Enormous Market Opportunity for White-box Tablet PCs

15 Jul

According to analysis from international market research firms, this year’s worldwide shipment volume for the tablet market will be approximately 55 million units. Apple’s iPad takes the lead with 80% market share; non-iOS products make up the remaining 20%. Samsung is at the head of the pack with an expected shipment volume of 5 million units in 2011, while Taiwanese companies Acer and ASUS should ship about 2 million units each. However, aside from these well-known brands, there is a new player on the market: the white-box (local or non-branded) tablet PC, that is quietly but quickly making its way up the ladder.

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Industry expectsworldwide sales volume of white-box tablets to reach5 million units in 2011, with largest demand coming from China.

Current Status of Tablet PCs

Expected shipment volume of Apple’s iPad series, including the iPad 2, is over 15 million units for the third quarter of 2011, which would push this year’s iPad shipment volume to over 40 million units. Apple introduced the iPad 2 in April with a competitive suggested retail price and attractive design, and the anticipated iPad 3 is due to hit the market before the fourth quarter. The enduring popularity of the iPad series has left little expansion room for Apple’s competitors.

As for other brands, Samsung has introduced 7-inch and 10-inch versions of the GalaxyTab, which they strategically market through telecoms, the same distribution channels astheir cell phones.Samsung’s anticipated shipment volume for 2011 is 5 million units, first place in the non-Apple category. Taiwanese brands Acer and ASUS have each set their target shipment volume at 2 million units for2011.

ASUS has made a name for themselves in the tablet PC market with the Transformer, the sales volume of which is expected to reach 1.3 million units by the end of this year. With theaddition oftwo other tablets from the companythatwill beout before the year is over,ASUSexpects shipment volume to exceed their target of2 million units.

Market Opportunity of White-box Tablet PCs

In terms of retail price, the iPad 2 starts at a very competitive $499 USD. Market rumors indicate that Apple is using economies of scale to manage the supply chain and decrease cost per unit, which wouldbe reflected in the suggested retail price of their next generation of tablet PCs. As a result, all of the major brands are biding their time, not only to focus on their own product development but waiting for Apple to reveal their new pricepoint, so they can adjust their own accordingly and gain footing in the tablet market.

White-box tablet PCs are continually on Chinese online retailer Taobao.com’s bestsellers list, with a price range of 1,000-2,000 RMB.

With the massive popularity of tablet PCs in the mid-to-high price range, non-Apple tablets stand little chance on the market. However, there is currently a new trend on the rise, that of white-box tablet PCs. White-box manufacturersare going against the grain, not seeking to compete with Apple and other international brands for market share. Instead, they are offering tabletsat rock-bottom pricingand targeting Mainland China, Eastern Europe, and Latin American countries.

White-box tablet sales are increasing rapidly, and the industry boldly estimates that their worldwide shipment volume for 2011 will exceed 5 million units, with the largest market demand coming from China.

Eight out of ten imitation tablet PCs currently come from China’s Shenzhen province, where manufacturers previously focused on e-readers and small notebooks have turned their attention to tablets. In terms of research, development, and production of tablets, imitation manufacturers have the advantage of thorough understanding of the Android OS, many having started working with Android even earlier than some international brands. Additionally, imitation tablets are cheaper, with the lowest price of 500 RMB and an average price of 1,000-2,000 RMB, even more affordable than the average non-Apple tablet. The rise in popularity of knock-off tablets has resulted in a polarization effect that has decreased the survival room for secondary and tertiary manufacturers.

While China is currently the largest market for imitation tablets, international demand for knock-off tablets is rising. The 10.2-inch Superpad, from a Chinese manufacturer in Shenzhen, is seventh on Amazon’s tablet bestseller list with a suggested retail price of $169.99 USD (accessed 7 Jul 2011).

