Tablets — the canary in the PC tunnel?

Posted: 07.11.11

The second quarter by all accounts so far has not been a blockbuster, in fact in some places it’s been a career buster. The DJIA wobbled, not many new jobs were created, and the politics in the US got even more rancorous if such a thing is possible.

In the PC industry the major bright spot had been tablets. Called computer tablets, media tablets, tablet PCs, or just tablets; reinvented by Apple and followed by a dozen or more imitators, tablets excited the industry — the latest great thing.

No one needs a tablet. It doesn’t do anything that can’t be done on various other devices. People just wanted a tablet. Of course when you want something, some new shiny toy, you can find all sorts of rationalizations for why, why you have to have it. And there are a lot of great use cases for Tablets, no doubt about it, but you don’t need one. Need and want are tricky elements in a shaky economy, and the Tablet could be the leading indicator economists, pundits, and politicians are always looking for—the canary in the tunnel.

Analysts reported that tablets shipped into the worldwide channel fell by 28 percent in the first calendar quarter of 2011, compared to shipments in the fourth quarter of 2010—28 percent—that’s a hellofa drop.

The fourth quarter is usually higher than the following first quarter as consumers frantically try to show their love and appreciation for one another by heaping gifts on each other. Most of it stuff that is isn’t needed, and often returned. But not tablets, they wouldn’t get returned, and a lot of people bought them for themselves in a perverted, hedonistic rationalization—look what I gave myself for the holidays.

And so in the cold light of Monday morning, also known in a grander scale as the first quarter, the credit card hangover came, and reality set in. Those who didn’t queue up quickly enough in the fourth quarter didn’t bother in the first.

Is the canary dead?

Far from it—but he's not feeling well.

Although sales were impacted by a slowdown in consumer spending following the holiday sales period, analysts are raising their 2011 shipment forecast stating that the market will be aided by the entrance of competitive new devices in second half of 2011 (those dozen or so Apple wannabes). In other words, if there’s more of the thing that’s not needed, more people will buy them. HUH?

Mobile phones, in particular the high-end smartphones, suffered a similar fall-off in sales. That was rationalized away by saying sales were largely stymied by consumers' unwillingness to sign up for the 3G/4G data plans that the carriers typically require along with these devices. Again—need vs. want.

The fact of the matter is consumers are scared. They don’t know if they are going to have a job, or in worse situations, get a job in the next month or so. The politicians are too busy trying to score points in a schoolyard brawl to give a damn about the country; and that level of uncertainty and lack of national purpose or leadership leaves the consumer—the economic engine of the western nations, cautious and unsettled. So only things that genuinely needed will get purchased. The nice-to-have items will have to wait till the economy improves. And that won’t happen until the political gamesmanship calms down in Washington.

Memo to the politicians. Want to create jobs so people will buy stuff like tablets? Then create confidence in the consumers. Indicate that you have a clue about them, and what the country really needs, and maybe for once put the nation ahead of your personal political agenda.

The canary warned you.