Tablet ‘Victory’ Not an Easy Call

“Will Tablets Kill the PC Star?”

That’s the provocative headline of this piece in Barron’s today, which discusses a recent Citigroup report asserting that hidden inside the otherwise overwhelming volume of PC shipments (400 million next year) is the makings of an ugly trend: tablet computer shipments (35 million next year) eliminate one PC for every 2.5 tablets sold.

That would translate into eliminate about 11 million lost PC sales next year, the analysts say.

What is not commented on — but should be — is the effect of smartphones on both markets. Smartphones currently outsell by more than tablets 4 to 1, and that market is growing much faster than those for tablets or PCs, for good reason. The 4G phones are fast — faster than broadband, in my experience — and obviously highly portable. Given that anyone under the age of 30 seems to have innate texting skills, not to mention a preference for that medium, the advantage of the standard (read: larger) PC keyboard is somewhat neutralized. Cost? Advantage smartphone.

If anything, I think this suggests the vast potential of cloud computing is very real. Users could, as needed, simply plug in their phones to dummy terminals: storage and applications software would reside elsewhere.

Unfortunately, except for a relative handful of players, no matter which way the end-market shifts most EMS companies will be left in the cold. These are very-high volume arenas in which few have the capacity to play.