In-Stat/MDR reports Tablet PC market will remain partially successful until prices fall.

The effort put forth by Microsoft and its hardware partners to introduce the Tablet PC into horizontal and vertical commercial markets, has only been partly successful, according to In-Stat/MDR. A recent report from the high-tech market research firm reports that the device, which was designed to counteract sluggish commercial PC sales, has been adopted in vertical markets, such as health care, real estate, and insurance. However, horizontal commercial markets have been somewhat hesitant to adopt a new PC form factor in a world of slow-growing IT budgets.

"Many vertical markets were accustomed to pen-based computing, and saw the Tablet PC as giving them the flexibility of pen-based computing plus access to all software that runs on Microsoft's XP operating system," said Brian O'Rourke, a senior analyst with In-Stat/MDR. "As a result, the vast majority of Tablet PCs that shipped in 2003 went to vertical applications." Within horizontal markets, Tablet PCs are particularly targeted at large enterprises. But, according to O'Rourke, "With limited IT budgets in the early part of this decade, and forecasts for annual increases in the 3% range over the next four to five years, enterprise IT managers have been hesitant to take a chance on a new PC form factor." However, In-Stat/MDR projects that as Tablet PC prices come down over the next few years, and Tablet PC software offerings increase, interest in horizontal markets will rise. Horizontal markets should start to make an impact on this market in 2005, as average selling prices fall below $2,000 for the first time.

--Additional Tablet PC offerings over the past year should have a positive impact on the market. In 2003, Microsoft released Office 2003 with digital ink support, and this summer they will be releasing the Windows XP Tablet PC 2005 Edition that will offer a number of improvements that will enhance the utility of the Tablet PC.

--Tablet PC vendors have been offering enhancements and new form factors to increase their popularity. In late 2003, both Gateway and Acer released Tablet PCs with 14-inch screens and Acer released the first true clamshell notebook with the Windows XP Tablet PC operating system.

--There will be very little consumer interest in Tablet PCs.

The report, "Tablet PCs--Will Businesses Take a Dose of Portable Computing?" (#IN0401152ID), contains five-year unit shipment and revenue forecasts for Tablet PCs. It also contains a five-year forecast for the regional breakdown of Tablet PC shipments. Extensive analysis of Tablet PCs in both horizontal and vertical markets is included, as well as the potential of Tablet PCs in the consumer segment. Also included are profiles of some of the markets' leading players, including Microsoft, Hewlett-Packard, Intel, Toshiba, Acer, Motion Computing, ViewSonic and Fujitsu. The report price is $2,295.