Microsoft Faces Challenges in the Exploding Tablet Market

Microsoft will struggle to become a major player in the tablet market at least until late 2014, according to CCS Insight’s new market forecast, published today. The mobile analyst firm expects over 1 billion tablets to be in use around the world by the end of 2017, up from 200 million at the start of this year.

In the period up to 2015 CCS Insight forecasts that Apple will carry on growing its volume but will see its market share slip as competition from Android devices intensifies. Disruptive service models from Amazon and Google have undercut Apple’s dominance. Android tablets will continue to proliferate, especially at lower prices, capturing the mid- to low tier in developed markets and a significant share in emerging markets. The biggest uncertainty in the future of the tablet market is how Microsoft will keep attacking this opportunity and whether the market in 2015 will remain the platform duopoly of today or become a more balanced game of three.

Marina Koytcheva, director of forecasting, at CCS Insight, commented: “Winning a solid share in the tablet market is an absolute must for Microsoft. However, it faces significant challenges with Windows 8. The current licence fees for Windows 8 Pro and Windows RT mean it’s hard for manufacturers to compete effectively and make a reasonable margin on tablets at the right prices, despite Microsoft’s effort to increase marketing support. Furthermore, the availability and quality of apps for Windows 8 are not strong enough.”

Microsoft must urgently address this “app gap” if it wants its tablets to succeed. This is home territory for Microsoft, which knows how to work successfully with developers, but it will take time. Optimising Microsoft Office for tablets is also imperative. Until this is resolved Microsoft will remain on the back foot.

CCS Insight forecasts that the global tablet market will reach 419 million units and be worth $95 billion in 2017. Koytcheva explained: “Since June last year, we’ve seen faster tablet adoption than we had expected in some emerging markets such as China, as the prices fell rapidly. We now expect 181 million tablets to be sold worldwide in 2013, and have uplifted our forecast until 2017.”

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David Dungay

Editor - Comms Business Magazine
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