RelevantSupply Chains vs. White-box Tablet PCs

Taiwanese IC design companies MediaTek, Elan Microelectronics, Global Unichip, VIA Technologies, and ITE Tech are actively involved with various non-Apple and white-box tablet PC companies. The IC design industry optimistically puts the estimate for white-box tablet shipment volume from China at 2 million units per quarter, with most products containing processors based on the ARM design. Currently the companies are aggressively moving into the white-box tablet market, with Global Unichip taking the lead. The core processor tablet Global Unichip cooperated with Shanghai company InfoTM on has already become number one among white-box tablets in China.

Taiwanese medium and small OEMs have also locked onto the white-box tablet market, with Shuttle rumored to have already received a white-box tablet order from Mainland China. GIGABYTE Technology and Elitegroup (ECS) are both currently negotiating white-box tablet orders.

Market rumors indicate that Shuttle has received an order from Chinese company Hasee, and general manager Chen Yu indicated the other day that they have already begun to ship tablet PC products and are targeting regional clients. GIGABYTE, on the other hand, has been eagerly chatting with white-box tablet OEMs but intentionally avoiding the competitive China market – there is speculation that they may receive orders from the Eastern European market. As for ECS, they displayed several tablet models at this year’s Computex, and they are rumored to have already received orders from local clients.

At present, white-box tablet manufacturers are mainly targeting local markets. While the shipment volume of each company is small, as there is power in numbers it would be unwise to overlook this segment of the market, which includes Mainland China, Eastern Europe, and Latin America. However, a hidden concern of the white-tablet market is thatquality is not uniform, as manufacturers havenot met international telecommunications testing standards. Batteries, connector cables, and other parts are alsonot subject to high-standard safety tests, resulting in products that are not only prone to damage but may pose safety risks. Currently white-box tablet manufacturers utilize panels that mainstream international brands have rejected. While these panels are inferior when it comes to comfort level of reading and browsing, they allow vendors to offer tablets at a very competitive price. For price-sensitive consumer groups, the low price point of white-box tablets is enoughof an attraction, despitepotential quality or safety issues.

According to analysis from international market research firms, this year’s worldwide shipment volume for the tablet market will be approximately 55 million units. Apple’s iPad takes the lead with 80% market share; non-iOS products make up the remaining 20%. Samsung is at the head of the pack with an expected shipment volume of 5 million units in 2011, while Taiwanese companies Acer and ASUS should ship about 2 million units each. However, aside from these well-known brands, there is a new player on the market: the white-box (local or non-branded) tablet PC, that is quietly but quickly making its way up the ladder.

Industry expectsworldwide sales volume of white-box tablets to reach5 million units in 2011, with largest demand coming from China.

Current Status of Tablet PCs

Expected shipment volume of Apple’s iPad series, including the iPad 2, is over 15 million units for the third quarter of 2011, which would push this year’s iPad shipment volume to over 40 million units. Apple introduced the iPad 2 in April with a competitive suggested retail price and attractive design, and the anticipated iPad 3 is due to hit the market before the fourth quarter. The enduring popularity of the iPad series has left little expansion room for Apple’s competitors.

As for other brands, Samsung has introduced 7-inch and 10-inch versions of the GalaxyTab, which they strategically market through telecoms, the same distribution channels astheir cell phones.Samsung’s anticipated shipment volume for 2011 is 5 million units, first place in the non-Apple category. Taiwanese brands Acer and ASUS have each set their target shipment volume at 2 million units for2011.

ASUS has made a name for themselves in the tablet PC market with the Transformer, the sales volume of which is expected to reach 1.3 million units by the end of this year. With theaddition oftwo other tablets from the companythatwill beout before the year is over,ASUSexpects shipment volume to exceed their target of2 million units.

Market Opportunity of White-box Tablet PCs

In terms of retail price, the iPad 2 starts at a very competitive $499 USD. Market rumors indicate that Apple is using economies of scale to manage the supply chain and decrease cost per unit, which wouldbe reflected in the suggested retail price of their next generation of tablet PCs. As a result, all of the major brands are biding their time, not only to focus on their own product development but waiting for Apple to reveal their new pricepoint, so they can adjust their own accordingly and gain footing in the tablet market.

