bn industry in India, contributing over half the incremental industry revenue and add 500 bp CAGR to an otherwise slowing voice industry. They estimate 3G’s contribution to mobile EBITDA to rise to 9-13% (from less than 5%) by FY3/14

Wi-Fi offload – a solution to handle growing data volumes and speeds

No doubt more and more carriers are adapting to Wi-Fi. Recently AT&T had inked a pact with Boingo - one of the leading Wi-Fi service provider having more than 600000 Wi-Fi Spots around the globe. Going forward the carrier-Wi-Fi adoption will be gather speed mainly because of two developments –

a)   NGH (Next Generation Hotspot) and Hotspot 2.0 specifications along with 5GHz enabled devices.

b)   Carrier-grade small cells along with Wi-Fi will enable high levels of capacity and along with the macro network will provide commercial and financial success to the operator.

Now what’s there for India in all this? Ironically, there are not many Wi-Fi hotspots in India currently. Given that almost one-sixth of the world's mobile subscribers are in India and that the country is already spectrum starved, in future offloading the mobile traffic on Wi-Fi is the only feasible and practical solution to cater to the growing hunger for data services.

ITU studies and other major research firms have already pointed out that the data requirements of future can never be met by increased availability of spectrum even if spectrum efficiency improve considerably. India cannot rely on vacation of frequencies by Defense ministry as the chances of this happening are remote. And even if this happens it will be a slow process. Thus demand and supply of spectrum in India will always have wider gaps than in other countries.

India specific approach – A Public Wi-Fi hotspot network

In such a scenario, it becomes important for the India to have a large number of Wi-Fi hotspots in almost all major cities and towns. There are two ways of doing this. The first way of approaching the problem is that the market is left to itself and the telecom operators or third parties like Boingo creates a Wi-Fi hotspot network. However the problem in this solutions can be  -

·         - The commercial criteria and not the country/public good at large will drive the hotspot creation

·         - All operators will target the same places for hotspot creation like Airports, bus and railway stations, big malls etc. They will end up creating duplicate infrastructure and in process may not get the return on investment. India missed the bus while the mobile towers were being erected and this resulted in sheer waste of resources by way of creating redundant infrastructure. All operators invested in mobile towers at same time and at same spots.

·         - Such approach slows down the rural penetration as all operators are busy spending their money in big cities. At least for Wi-Fi, we can eliminate this approach.

This leads us to the second and more practical approach of policy intervention to ensure that a common Wi-Fi network is created across major cities that can be shared on payment basis by all operators. This will help in savings on one hand and better ROIs on other. An added advantage can be faster rollout even in tier II and tier III cities. The Bharat Broadband Nigam Limited (BBNL) had been created by Government of India to roll out a common optical fiber network that can be shared across telecom service providers. On similar lines, BBNL can also be entrusted to create a common Wi-Fi network funded through USO. However, the entity will be able to make money once the Wi-Fi network is used by telecom operators. A Wi-Fi hotspot requires back-end connectivity, preferably on fiber so as to ensure that large numbers of users are supported by the hotspot at higher speeds. Suggested approach will ensure that BBNL will identify Point of Presence (POPs) for optical fiber as per the hotspot requirements. If implemented, such a solution can not only help in solving the spectrum crunch, but will also help Indian citizens to get higher broadband speeds at affordable prices – an objective that the NTP 2012 envisages to meet.

Mobile phone market booming in India

According to a study by  market research group IDC, Mobile phone market in India grew  to 218 million units, a 16 per cent year-on-year growth from CY 2011. Smartphone in the country grew by 48 per cent to 16.3 million in 2012 against 11 million in 2011.

Local vendors have remained dominant in sub-$100 price band while they pose serious competition to the global vendors in the $100—200 price band. 

Android continues to be the dominant player in the Indian smartphone market. 

As per IDC. the mobile phone market is expected to continue its growth into 2013, driven by the stupendous growth of close to 70 per cent in the smartphone market.”

Smartphones - Market share

As per the latest reports published by the comScore Google Android continued to lead among smartphone platforms, accounting for 53.6 percent of smartphone subscribers, while Apple secured 34.3 percent. For the three-month average period ending in October, device manufacturer Samsung ranked as the top OEM with 26.3 percent of U.S. mobile subscribers (up 0.7 percentage points).

Top Mobile OEMs

	Share (%) of Mobile Subscribers
	Jul-12	Oct-12	Point Change
Samsung	25.6%	26.3%	0.7
Apple	16.3%	17.8%	1.5
LG	18.4%	17.6%	-0.8
Motorola	11.2%	11.0%	-0.2
HTC	6.4%	6.0%	-0.4

Smartphone Platform Market Share

121.3 million people in the U.S. owned smartphones (51.9 percent mobile market penetration) 

Top Smartphone Platforms

	Share (%) of Smartphone Subscribers
	Jul-12	Oct-12	Point Change
Google	52.2%	53.6%	1.4
Apple	33.4%	34.3%	0.9
RIM	9.5%	7.8%	-1.7
Microsoft	3.6%	3.2%	-0.4
Symbian	0.8%	0.6%	-0.2

Mobile Content Usage

In October, the percent of mobile subscribers in USA that used various types of contents are as follows - 

text messaging - 75.9 %(up 0.3 percentage points)

Downloaded applications -  54.5 % (up 1.9 percentage points), 

Browsers - 52.7% (up 1.5 percentage points).

Social networking sites or blogs - 39.4 % (up 1.5 percentage points) 

Game-playing - 34.1 % (up 0.3 percentage points), 

Listened to music on their phones -28.7 % (up 0.4 percentage points)

Tablet market forecast by IDC

International Data Corporation (IDC) has come out with latest quarterly forecasts for tablet market. As per IDC tablet market will increase its 2012 forecast for the worldwide tablet market to 122.3 million, up from its previous forecast of 117.1 million units. IDC also raised its 2013 forecast number to 172.4 million units, up from 165.9 million units. And by 2016 worldwide shipments should reach 282.7 million units, up from a previous forecast of 261.4 million units.

IDC also forecasts a decline in eReader market. IDC now expects 2012 eReader shipments to top out at 19.9 million units, down from the 27.7 million units that shipped in 2011.

As far as tablet operating system splits is concern, IDC now expects Android's worldwide tablet share to increase from 39.8% in 2011 to 42.7% for the full year of 2012. During that same time Apple's share will slip from 56.3% in 2011 to 53.8% in 2012. Long term, IDC predicts Windows-based tablets (including Windows 8 and Windows RT) will grab share from both iOS and Android, growing from 1% of the market in 2011 to 2.9% in 2012, on its way to 10.2% in 2016.

Tablet Operating Systems, Market Share Forecast and CAGR 2012-2016

Tablet OS	Market Share		CAGR 2012 - 2016
	2012	2016
iOS	53.8%	49.7%	20.9%
Android	42.7%	39.7%	21.0%
Windows	2.9%	10.3%	69.2%
Other	0.6%	0.3%	7.7%
Grand Total	100.0%	100.0%	23.3%

Source: IDC Worldwide Quarterly Tablet Tracker, December 5, 2012

Table Notes:

• Windows shipments include Windows RT, Windows 8, and Windows 7 tablets.
• Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.