The tablet bubble – a billion dollar lemmings race

Posted: 01.07.11

Or ... a bunch of teenagers drinking and driving

The impact and influence of Apple on the rest of the PC and mobile phone industry is astonishing. Many of the CES tablets this year represent the herd-like knee-jerk reactions to Apple’s product introductions by industry veterans. As a result of all the jerking knees, about 100 new tablets have been introduced. It started at CES last year, it accelerated at Computex in Taiwan last June and continues at CES this year.

I estimate it costs about $1,000,000 to develop a tablet, and that’s probably conservative. That 1,000,000 figure assumes certain infrastructure, supply chain, and engineering & design teams already being in place and that it is being treated as a new model, not a company start-up. So, if 100 tablets have been brought to market in reaction to Apple, conservatively that represents a $100 million knee-jerk investment on the part of the industry. And it’s especially interesting in view of the detrimental comments about the iPad when it first came out.

Obviously most of these iPad wannabes are going to fail. It’s ironic coming from people who should know better, but like when kids do stupid things like smoking or driving after drinking, and you warn them about it. They always say, heh, that won’t happen to me - all kids think they are bullet-proof and somehow protected from reality. How many of these companies producing these 100+ tablets are kids who are dining and driving – with their investor’s money on the line? We’ll give you the mortuary report this time next year as we examine the tangled crumpled wreckage of the latest bubble.
Epilog: Part of the bubble-effect will be the inflated forecasts of the SoC and other component suppliers’ who have gotten design wins for these tablets. A lot of semi, display, and other component suppliers are going to have to do some fancy footwork when they explain to their investors why their enthusiastic forecasts weren’t realized.

Editors Note: When this blog post was first published it featured some suspect multiplication to get to a nice round billion. Even those among us who are math-challenged know that 100 times $1,000,000 comes to $100 million. The copy has been changed to reflect that, but the point remains: a lot of money, probably a billion dollars eventually, is going to be spent chasing the tablet market. Few will be chosen.