India Tablets Market Report - By Convergence Catalyst

Tablet Ecosystem in India –  
Current State, Potential and Outlook

November 9, 2011

Jayanth Kolla & Vijay Ramanathan

Preface

As a concept, tablets have been around for a while. So have touch screens on phones. It did take quite a while for a
true convergence of hardware, software, operating systems, usability and an application ecosystem to finally come
together (read as iPad) which has paved the way for a new generation of devices in the form of today’s tablets!

As this nascent market grows at a breakneck pace globally, economies of scale have started setting in already. While a
number of models are available in India from global brands and not so global ones there has been very little by way of
differentiation amidst all these products. While tablet adoption has largely been with consumers, uses for this device
in certain verticals such as education, retail, healthcare, corporates & aviation industries prove there is a large
potential for those verticals.

Why do a report on the Tablet Market for India? Tablets have the potential to grow exponentially if key players in
the Indian market can play to the right market forces. However, India is a complex market made more challenging
with a lack of structured, actionable data (the insights and analysis needed for business leaders). Hence this report.

What to expect from this report? This report will not only look at global trends, applications and use cases for
tablets but also the current state of Indian market, challenges and the outlook for the Indian tablet market. This
report will highlight the potential and opportunity in India which should serve as a strategic tool for category players.

The authors have reached out and interviewed business heads, product, marketing and sales managers, distributors
and retailers of leading global and local tablet OEMs and also some neutral parties such as technology journalists,
bloggers and reviewers. The authors wish to thank all the individuals who provided input for this report.

Who is Convergence Catalyst & how are they qualified? Convergence Catalyst is a young and nimble Telecom
Research and Advisory firm focusing on the Indian market. Convergence Catalyst (CC) principals bring decades of
relevant Telecom experience in the Indian Telecom Industry. Having been Technocrats, Product Marketeers, Analysts
and Business Consultants, they bring a keen insights into the Indian market dynamics. These insights will reflect on
this report to help industry players base their strategic, operational decisions on the emerging Tablet Market.

Contents

Overview of Global Tablets Market

Key Players in The Value Chain

Potential Applications and Use Cases of Tablets for Consumers

Status of Current Tablet Market in India

Potential Scenarios That Could Drive Tablets Adoption in India

Factors Contributing to Tablet Consumer Value Proposition in India

Challenges For Growth of Tablets in India

Forecasts for Tablets Sales in India

Something to Think About…

Convergence Catalyst Credentials

3

Tablets have become popular consumer devices with the launch of
Apple iPad in Q1 2010, followed by a number of models by other OEMs1

Timelines of Key Tablets Launched Globally

Samsung
Motorola
HP Slate
Blackberry
Apple iPad
Galaxy Tab
Xoom
on Web OS
Playbook

Apr ‘10 Sep ‘10 Jan ‘11 Feb‘11 Apr‘11

•  Although tablets as portable, basic connectivity and computing devices have existed for many years, launch of
Apple iPad heralded a new device segment
•  iPad launch was followed by a number of tablet launches such as Samsung Galaxy Tab and Motorola Xoom on
Android, HP’s slate on WebOS and Blackberry’s Playbook on the QNX platform
•  Although HP has recently announced the cancellation of Slate and WebOS development, the company is
rethinking its strategy

4
Sources: CC Estimates, Industry inputs Note 1: OEM – Original Equipment Manufacturer

Tablet sales are expected to grow over four times in 2011, with majority
of sales coming from North America and Europe regions

Total Global Tablets Sales by Year (in Mn)
Worldwide Tablets Sales split by region
(2011)

70

40%

100%
36%
16

22%
2%
2010
2011E
Total Tablets North Rest of the
Europe
Asia
Sales
America
World

•  Globally, over 16 million have been sold in 2010, and the number is expected to grow approximately by 350%
to 70 million by the end of 2011
•  Currently, tablets are being sold in developed markets on North America and Europe, while Asia (especially,
China) is soon catching up
•  With global (adult) internet penetration expected to reach over 21% by 2014, tablets will help drive the internet
adoption among the unconnected, especially in the emerging markets

