Nobody Needs a Tablet

Amazon.com's (Nasdaq: AMZN  ) incomplete press release yesterday -- proclaiming that it sold four times as many Kindles on Black Friday than it did a year ago -- should be enough to get Apple's (Nasdaq: AAPL  ) attention. The Kindle Fire has been Amazon's best-seller since it was introduced eight weeks ago, so clearly the $199 price point is a hit with consumers looking for a cheap entry-level tablet.

However, the market may be heating up on the higher end of the tablet space too.

We're starting to see retailers promising release dates of late next week for Transformer Prime. No, this isn't a new Shia LaBeouf movie. (Thank goodness!) Transformer Prime is ASUS' well-hyped device, and the spec sheet is impressive. We're talking about an NVIDIA (Nasdaq: NVDA  ) Tegra 3 mobile chip processor for killer graphics and speed. Transformer Prime's slick guts are apparently enough to have GameStop (NYSE: GME  ) bundling it with a Bluetooth console-like controller and several digital games as a tablet that diehard gamers can finally sink their teeth into.

Unfortunately, ASUS is pricing this at $499. No one will argue that it's not worth at least that much. It matches the iPad 2 on price, but more features and a slightly larger display are compelling differences. Side by side, Transformer Prime will give tablet buyers more bang for their buck. If buyers are in the market for a rich Android-flavored tablet, this may be the one worth getting.

You're not going to get a Transformer Prime next week, are you?

The uncomfortable truth
Tablet manufacturers don't know what you -- in the back of your mind -- already know. No one needs a tablet.

Millions of people already own tablets in this country. Millions if not tens of millions more want one, and may very well get one this holiday season. However, the gadgetry world's best kept secret is that nobody really requires a tablet.

A desktop or laptop is a necessity for getting work and homework done these days. A mobile phone, ideally a smartphone with "good enough" computing capability, is the way folks communicate with one another these days. Where's the killer application that makes a tablet indispensible? Solo streaming is certainly convenient on a tablet, but nearly any Web-tethered device can scratch that itch. Rudimentary Internet surfing and gaming apps are entertaining. Dedicated e-readers are cheaper for consuming digital books, newspapers, and magazines.

As long as tablets are primarily leisure appliances and the economy isn't amenable to grown-up toys with three-figure price tags, we're not going to get anywhere here beyond the novelty.

A tale of two tablets
Folks snapped up iPads last year because Steve Jobs said they were magical. Folks are snapping up the Kindle Fire -- apparently in the millions -- because Amazon is willing to take an initial loss on the gadgets given its rich ecosystem. It's also been promoting the Kindle Fire on its well-trafficked homepage for two months.

It gets bleak after that. Outside of the iPad 2 and Kindle Fire, there were roughly as many people attending an NFL game in person over this holiday weekend as there are tablet buyers this year through the end of October.

Market tracker NPD Group shocked the public when its channel checks showed that there were just 1.2 million non-iPad tablets sold in this country through the first 10 months of the year. It would have been substantially less if Hewlett-Packard (NYSE: HPQ  ) hadn't marked down its webOS TouchPad tablet to as little as $99 in a seemingly going-out-of-business clearance sale.

In short, despite all of its success as a mobile operating system for smartphones, Google's (Nasdaq: GOOG  ) Android has been a dud for any manufacturer actually trying to sell gadgetry at a profit.

Give it time
Nobody needs a tablet now, but that doesn't mean that they won't need one in the future.

There are already several schools around the country making the dramatic leap from textbooks to digital books on iPads. The movement is largely iOS-driven. There aren't too many schools, if any, going the cheaper Android route. The Kindle Fire's success may change that, but at least we're getting to the point where the country's youth is trading heavy backpacks of books for a lightweight iPad.

This is how it starts. Kids armed with tablets for school will eventually find that they're spending more time on tablets than they are on their parents' computers. Tablets may become the next generation's computer.

It certainly doesn't hurt that Bluetooth keyboard accessories are turning tablets into simple touchpad laptops. Once Microsoft (Nasdaq: MSFT  ) throws a little more weight behind Windows-propelled tablets we may get to more traditional functionality, but who are we to assume that the next generation won't simply choose cheaper app- and cloud-based alternatives to Microsoft's Office suite of programs? The kids will figure this out on their own, and they're the ones that will make tablets technological necessities.

