Do you have a hammer at home? Of course you do, everyone does. You might even have two, maybe three (I have four). When was the last time you bought a hammer? If you’re 40 years old, and you have four hammers, then your average buy-cycle is one hammer every ten years. Doesn’t sound like a growth market, and yet you find a hammer in every hardware store and most general purpose stores, even Walgreens sells hammers. There are websites dedicated to hammers—just hammers.
So if hammers are such low volume almost zero CAGR products, why are there dozens of hammer makers? Where’s the industry consolidation that we smart analysts predict when market growth slows down and there are too many suppliers?
Everybody has a hammer. Not everybody has a tablet. Not everybody has a PC or a mobile phone. Tablets, PCs, and mobile phones are growth markets; hammers aren’t.
There are different sized hammers, for different jobs. A tack hammer for, well, tacks, ball peen for putting dents in your neighbor’s car door to teach him a lesson about blocking your driveway, claw hammers for removing nails and driving in wood screws, and sledge hammers for fixing door hinges and holding down things while the glue dries
There are different sized PCs and tablets too. Samsung, which just announced its Galaxy Tab 7.0, has a 7-inch, 7.7-inch, 8.9-inch, and a10.1-inch tablet for sale—a size for every man women, and child. RIM has a 7-inch tablet and so does Amazon, you may have heard about them if you weren’t busy in the garage pounding nails into the dog house you built.
A proper sized tablet
But Steve Jobs told us 7-inch tablets are DOA, and in HP and RIM’s case he may have been right (he was not often wrong). HP had to build a few hundred thousand of them to figure out they were wrong. And seeing how well they sold should have proved the point. Huh? Now RIM is trying to prove to themselves a 7-inch tablet is something someone wants, but they don’t know for whom: is it a business machine and entertainment machine, or a candy mint—you’re both right. You get those duality kind of problems when you have dual CEOs.
Amazon like Apple only different, doesn’t much pay attention to what anyone says and just goes ahead and does the right thing. Bezos has been doing that since he opened the store, and like Jobs he’s seldom (if ever) been wrong. And then there’s Sony. Sony makes a 7-inch tablet, and some of the folks at Sony even know about it, no one else it seems does either. At MAX, Sony was showing off a clever two-screen folding tablet. Sony used to be the style setter, and they still make beautiful looking stuff (I just bought a 13-in 2.5 pound Vaio). But Sony isn’t Apple or Amazon, not any more.
While everyone is busy predicting how many tablets will sell this and next year, and getting giddy about how Android is out-pacing iOS in shipments, Apple is running 25/8 to keep up with demand. Where are all those Android tablets going, the hinter lands of China?
And how many customers do you think HP’s fire sale siphoned off from the big tablet boom, in a worldwide economic slump? Well we know exactly how many don’t we? 300,000. Now if you count them and the 100,000 or so RIM is going to dump, and Acer’s, Amazon’s, Samsung’s, and Billybob Joe’s tablets you might get to half as many as Apple sells.
Why, they’re selling like, hammers. Everybody wants and needs one or two. In our about to be released new report on Mobile Devices and the Semiconductors in Them, we found no less than 464 suppliers of tablets, and 21 suppliers of semiconductors—21! That’s about the same number of suppliers of hammers, maybe a little less. But the big difference between tablet and semiconductor suppliers and hammer suppliers is stay-ability. Three years from now there won’t be 21 semiconductor and 464 tablet suppliers, there will be maybe a dozen of each or less. The hammer suppliers with their zero CAGR market will still be here.