5
Sources: CC Analysis, Morgan Stanley – Tablet Demand and Destruction Report – Feb 2011

Apple’s iOS leads the market with two-thirds share followed by Android

•  Apple iOS leads the tablets operating
Tablets Operating Systems Market Share
system market with two-thirds share
(Q3, 2011)
•  Android’s share has increased from 2.3%
in Q3, 2010 to close to 27% in Q3, 2011
•  Android is the platform of choice by many
OEMs (outside of Apple)
66.6%
•  As the tablet adoption increases in
100%
emerging markets, the share of Android is
also expected to increase in the next few
26.9%
2.4%
1.2%
quarters
2.9%
Total Tablets iOS
Android
Windows
QNX
Others
•  Among all the Android-based tablet
Sales
OEMs, Samsung leads the market with
approximately three million shipments in
Q3, 2011

6
Sources: CC Analysis; Strategy Analytics – Global Tablet Shipments, Q3 2011 – Oct 2011; Nomura – Open Mobile Summit Report – Jun 2011

The apps (available on each platform’s app store) play a key role in the
tablets ecosystem

Number of Active Applications by Operating Top Categories of Apple App Store Apps (‘000)
System App Store1 (‘000, Sep 2011)

Apple App Android Blackberry Windows
Games
Books
Entertainment
Education
Lifestyle
Store
Market
App World
Market Place

•  Apps form a critical part of tablets usability and experience as they continue to provide new feature sets and a
whole new dimension to postponability
•  While Apple App Store has over 100K iPad optimized apps, the number of apps developed for tablets on
Android 3.x (Honeycomb) and other platforms are abysmally low
•  While many of the existing Android smartphone apps do run on tablets, the platform SDK’s2 do not
automatically scale the fonts and graphics for the bigger tablet displays, thus providing poor user experience

7
Sources: CC Analysis; Industry inputs Note 1: Includes both smartphone and tablet apps, 2: SDK – Software Development Kit

Along with web browsing and email, media consumption (consumers)
and presentations (enterprise customers) are the key tablet applications

Percentage of Users Who Use Tablets Enterprise Customers iPad Usage for
Regularly for Consuming Content
Different Activities

68%
73%
69%
67%
62%
54%
54%
52%
52%
51%
46%
45%
38%

•  Tablets are primarily being adopted for consuming content, with accessing internet and checking emails being
the predominant activities both by retail and corporate consumers
•  While retail consumers also use tablets predominantly for multimedia consumption and gaming, enterprise
consumers leverage the portability and the mobility of the device for remote access and client presentations
•  Lack of end-user ﬁle management system and ergonomic design for prolonged creation of spreadsheets and
presentations does not yet make the tablet conducive for replacing PCs in enterprises

8
Sources: CC Analysis; AlphaWise; Morgan Stanley – Tablet Demand and Destruction Report – Feb 2011

Tablets can also be adopted as primary devices in various industry
verticals for diverse uses and applications
Various Tablet Use Cases for Different Industry Verticals

Healthcare
Education
Aviation
Retail

Typical use cases of tablets in Typical use cases of tablets Typical use cases of tablets Typical use cases of tablets
the Healthcare industry include:
in the Education industry in the Aviation industry in the Retail industry
•  Electronic Medical Records
include:
include:
include:

•  Speech Therapy
•  Digitized Textbooks
•  Flight Charts
•  Point of Sale Terminals

•  Digital Imaging
•  Annotate Notes & •  Access to Terminal •  Customization
Textbooks
Approach & Procedures •  Sales Assistant
•  Patient Education
Charts
•  Interactive apps for
•  Sign out
•  E-Commerce
education
•  Airport/Facility Directory
•  Billing
•  Digital Signages
•  Note Taking
•  Weather Brieﬁng
•  Online Catalogs
•  Streaming of educational •  Altitude Charts
content

