Tablet PC marketers push steadily forward

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It might not have taken the world by storm, but the Tablet PC revolution is a work in progress.

In November 2002, Microsoft CEO Bill Gates introduced Tablet PCs as the next big thing in personal computing at a press conference in New York that included appearances by famous Tablet PC users including actor Rob Lowe and author Amy Tan. Gates told the audience that digital ink would become as commonplace as the Windows desktop.

Yet almost two years later, most consumers still don`t know what a Tablet PC is. Only about 435,000 units were sold in 2003, accounting for less than 2% of the total notebook market, according to Gartner Group. Gartner doesn't expect the number to grow substantially for 2004.

vertical emphasis

So that's it, right? Like Apple's Newton, Tablet PCs just didn't catch on. Game over.

No, actually. According to many of the players in Tablet PC arena, the game is just beginning. Consumers don't know about Tablet PCs because until now most marketing efforts have focused on vertical markets like telecommunications and other field service industries. Manufacturers like Hewlett Packard, Toshiba and Fujitsu have also been working to improve and add hardware features. And Microsoft has been tweaking its Tablet PC operating system (the only one available so far) with a new version due this summer.

"The Tablet PC was never intended to go directly to the consumer market," said analyst Tim Bajarin, president of Creative Strategies. "Any kind of radical technology like this takes seven to 10 years before it hits the broad mainstream. ... A lot of traditional laptop companies will add tablets simply as part of the design."

Vendors agree. Fujitsu Director of Corporate Communications Megan O`Neil said, "We see the Tablet PC going mainstream within five years. Eventually, most mobile PCs will have the inking capabilities."

low-key

For now, manufacturers are introducing low-key consumer marketing programs such as standalone in-store displays, public relations efforts targeting key media influencers and informational tours on college campuses. At Toshiba, where one-third of the marketing department already uses Tablet PCs, they're working with retail partners like Best Buy and Circuit City to change the demo environment. Beginning in May, Tablet PCs will be accessible to customers who will be able to flip the screen or try the pen. Microsoft has been the only Tablet PC backer to create ads (for Windows Tablet PC Edition) with print ads featuring the Tablet PC and copy such as "Go beyond the notebook PC with the Tablet PC." Microsoft declined to be interviewed.

"We`re still in category creation mode," said Mona Pal, Toshiba customer marketing manager. "We expect a bigger back-to-school season this year. We expect sales to go from about 7% of our notebook sales up to 10% to 12%."

Hewlett-Packard still sells most of its models to the business market, but Mark Baerenstecher, HP global program manager for the Tablet PC, said they are constantly reviewing the consumer market and will be involved when the timing is right. HP did a test campaign with retailers in late summer 2003 but the "performance could have been a little better," Mr. Baerenstecher said.

getting the word out

"I think fundamentally the right marketing has been done so far. I'm sure some people would say we could have done it better. Given an infinite amount of funds? Maybe. But for the most part, Microsoft has already done that. They're doing a lot to get the word out," he said. "It's a matter of expectations and reality. And so far HP's Tablet PC is in line with what we expected."

Yet manufacturers also realize some changes need to be made before the Tablet PC is ready for a mass audience. One issue is price. Tablet PCs currently cost about $500 more than average notebook computers. Another is software, or the lack of it. Developers like Franklin Covey (organizers) and Zinio (digitized magazines) have created products for the Tablet PC, but manufacturers agree more is needed.

Some are content to remain only in the business market. Panasonic, for instance, only sells its Tablet PCs in a specially-designed rugged version and only within business-to-business verticals, with no plans to expand to consumers. Still other computer makers are not playing at all: IBM, Dell, Sony and Apple are all noticeably absent from the Tablet PC market.

"Most people who build technology underestimate the time it takes to go to market," said Jack Gold, analyst and VP-mobile and pervasive computing at Meta Group. "Microsoft and Bill Gates really believe that Tablet PCs are the wave of the future. And in the long term, that's probably true."

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