It will happen, but every manufacturer rushing to get their tablet on the market in time for this holiday season is missing the point. If they think they'll be purveyors of stocking stuffers, they're at least a year or two too early, even during a time of year that has historically valued wants over needs.

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The Motley Fool owns shares of Google, Apple, Microsoft, and GameStop. Motley Fool newsletter services have recommended buying shares of Apple, NVIDIA, Amazon.com, Google, and Microsoft. Motley Fool newsletter services have recommended writing covered calls in GameStop, creating a bull call spread position in Apple, writing puts in NVIDIA, and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Hewlett-Packard. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (16) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 29, 2011, at 10:12 AM, StarWitchDoctor wrote:

    I thought the article was great but in a nutshell, there was a question left unanswered: How many persons attended an NFL Game in person? Was that to say sales were healthy or Ill? I dont "get" it. I believe nuanced communications do not come out that well in written format.

  • Report this Comment On November 29, 2011, at 10:23 AM, stanbaran wrote:

    Also see: "Nobody NEEDS an iPhone. A regular flip phone is all you need" and "Nobody NEEDS an iPod Touch. Who's gonna carry around a device with a bunch of apps on it?". It's another one of those devices whose usefulness you don't appreciate until you actually use one. Just looking around and seeing all the uses that the iPad has been put to, things that could not be done on a smartphone or on a laptop (at least not very easily) shows how incorrect the headline and the gist of this article are. And, as has been pointed out by people much more clever and astute than I am, there is no tablet market, there's just the iPad, so that's really what we're talking about here. Until we get another company that can produce a tablet that can compete with the iPad in terms of functionality, ease of use, battery life, and price (and I wouldn't hold my breath for that), there is no need to be talking about any other tablets as if they are a part of this market. The Kindle Fire, as the article correctly points out, is designed to appeal to a different market segment and can't be compared to the iPad. So what the article is really saying is, you don't NEED an iPad, which is about as true as saying you don't NEED a computer, unless you want to do all the things that having one allows you to do and which you weren't able to do before.

  • Report this Comment On November 29, 2011, at 10:49 AM, H3D wrote:

    "Amazon.com's incomplete press release yesterday -- proclaiming that it sold four times as many Kindles on Black Friday than it did a year ago -- should be enough to get Apple's attention."

    While I am sure that the Fire will have had Apple's attention, this announcement tells us nothing. Perhaps the Kindle would have sold four times as many as last year even without the Fire. If they had any information worth bragging about, they would use it.

    "The Kindle Fire has been Amazon's best-seller since it was introduced eight weeks ago"

    Before the Kindle Fire was introduced Amazon's best seller in the Tablet category was... The Xoom. You see Amazon don't sell iPads.

    And since the Kindle is Amazon's own product, it is likely that anyone who wants one will buy it from Amazon. So this bestseller status just tells that it outsold the Xoom at Amazon, but not necessarily in total.

    "...so clearly the $199 price point is a hit with consumers looking for a cheap entry-level tablet."

    No. as shown above, that is not clear at all. You have been duped.

    Now maybe the Fire has been a bit, maybe it's sold really well. But we have been given no evidence that that is the case.

  • Report this Comment On November 29, 2011, at 11:07 AM, Purpleboarder wrote:

    StanB....If you aren't an Apple fanboy, I don't know what one is....And that's OK. you know what you like, and happen to profess the advantages of whatever you like. But the author is correct. I still don't need an Ipad, iPhone, or i-Pod...To me, these are 'nice to haves', not 'need to haves'.....Until my company upgrades my Blackberry to a Droid/iPhone, I'm good....No matter who you are, or what you do, it comes down to time. Time is a luxury for most, and I don't need to run to a tablet/smartphone every waking moment I'm not busy.....Me? I'm married, got two kids, and work 40-50 hours a week in an office. I have no time to dick around w/ an iPad. If I'm going to surf the net at home, it will be on a PC (or MAC for the Apple-fanboys)...I think you are using the term NEED very loosely. I think the author hit the nail on the head; Nobody needs a tablet.....What people do need is a home w/ A/C, heat, washer/dryer, working toilets, fridge, etc. Sorry, but as much as you love your iPad, it doesn't fall into the above category.....