•  Healthcare industry in the West •  Universities and Schools •  The FAA has allowed the use •  While online catalogs will
(especially the US) has exploited adopting Tablets in a big way of iPad for electronic ﬂight aid sales, Retailers are
technology for a long time
in the US for a variety of uses
charts. Big airlines such as slowly turning to tablets
United and Alaskan Airlines to enhance the in-store
•  Commercial Consumer tablets are
have replaced their Flight purchase experience for
coming in as cheaper alternatives
Manuals with digitzed copies the consumer
and as supplemental devices
on the iPad

9
Sources: CC Analysis

While some industries are still in the pilot mode, education industry
across the world has gone ahead to adopt tablets full time

Large Scale Tablets Deployment Across the World –
Share by Industry Vertical (July 2011)

64.6%
100%
10%
7.3%
17.8%

Total Tablet Usage
Education
Public Services
Healthcare
Others

•  While many industries are testing/piloting tablets as a potential replacement for their current devices,
education sector across the world has already started deploying these devices
•  Various universities and colleges are providing tablets to faculty and students (sometimes as loaner devices for
the duration of the course) for downloading digital textbooks, podcasts, assignments, etc
•  Various government departments such as Bureau of Land Management, City Councils, Police Force, Geological
Survey Dept, etc in US & UK are using tablets for documentation, instant database access, and as a part of their
paper reduction initiatives

10
Sources: CC Analysis; iPad Pilots – K12 Learning

Contents








Tablet Projections in India



11

The tablets supply side value chain includes both hardware & software
providers along with consumer interface such as carriers/retail channel

Chipset & Other Operating Device Carriers
Component System Integrator
Makers/
Providers
Providers
OEMs
Retail Channel

•  Chipset vendors •  Operating System (OS) •  Hardware and •  Device makers •  Carriers provide the
develop various providers not only software integrators develop and launch requisite 2.5G/3G/
processors used in develop the OS for help enable ﬁnished tablets in various 4G connectivity for
tablets such as CPU, devices, but they also products for OEMs
global markets tablets to be used
GPU, RF processor, etc
enable third party either in partnership on the go. In some
application developers with carriers and/or cases, carriers
•  Other key hardware
to develop apps and through retail partner with OEMs
components such as
help grow the channel
to launch tablets
Touchscreen Display,
ecosystem
bundled with their
Memory, Battery, etc
services
are provided by various •  While companies such
component makers
as Apple & Blackberry •  Retail distribution
develop the OS for channel plays a key
their own products, role in tablets sales
Google & Microsoft and Go-To-Market
partner with tablet strategy of OEMs
OEMs to license OSs

12
Source: CC Analysis

Of all the global tablet ecosystem players, Apple has managed to
integrate most elements of the value chain

Player
Role in the Value Chain
Analysis
•  Apple has managed to integrate most elements of the tablets
value chain and provide end-to-end value proposition
Apple
•  It is accredited with creating the tablets category, enabling the
paradigm shift to multi-touch and establishing prices for the
segment

•  Samsung is a key player in the ecosystem. It provides critical
Samsung
hardware components such as displays, memory, etc and also
manufactures its own tablets under the sub-brand “Galaxy”

•  Leading Android development and making it accessible to all
OEMs and app developers, Google has opened up the tablet
Google
ecosystem for a myriad of ecosystem players
•  With acquisition of Motorola Mobility, Google has in-house
hardware capabilities for potentially building a device of its own
•  With very few Windows 7 based tablets launched in the market
and with it’s tablet-optimized operating system (Windows 8) yet
to be commercially released, Microsoft is a late entrant into the
Microsoft
tablet ecosystem (not counting tablet PCs)
•  However, partnering with over 55% of Android vendors gaining
royalty for Android use, Microsoft is ensuring revenues from
increased use of Android OS
Design •  The design houses and hardware manufacturers in Shenzen
Houses in (China) and Taiwan are enabling the OEMs to acquire and
China & market readily available devices, thus driving the low and mid
Taiwan
end tablet penetration in emerging markets
13

