UK: Deloitte TMT Predictions 2014 - Technology - One Became Many: The Tablet Market Stratifies (Video Content)

Last Updated: 4 September 2014
Article by Deloitte Technology, Media & Telecommunications Industry Group

Most Read Contributor in UK, August 2017

1. One became many: the tablet market stratifies

The compact tablet, with an 8.5 inch or smaller screen, will become the predominant size of tablet. The surge in sales of compact tablets is driving a stratification of the tablet base, similar but more profound than that experienced in the smartphone market over the last two years. Aside from screen size, tablets are also diversifying by weight, processor speed, memory capacity and price.

In the first quarter of 2014, the installed base of compact tablets will surpass the base of classic tablets for the first time. By end Q1 2014, the base of compact tablets to be 165 million units, slightly ahead of the classic tablet base, with 160 million.

Compact tablets will have taken segment leadership within about 18 months of the first mass-market models coming to market, and within four years of the launch of the modern tablet category. Compact tablets are generally lower-priced, as vendors of smaller tablets are likely to have different business models than those selling larger tablets. Retailer-branded tablets are likely to be sold at or near cost, with monetization resulting from product sales generated by the device.

The decline in average selling prices for tablets has led to a 50% growth in the base of tablets in the UK, with some 12 million tablets sold in 2013. By the end of January 2014, about half of Britons may own or have access to a tablet.

The growing range of tablets is leading to a diversifying ownership profile. Owners of the first tablets tended to be relatively prosperous, that is individuals who could afford a £300 tablet in addition to a laptop computer.

These individuals tended to have a higher propensity to purchase online. More recent owners of tablets include those for whom the tablet replaces an existing device, such as a handheld games console, or a netbook computer.

Tablets have gained popularity with extraordinary speed, and manufacturers will have to work hard to stay on top of the evolution of the market. There appear to be more users and use cases for tablets than many had imagined. Getting the balance of form, function and price right will likely be a moving target during 2014, especially at the lower end of the market.

2. Wearables: the eyes have it

Global revenues for smart glasses, fitness bands and watches should exceed £2 billion in 2014. The most successful category, smart glasses, are likely to be priced at about £300 and sell about 4 million units. People are used to wearing watches, but may be less keen to charge them on a daily basis, so we expect demand for smart watches to be two million units. The appeal of fitness bands may diminish if owners' quantified exercise levels decline.

The mass launch of smart glasses in UK is likely to be met by scepticism and delight, as is customary with the launch of each new digital form factor. And the first models of smart glasses are likely to appeal to, and be purchased by, a niche, which should number in the hundreds of thousands in the UK, and in the millions worldwide.

This may seem an unlikely outcome for what is considered a new and slightly eccentric form factor, saddled with significant and fundamental constraints: smart glasses have to be transparent, may never work well in direct sunlight, and due to their low contrast are unsuitable for watching TV programs or films.

Initial users of smart glasses are likely to include: early adopters, for whom being at the bleeding edge of innovation is of paramount importance, even if the user experience in terms of interface and reliability requires further refinement; wealthy individuals for whom £300 would be a relatively small amount to pay, and professionals whose job is to investigate the potential of new products such as smart glasses for increasing productivity.

As for the smart fitness band, a form of wearable computing typically worn on the wrist, these should enjoy reasonable demand in 2014; but the market for such devices may never become mainstream in the UK, despite high-profile advocacy. Smart fitness bands measure a range of activities from paces walked to hours slept, and tap into the trend for the 'quantified self', whereby many aspects of one's activity and being are measured.

Quantification appeals when metrics are heading in the right direction; owners of smart fitness bands may be less enthusiastic about their devices if their performances heads in the wrong direction.

We expect smart watches to remain specialist devices and be outsold by smart glasses over the long term. This may surprise: after all, the value proposition for watches is well-established. People have worn watches to tell the time, and to display status or wealth, for hundreds of years. By comparison, attaching a screen to a pair of glasses and then talking to the device may seem unnatural.

3. Massive Open Online Courses (MOOCs): not disruptive yet, but the future looks bright

Student registrations in Massive Open Online Courses (MOOCs) will be up to over 10 million courses, a 100% increase over 2012. The low completion rates mean that less than 0.2% of all tertiary education courses completed in 2014 will be MOOCs. By 2020, however, over 10% of all courses taken in tertiary and enterprise continuing education may be MOOCs.

MOOCs differ from traditional courses in that they are massive, with potentially millions of users, and they are open, available to anyone, often for free or at minimal cost, much less than a traditional university or college course.

MOOCs are more efficient in that they avoid duplication of effort: first year physics courses tend to have very similar content at every university, which means MOOCs could be used to make a single, well-designed online version available to anyone, for a relatively low fee.

This efficiency also manifests in enterprise training. For example online training courses on spreadsheet use are common at accounting firms, but tend to be restricted to a firm's employees. However, spreadsheet skills are fairly universal. It would make more sense for a single, well-produced and scripted spreadsheet course to be available to anyone. Enterprises are already beginning to adopt MOOCs for this kind of training.

At the moment, one of the biggest differences between traditional education and MOOCs is the completion rate: one survey found that 93% of students who register for a MOOC fail to complete their prescribed course of study. By contrast, most people taking a university course or corporate online training course want to complete it, need to complete it, and keep trying until they pass. Even at universities where dropout rates of 50% make headlines, students are still completing their education at a rate seven times higher than the average MOOC.

Deloitte predicts that by 2014, while student registrations in Massive Open Online Courses (MOOCs) will be up 100% compared to 2012 to over 10 million courses, the low completion rates mean that less than 0.2% of all courses completed globally in 2014 will be MOOCs. The growing awareness of online education will force educational institutions to increase investment in this area, drive more acceptance of online education as it becomes accredited, and increase adoption by corporate training groups.

Most large educational institutions will experiment with this form of content but MOOCs will not disrupt education significantly in the near term. Enterprise training (an £85 billion market) and continuing education looks likely to be the fastest adopter of MOOCs, with significant growth in 2014 and 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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