  • Report this Comment On November 29, 2011, at 11:17 AM, pinks2000 wrote:

    I do not need a tablet, but I got a tablet, and after a while I got rid of my laptop.

    I do not need a tablet, but now you will have to pry it out of my cold dead fingers.

    No I do not need a tablet. But soon you and I will.

    Just the ability to trade options and stocks 24/7 will pay for the tablet over and over. The laptop was just too much trouble. Once you drink the cool aid it's hard to go back.

  • Report this Comment On November 29, 2011, at 11:17 AM, TMFMitten wrote:

    I don't get the need for tablets, either. I have an iPad because my wife wanted one and she wanted to Facetime with me during the day. She loves her iPad and uses it all the time. I pick mine up maybe twice a month for about five minutes -- and we ended up using Skype instead of Facetime. Tabs just seem like a third wheel ... I can use apps and do mobile surfing on my smartphone (Dell Streak -- 5-inch screen; it's like a mini-tablet), and my laptop is my productivity machine. If I need computing power on the go, there's a netbook I keep in the car. When MSFT comes out with a Windows tablet that's actually useful for work and not just play, maybe it'll replace the netbook. Beyond that, I still can't see the purpose of these things.

  • Report this Comment On November 29, 2011, at 1:00 PM, FirstLemming wrote:

    Its more correct to call it the "comfortable truth", rather than uncomfortable. The whole consumer based economy is built on people buying things they want instead of just buying what they need. The reason they keep buying is because it makes their life more comfortable.

    If the tablet was invented before the laptop, the skeptics out there would be saying "why on earth would you want to strap a keyboard on when we spend more time consuming information than we do creating it".

    Tablets are better than anything else in many situations. If you've ever been to a meeting where everyone hides behind their laptop screens, or had to precariously balance the laptop in one hand while you explain things on the screen with the other, you'll know what I'm talking about.

  • Report this Comment On November 29, 2011, at 2:05 PM, ViewRoyal wrote:

    It's true, nobody needs a tablet... or a computer... or electricity (humankind got along just fine for hundreds of thousands of years without electricity ;-)).

    We could all go back to using flint tools, instead of machines, to produce all of the products we "need".

    But then, it would take a little bit longer to manufacture things.

    :-)

  • Report this Comment On November 29, 2011, at 4:55 PM, garifolle wrote:

    I would really like to know what people who really need computing do with a tablet!

    I need at least 2 computers at home, one laptop to bring my work with me.

    I'd like to read real life examples of serious computing work done on an IPad.

    I could not stand to see my grand children running up to my office to play games on my computers.

    I gave them an IPad that stays at my home: now they rush to the IPad, we can play games together, I enjoy their presence more, and slowly but surely, we are coming back to real games that we play on the table, we have fun, we communicate more, and every body forgets computers and IPad.

    That's the use I make with my IPad. Oh and yes, I take it with me if I have to bring my car for service: I play chess while I wait.

  • Report this Comment On November 29, 2011, at 8:39 PM, Hawmps wrote:

    I have a chiropractor friend that uses an iPad in his practice as a secondary machine to whatever you call the big desktop screen computer thing Apple makes. There is a small accessory that attaches to the iPad to scan your credit card, you sign your name right on the iPad screen with your finger, and your receipt is e-mailed to you (not printing a reciept saves a few pennies). He keeps various other files on the iPad as well for reference. Could he get by without the iPad; well, yes. However, this is one gizmo that has helped him to streamline part of his business and to top it off, my 3 year old can watch Curious George on it while he is waiting in the office.

  • Report this Comment On November 29, 2011, at 10:01 PM, Kdesert wrote:

    My first comment. After reading this article and the comments i was compelled too.

    Nobody needs a tablet? Let me tell you who needs one as part of their job or will be forced to suffer:

    Physicians/Nurses/Healthcare Practitioners: three words, Electronic Medical Records. Today they are PAINFUL. As a provider you have 3 choices -

    ---Paper charts (while it lasts)

    ---Sitting in the patient room while typing on a computer chart and having no eye contact with the patient.