Contents











14

Tablets offer multiple services and experiences (which were earlier
delivered on multiple platforms) on a single device

Key
Services
Music
Video
Gaming
Books
LBS
Email
Social Networking

Yellow
Browse
IM - Chat
Listen
Manage
View
Direct
Reading
Pages
Directions
Use
Play
Cases
Stay in Touch

Rip
Buy
Broadcast
Guide
Create
Gamble
Navigate
Maps

Current
Delivery
Platform

15

Intuitive user interface, portability and instant access to digital content
makes Tablet an ideal consumption device
User
Experience
Multifunctionality
Connectivity
Interaction

Ebooks
Connectivity
Sensory
Multimedia
-  2G, 3G, 4G
Interface
Key Functions
-  WiFi
Accelerometer
- Browse
-  Bluetooth
Gyrometer
- Email
Flip to turn
- Office
Pinch to Zoom

Leading to Excitement,
Delight

Contextual Usage
Relevance
Hygiene

Touch
Push Notiﬁcations
Intuitive
Location Aware
App
Ecosystem
Long Battery
New Biz Models
Portable
App for everything
Instant ON
Developer friendly
Global Reach
Leading to Satisfaction,
Comfort
App 16
Ecosystem

Primarily being a consumption device, Tablet will co-exist with both
mobile phones and computers

Primary Communication Device
Basic Voice Communications to sophisticated Smartphones
Highly Portable, highly capable, but still short on Display sizes

Primary Computing/Creation Device

Basic creation to sophisticated computing

Highly capable but, primary interface is a keyboard for creating

Primary Consumption Device
Basic creation to heavy duty consumption

Highly portable, excellent via media for everyday tasks due to touch
interface, instant on, long battery life. Work + Entertainment for all situations

17

Contents











18

In India, Tablets were introduced in Oct 2010 with the launch of
Samsung Tab and Olive Pad

Timelines of Key Tablets Launched in India

Samsung
Olive Pad
Apple
Apple
Galaxy Tab
iPad 1
iPad 2
Reliance 3G Tab
VT100

Oct‘10 Jan ‘11 May‘11 Aug‘11

•  Tablets were introduced in the Indian market in October, 2010 with the launch of Samsung Galaxy Tab (7-inch)
and Olive Pad VT100, both Android-based devices
•  Although Apple launched iPad 1 in India in January 2011, it could not garner signiﬁcant sales as iPad 2 was
announced globally around the same time
•  Reliance 3G Tab is the ﬁrst tablet launched by a telecom carrier (Reliance), bundled with 3G services

19
Sources: CC Analysis; Industry Inputs

Until the launch of Apple’s iPad 2 in May 2011, Samsung Galaxy Tab was
the leading tablet sold in India

Indian Tablets Market Share of OEMs Indian Tablets Market Share of OEMs
(Oct’10 to Apr’11)
(May’11 to Sep’11)
100%
10%
100%
55% - 60%

82%

25% - 30%

15% - 20%
6%
2%
Total Tablet Others
Total Tablet Others1
Apple
Samsung
Olive
Apple
Samsung
Sales
Sales

Note 1: Others include Olive, Reliance, Spice, Beetel, Blackberry, HTC,
Motorola, Acer, etc

•  For the ﬁrst two quarters of tablets availability in India, Samsung Galaxy Tab dominated the market
•  With the launch of their globally successful iPad 2 at the end of April, and with decreased price of iPad 1 by
various retail chains, Apple has managed to lead the market since May 2011, catering to early adopters in India
•  As per our estimates, the tablets market has also grown by 60% to 80% between May and Oct 2011, (post the
iPad 2 launch) as compared to Oct ‘10 to Apr ‘11 due to increased distribution and consumer awareness

20
Sources: CC Estimates; Voice & Data; Industry inputs

Apart from leading global brands such as Apple and Samsung, a number
of local Indian brands have also launched tablets in India

Samsung Galaxy Tab –
Apple iPad 1 & 2
Dell Streak
Motorola Xoom
7”, 8.9”, 10.1”
Asus EEE Pad Creative ZINIO 7, Black Elemente iBall Slide
Transformer
10
701, 707, 708

