Channel swallows its tablets

Channel swallows its tablets

Tablet PCs may not be quite the Viagara the channel has been looking for but nor are they proving to be bitter pills for resellers and distributors to swallow.

Generally, there is a positive response to the role that tablet PCs are playing in the good start to 2003 that many people in the channel are reporting. Price is seen as an inhibitor to some parties and a lack of supply is hampering the potential but it is almost unanimously declared that there is a strong future for tablet technology.

The bottom line is that the technology is not yet having a major impact on PC sales. Research director at Inform, Chris Herbert, said the channel research company had been monitoring sales since the product was launched in November.

“It is really too early to say whether it [tablet PC technology] is going to be the saviour of the channel,” Herbert said. “Certainly it is not yet taking any market share from PCs or notebooks.”

Herbert said that tablets had registered “half of 1 per cent” on its channel PC sales data for November, December and January.

A breakdown of that miniscule percentage showed that the biggest slice of those channel sales was through what Inform calls “corporate dealers” and make up 35-40 per cent. The “traditional dealers” category accounted for a further 28 per cent and “mass merchants” represented 15 per cent.

Herbert said he did not think there would be much adoption of tablets this year but thought that when future generations of product arrived and the price came down “adoption will accelerate” in much the same way as notebooks did.

Harvey Norman’s computer division general manager, John Slack-Smith, said that sales were inhibited by a lack of stock.

With nearly 150 stores, he said it was hard to get product into every location to fulfil the market’s potential.

“Enquiries and sales have been okay but stock is in short supply,” he said. “Where there is short supply there is always going to be an artificial glass ceiling on the opportunity of the product.”

Slack-Smith did not see price as a barrier.

“For consumers and businesses that are early adopters of technologies such as the tablet PC, price is never the driving motivator in the purchase,” he said.

Big corporate resellers definitely see potential in the product.

Managing director of ASX-listed Volante, Hugh Bickerstaff, said that it bought “quite a few demonstration models” from Toshiba and HP which had been “scrolling through” its customer base.

“I don’t think that we have taken a major roll-out order for tablets as yet but there has been plenty of interest in seeing them and playing with them,” Bickerstaff said.

CEO at another big ASX-listed reseller Data#3, John Grant, also talked of positive early experience with the technology. “When the Tablet was first announced, our sales and service people were quite sceptical about it,” Grant said. “It was difficult to see the applications and we didn’t see it as a good fit with the solutions we sell.

“But when we actually put a few into our business, attitudes changed. Some of our staff have thrown out their laptops and PDAs and bought tablets. Within our business we have found an experience that is really positive.”

Grant said that on the customer side it had also been “more positive than we thought it would be.” He understood that HP sales had been “absolutely fantastic”.

“So, yeah, there is something going on here,” Grant said. “Customers are actually showing some interest. If our experience is mirrored within our customers then I think we may be onto a good story to tell.”

Distributors are also very confident that the tablet is a good product waiting to happen. Managing director of Dicker Data, Fiona Dicker, said there had been a “heap of interest” from its reseller base.

Dicker Data had sold “plenty” of the Toshibas and Compaqs it stocked, she said.

Interestingly, despite being very early in the life cycle, Dicker said tablet PCs had landed right in the middle of a serious price war. There was not a huge margin in them for distributors.

“They have arrived with the same sort of margin as other high-end notebooks,” Dicker said.

Tech Pacific’s HP business unit manager, George Bekris, agreed that there was strong and growing interest.

“Our sales started slowly but have gained momentum,” Bekris said. “They have been growing at about 8-10 per cent each month since introduction.”

Bekris said tablets required a different approach to other PCs because they represented a “totally new form factor”.

A wide range of resellers were saying that “the product needs to be touched and felt by customers before they are interested,” Bekris said. Even analysts are predicting that there will be a strong future for tablet PCs but it will not eventuate as a real channel opportunity until further down the life cycle.

PC analyst with research company Gartner, Andy Woo, said that tablet PCs would find a home in vertical markets in the short term rather than the mainstream. Gartner is predicting that only 450,000 tablet PCs will be sold globally in 2003.

“It is applications rather than hardware that will drive the market,” Woo said. “There are a lot of issues to be ironed out in the hardware and the marketing and the price is still too high for it to be received by the mainstream.

The channel was “crucial” to the success of tablet PCs, Woo said. “Obviously the channel is going to play a part in the success [of tablet PCs] because they have the customers and they have the vertical markets. [The channel] will develop the vertical applications that are needed.” Vendors insist the best is yet to come for tablet PC technology.

Toshiba’s systems division general manager, Ralph Stadus, said the vendor was only selling “small numbers” at present but it had sold out its allocations in November, December and January.

“The thing about the tablet PC is that it makes lots of new things possible but like any enabling technology, people have to work out how they will deploy it,” Stadus said. “It has been quite a while since we have had something this different.

“The channel has a key role. We think there will be hundreds and hundreds of applications for tablet technology and it will be channel partners closest to their customers needs that will understand how to deploy this technology to good advantage for the customer.”

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