White-box tablet PCs are continually on Chinese online retailer Taobao.com’s bestsellers list, with a price range of 1,000-2,000 RMB.

With the massive popularity of tablet PCs in the mid-to-high price range, non-Apple tablets stand little chance on the market. However, there is currently a new trend on the rise, that of white-box tablet PCs. White-box manufacturersare going against the grain, not seeking to compete with Apple and other international brands for market share. Instead, they are offering tabletsat rock-bottom pricingand targeting Mainland China, Eastern Europe, and Latin American countries.

White-box tablet sales are increasing rapidly, and the industry boldly estimates that their worldwide shipment volume for 2011 will exceed 5 million units, with the largest market demand coming from China.

Eight out of ten imitation tablet PCs currently come from China’s Shenzhen province, where manufacturers previously focused on e-readers and small notebooks have turned their attention to tablets. In terms of research, development, and production of tablets, imitation manufacturers have the advantage of thorough understanding of the Android OS, many having started working with Android even earlier than some international brands. Additionally, imitation tablets are cheaper, with the lowest price of 500 RMB and an average price of 1,000-2,000 RMB, even more affordable than the average non-Apple tablet. The rise in popularity of knock-off tablets has resulted in a polarization effect that has decreased the survival room for secondary and tertiary manufacturers.

While China is currently the largest market for imitation tablets, international demand for knock-off tablets is rising. The 10.2-inch Superpad, from a Chinese manufacturer in Shenzhen, is seventh on Amazon’s tablet bestseller list with a suggested retail price of $169.99 USD (accessed 7 Jul 2011).

RelevantSupply Chains vs. White-box Tablet PCs

Taiwanese IC design companies MediaTek, Elan Microelectronics, Global Unichip, VIA Technologies, and ITE Tech are actively involved with various non-Apple and white-box tablet PC companies. The IC design industry optimistically puts the estimate for white-box tablet shipment volume from China at 2 million units per quarter, with most products containing processors based on the ARM design. Currently the companies are aggressively moving into the white-box tablet market, with Global Unichip taking the lead. The core processor tablet Global Unichip cooperated with Shanghai company InfoTM on has already become number one among white-box tablets in China.

Taiwanese medium and small OEMs have also locked onto the white-box tablet market, with Shuttle rumored to have already received a white-box tablet order from Mainland China. GIGABYTE Technology and Elitegroup (ECS) are both currently negotiating white-box tablet orders.

Market rumors indicate that Shuttle has received an order from Chinese company Hasee, and general manager Chen Yu indicated the other day that they have already begun to ship tablet PC products and are targeting regional clients. GIGABYTE, on the other hand, has been eagerly chatting with white-box tablet OEMs but intentionally avoiding the competitive China market – there is speculation that they may receive orders from the Eastern European market. As for ECS, they displayed several tablet models at this year’s Computex, and they are rumored to have already received orders from local clients.

At present, white-box tablet manufacturers are mainly targeting local markets. While the shipment volume of each company is small, as there is power in numbers it would be unwise to overlook this segment of the market, which includes Mainland China, Eastern Europe, and Latin America. However, a hidden concern of the white-tablet market is thatquality is not uniform, as manufacturers havenot met international telecommunications testing standards. Batteries, connector cables, and other parts are alsonot subject to high-standard safety tests, resulting in products that are not only prone to damage but may pose safety risks. Currently white-box tablet manufacturers utilize panels that mainstream international brands have rejected. While these panels are inferior when it comes to comfort level of reading and browsing, they allow vendors to offer tablets at a very competitive price. For price-sensitive consumer groups, the low price point of white-box tablets is enoughof an attraction, despitepotential quality or safety issues.

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