Devices Announced, Yet to be Launched

HTC Flyer
Acer Iconia
Viewsonic Viewpad
Olivepad VT100
Datawind Ubislate or the Govt. driven Akash
7”, 10”

Program

Milagrow
Reliance Tab
HCL Me X1, AE7-
Mercury MTab
TabTop
A1, AP-10 A1
Huawei S7
Binatone
SmartTab

Spice MI-720
Sony S1
Sony S2
Beetel Magiq
MSI Windpad Inﬁbeam Phi
Blackberry
7”, 10”
Playbook

Lenovo Ideapad – 3
Fly Vision
versions
NotionInk Adam
Cisco Cius
Amazon Kindle Fire
Asus EEE Pad
Toshiba Thrive
Slider
21

With Android being the choice of operating system by most of the OEMs
outside of Apple in India

Number of Tablet Models Launched in India Operating System Wise Share of Total Tablets
Split by Operating System (Oct’11)
Sold in India (Oct’10 to Sep’11)
36
26
100%
55% - 60%

38% - 42%

4

3
2
1
3% - 5%

Total Tablet Android Android Total Tablet Others1
Android
iOS
Windows
iOS
QNX
Sales
Launched
2.x
3.x
Note 1: Others include Blackberry QNX and Windows 7

•  Of over 35 tablets launched in India so far, majority of them are on Android operating system
•  Of all the Android based tablets, Samsung Galaxy Tab is the highest selling device
•  Although there were only two models of iPads launched in India, six different versions of each model
(combination of Wi-Fi, 3G and memory size) offer choice to consumers at different price points and features
•  Apple managed to garner signiﬁcant share with iPad 1 & 2 despite the high number of Android tablets
availability in India

22
Sources: CC Estimates; Industry Inputs

Operating Systems play a key role in delivering the experience for tablets

Features
Apple iOS5
Android 4.0
Microsoft WP 7.5
Blackberry QNX
Kernel
•  OS X
•  Linux
•  Windows CE 7
•  QNX Neutrino
•  GSM, CDMA, 3G,
RF Connectivity
•  GSM, CDMA, 3G
•  GSM, CDMA, 3G
•  3G, 4G
4G
Multitasking
•  Yes
•  Yes
•  Yes
•  Yes

Social Media •  Facebook, Twitter,
•  Twitter
•  Facebook, Twitter
Integration
LinkedIn, Win Live

•  iTunes – Music,
•  Windows Market •  Blackberry App
App Store
Videos, Games, •  Android Market
Place
World
Books
Browser
•  Safari
•  Chrome based
•  IE 9
•  Yes
Flash Support
•  No
•  Yes
•  No
•  Yes
•  Icons + Widgets
Home Screen
•  Icon Centric
•  Icons + Widgets
•  Icons
(Live Tiles)
Productivity
•  iWork
•  Google Docs
•  Office Mobile
•  Docs To Go
Voice Recognition
•  Yes
•  Yes
•  Yes
•  No
Voice Assistant
•  Siri
•  No
•  No
•  No
WiFi Syncing
•  Yes
•  With 3rd party apps
•  Yes
•  Yes. Manual Sync.
Over the Air
•  Yes
•  Yes
•  No
•  Yes
Updates
Cloud Support
•  iCloud
•  Google Sync
•  Sky Drive
•  Limited (after •  Deep
Customization
•  None
•  Limited
Jailbreaking)
Customization
Wireless Cloud
•  Yes, 5Gb Free
•  No
•  No
•  No
Backup
23