    ---Talking to the patient like a human being and having to spend 4 hours every night entering medical records/using voice dictation services.

    As a patient, do you really want your doctor to be typing on a computer during your entire medical visit??? Wouldn't you rather be able to get medical test results quicker, x-rays, and face to face with the doctor? Heck some doctors are even remotely seeing patients through video chat on tablets (not that I think thats a good idea). EMR software companies are working on Apps for tablets as we speak. (Dragon Software, etc...)

    Teachers/Professors/Students - This was covered a bit in the article. Why carry around a laptop bag or a book bag when you can have a tablet storing your textbooks in the "cloud"? Collaborative environments would benefit. Easier for you to get feedback from a professor or teacher rather than waiting at his office hours. AKA get your money's worth out of your education!

    Pilots - In fact, pilots have been using "tablets" for 10 years or more now. They are called Electronic Flight Bags which weigh several pounds and replace a 40 lb paper bag that pilots had to otherwise carry, with airport and airspace info. Now they can use a tablet with paper backups, and it gives the pilot way more information than just charts.

    ...

    Just think of other professions where you need access to large amounts data but do not want to be forced to sit infront of a computer at your job to create/access the data. The tablet becomes the answer.

    So yes, SOME PEOPLE need a tablet. But please do not tell me that NO ONE needs one. I acknowledge that the technology is not quite there yet (Apps not developed, processing power limited regarding handling the Health Records) to become industry standards, but it is coming...and coming soon.

    I give the article credit - you acknowledge that "in the future" they will be needed. Isn't that what we as investors care about?

  • Report this Comment On November 30, 2011, at 3:34 PM, jabailo wrote:

    I can only speak for myself, but the "transformed" tablet is what I really want.

    Or should I say, the machine I have wanted for the past 5 years is an ultralite netbook. The clamshell design is what appeals to me as I both read and write the internet. Even if I'm doing consumption, like reading a book, or watching a video, I still want to jump back on the web and look up things, make a comment, and so on.

    My dream machine is a 10" Android ultralite netbook that comes in around $350. I have an ASUS eee netbook, which has served me well, but is still a chore to carry around and is very slow on startup and somewhat underpowered.

  • Report this Comment On November 30, 2011, at 3:52 PM, SSchlesinger wrote:

    Wow, i really thought that this was an excellent article. Your point is that most people don't need tablets, not nobody. Yes they are useful, to some more than others.

    I think for a tablet to be successful it needs two things. The first is an attractive price point, the sub-$200 on Amazon jumped into. The second is a rich ecosystem.

    Apple got people in droves to show up for a $499 iPad and iPad2. But that's slowing down. For that much money you can get a decent laptop. The $199 number is now set in consumers minds. It's a good little unit and it will be harder to justify spending twice as much for a first tablet.

  • Report this Comment On November 30, 2011, at 7:49 PM, racchole wrote:

    These comments have shown us all how spoiled we all Americans are, and how being spoiled is the new norm. I get such a kick out of any AAPL-related article.

  • Report this Comment On December 01, 2011, at 7:21 PM, techy46 wrote:

    "Nobody needs a tablet now, but that doesn't mean that they won't need one in the future"

    First comes stand alone novelty then come appliactions and finally we require integration. Microsoft's timing for Windows 8 is a perfect fit with the end of Windows 7 800 million upgrade sales. Next we';; get Win 8 tabs with keyboards and the integrtaion of the tablet into the enterprise will start. Schools can then use same to train new job seekers.

  • Report this Comment On December 02, 2011, at 12:28 AM, phyrne wrote:

    In the 3rd world where you have to pay ridiculous prices forphotocopys,non existant street names stodgy slow burocratic with reams of paper permits that if get misplaced are horrific to replace and its all time consuming and disheatening ,who wants the flashy watch any more! No thanks any decent buisness persons eyes twinkle with happiness when you present them with a ipad2 because semi decently photo or it scanns the docs and keeps them safe and the whow factor of presentation.....unfortunately to get a chip in said ipad that works over there without paying a fortune

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