Too many Android versions have lead to fragmentation
2005

Apr 2009
Sep 2009
Feb 2010

Android Donut – 1.6
Android Éclair – 2.1
Android Cupcake – 1.5
Support for multiple accounts & email
Animated Window Transitions
New way to Search Bookmarks, Web
History, contacts & Web from Home in a combined Inbox
Accelerometer
Exchange Support
Improved Web Browser
Screen
Unified Video & Photos in Gallery App
Ability to search through SMS & MMS
New Virtual Keyboard
Camera Upgrades
Integrated Voice Search
Select Multiple Photos for Deletion
See what apps are draining battery
Built-in Adobe Flash Support
Home Screen Widgets
Digital Camera Zoom
Live Folders
Camera Speed Boodt (Google claims
up to 39%)
Scene modes, White Balance Controls
Color effects, Macro Focus Mode
Makeover to Virtual Keyboard for
faster typing
May 2010
Dec 2010

May 2011

Android Froyo – 2.2
Android Gingerbread – 2.3
New Homescreen to configure Designed for making Android simpler,
Shortcuts & Widgets
faster & easier
Android Honeycomb – 3.x
Built specifically for tablets
New Applications Launcher & Browser
UI placed colorful elements on black Overhaul to the OS with a 3D ‘esque path towards
Improved Security with option to set background
multitasking, Notifications, home screen customization &
PIN or password
On screen keyboard overhauled for widgets
System bar is a constant fixture
Calendar support to Exchange improving typing accuracy
Action bar changes depending on which app is being
Calendars
One touch selection with Copy & Paste
used
Camera App added on-screen buttons Improved Power Management with ability Easy to switch between apps
for Zoom, flash, white balance, geo- to monitor & close active apps
Redesigned onscreen keyboard
Browser, camera, gallery, contacts & email apps
taggings, focus & exposure
Camera app support for multiple cameras
redesigned for big screen
Camcorder got LED Flash support
Open Accessory Feature
Overall Speed boost
Performance Tweaks to Animation Framework
Resize Home Screen Widgets

24
Sources: CC Estimates, Industry inputs, http://blog.o2.co.uk/home/2011/05/android-versions-whats-the-difference.html

Apart from OS, specific hardware features such as external memory, long
battery life & USB support are also key for success of tablets in India
Key Features to be Considered for Launching Tablets in India

Feature
Description and Analysis
Significance

•  Extendable memory support is key for Indian consumers
•  Many mass market consumers in India get their
Extendable multimedia content and apps loaded on to the memory
Memory Support
card by the retailers for consumption on their devices
and share the content with others by exchanging their
memory cards

•  Some of the low & mid tier tablets with Wi-Fi only
connectivity enable users to plug in USB based data
modems for 3G connectivity. This and the ability to
connect other peripherals through the USB port is highly
USB Support
desired by the Indian consumers
•  Some retailers also position the USB port as easy to use
drag-and-drop content transfer mechanism. This is
favored by consumers who do not want to deal with
specialized software such as iTunes for content transfer

•  Long battery life is a key hygiene factor for all devices in
India
•  Mass market consumers in India expect their device
Long Battery Life
battery to last at least one full work day
•  Consumption of multimedia on portable devices is
extremely high in India and also, sub-optimal networks
(3G & Wi-Fi) tend to drain the device power rapidly

Extremely Important
Highly Important
Important
Less Important
Insignificant
25

Of all the retail channels that are currently selling tablets, Large Format
Retail stores sell the most

Current Tablets Sales in India Split by Type of Retail Channel (Sept 2011)

100%
60% - 65%

10% - 15%

15% - 20%

5% - 8%
1% - 2%
Total Tablets Sales
Large Format Retail
Concept Stores
IT Channel
Telecom - Telecom - Multi
Orgnanized Channel
Brand Outlets

•  Tablets sales in Large Format Retail stores such as Croma & Reliance Digital is high as they provide wide
range of devices on display, good device as well as retail experience and have well trained staff
•  Some OEMs are confused whether to position the tablet as an IT product or a telecom product. They are
distributing 7-inch versions in the telecom channel and the 10-inch version in IT channel
•  Telecom organized channel chains such as Univercell, The Mobile Store, etc who have recently started selling
tablets are struggling with sales, as they are unable to provide the necessary retail experience or educate the
customers
•  IT Channel, which is more adept at solution-selling is able to educate the consumers on the value proposition
of tablets and are currently faring better than telecom channels for tablet sales

26

The current tablet buyers (early adopters) in India consider device OS,
price, brand and the high level features for purchase
Purchase Decision Making Process for the Current Tablet Buyers (Early Adopters)
in India
Apple
iPad
Wi-Fi Only Wi-Fi + 3G
iPad or
Or
Other
Wi-Fi + 3G
Tablets

Wi-Fi Only

Others
Purchase one of the Purchase one of the
Wi-Fi Only iPads
Wi-Fi+3G iPads

Evaluate key parameters Key evaluation criteria for non-iPad models include:
(Price, Brand & Features)
•  Price
−  Low End – Sub USD1 250
−  Mid End – Between USD 250 and USD 500
−  High End – Over USD 500
•  Brand – Samsung, Motorola, Acer, etc
Evaluate secondary •  Key product features
parameters (Product
−  Display Size – 7” or >7”
Hygiene)
−  Operating System – Android 2.x vs 3.x or other
−  Extendable memory support
−  Onboard memory size
•  Hygiene features such as long battery life, USB
Purchase appropriate support, multiple multimedia formats support,
model
type of inbox accessories, etc
27

Note1: 1 US Dollar = 50 Indian Rupees

The devices in India can be broadly classiﬁed into three different
categories based on their features and price point
Segmentation of Tablets Currently Being Sold in India Based on Price

Segmentation
Price Range
Key Features

•  7 inch, 800 x 400 px, capacitive display (some OEMs
use resistive displays for ultra-low end tablets)
•  Smartphone operating system (Android 2.x)
Low Tier
•  Up to USD 250
•  Processor – Typically less than 1GHz
•  Memory – 256MB RAM. Internal memory of 8GB or less,
with extendable memory support
•  Connectivity – Typically Wi-Fi Only

•  7 inch or higher capacitive display
•  Smartphone operating system (Android 2.x)
Mid Tier
•  Processor –1GHz
•  USD 250 to USD 500
•  Memory – 256 or 512MB RAM. Internal memory of 8GB
or less, with extendable memory support
•  Connectivity – Typically Wi-Fi & 3G (in some cases)

•  Typically over 7 inch, multi-touch capacitive displays
•  Tablet optimized operating systems – Android 3.x,
High Tier
Apple iOS, Blackberry QNX, etc
•  Over USD 500
•  1GHz or higher, multi-core processors
•  Memory – 512MB or 1GB RAM. Internal memory of 16GB
or higher
•  Connectivity – Wi-Fi and 3G

28

Different segments of consumers have different primary uses of tablets
ranging from portability and remote access to multimedia consumption
Various Indian Consumer Segments and Their Primary Tablet Use Cases

Consumer
Deﬁnition
Key Tablet Use Cases
Description
Segment
•  Portability
•  Corporate professionals use tablets
•  Professionals spend •  Connectivity on the move
extensively as it provides
most of the day in •  E-mail & internet access
portability and the bigger display
Corporate
offices
(as compared to smartphones) is
Professionals
•  Client presentations
•  Connectivity is high conducive for extensive web
priority
•  E-book reader
browsing, remote e-mail access
•  Writing & annotation
and reading
•  Applications
•  Connectivity on the move
•  Technology savvy early adopters
Tech Savvy/
•  Own latest device
explore the latest applications and
•  E-mail & internet access
Gadget Crazy
•  Early adopters
games and are always-on the
•  Multimedia
internet while on the move
•  Gaming
•  Applications
•  High end youth and prosumers
•  Aspirational Category
•  E-mail & internet access
moderately use tablets for various
High End Youth •  May go beyond their applications and services
•  Multimedia
and Prosumers
means to own better
gadgets
•  E-book reader
•  Their primary goal is to cater to the
•  Gaming
aspirational value of the device

•  Multimedia on the go
•  Mass market consumers in India
•  May not be connected
are expected to use the tablets
Mass Market
to Internet but own a •  Basic internet and e-mail primarily for multimedia
communication device
access
consumption

29

Contents











30

Apart from retail, tablets targeted at specialized verticals such as
education sector & enterprise users are also being launched in India
Aakash (Ubislate) – USD 35 Tablet for Students
Cius (Cisco) – Tablet for Enterprise Customers

•  Aakash is an Android tablet jointly developed by the •  Cisco has launched a 7” Tablet, Cius at USD 700
London-based OEM, DataWind with the Indian Institute targeted for enterprise customers
of Technology and manufactured by the India-based •  Cius is the ﬁrst tablet based on Intel’s Moorestown
company Quad
family of processors and is also compatible with a
•  The seven-inch touch screen tablet features 256 MB docking station
RAM, uses an ARM 11 processor with the Android 2.2 •  Cius is based on Android 2.2 and includes various
OS, has two USB ports and delivers HD-quality video. Cisco’s enterprise communication apps such as
Aakash has access to Getjar app store instead of −  Uniﬁed Box (Phone, Chat, Email, Calendar, and Contacts
Android Market
in a single app)
•  The device will be sold to the Government of India at −  TelePresence video conferencing system and
$50 and will be distributed to the students at a −  WebEx web-conferencing app
subsidized price of $35
•  Access to Cisco’s AppHQ along with Android
•  The Aakash is designed to support various document, Marketplace will enable companies access secure
image, audio & video formats
mobile business-differentiated applications
•  The success will however depend on how well the •  Tablets offering higher security and enabling
device is built and its usability
customized apps are preferred by enterprises over

retail consumer devices

31

Educational institutes in India are also considering to deploy tablets

Case Study: Proﬁle of a South Indian Engineering College considering tablets deployment

Process Flow for Classroom Notes Distribution
and Consumption on Tablets by Students
•  Number of Courses Offered – 39
•  Number of Students – Over 9,000
Central Server
•  Number of Faculty – Over 1,100
Wi-Fi Router
•  Campus already enabled with Wi-Fi network
Digitized Board
2
•  Objective: : Digitization of all key study
1
elements
−  Textbooks
−  Daily notes distributed through a campus wide
4
Wi-Fi Network
3:
−  Automate class room attendance
5
•  Authenticate
•  Store and •  Solution:
disseminate −  Deploy tablets to all students, enabling portability
digitized and mobility
content
−  Disseminate digitized textbooks and daily updates
•  Read
of class notes to the tablet
•  Annotate
•  Consume
−  Deploy a location-based solution for automated
attendance marking in the classroom
Students With •  Currently in discussion with various tablet
Tablets
OEMs and solution providers/system
integrators to source a complete solution

32

Telecom carriers, looking for higher data-based ARPUs have started
launching tablets bundled with their 3G services
Reliance Tab Proposition and Offerings

Key Device Features:
•  Android 2.3 OS (Gingerbread)
•  7 inch Multi-touch Screen (480*800 pixels)
•  9 hours of talk time & 300 hours of standby time
•  Extendable memory support
•  Dual Camera (2 MP - Rear & VGA - Front )
•  Fully featured mobile phone with FM radio
•  Wi Fi Hotspot + Bluetooth and Live TV

Tariff Plans Prepaid & Postpaid

Free Data Usage/Month
1GB
2GB
5GB

Advance Annual Rental (USD)
90
110
140

Device Cost – USD 260
Discounted Monthly Rental (USD)
NA
12
16

•  Reliance has started offering a mid-tier tablet bundled with its 3G services. It procures the device from ZTE
•  The minimum cost of ownership for the consumer is USD 350 (device cost + 3G, annual 1GB plan)
•  As per Convergence Catalyst estimates, Reliance has managed to sell 10K to 12K devices in the ﬁrst 10 weeks of
its launch (as of end Oct’11), with majority of sales from Reliance’s existing enterprise customer base
•  For new carriers such as Reliance, who have relatively uncongested 2G networks and are looking to attract high
ARPU subscribers on their 3G networks, tablet-bundled 3G services are a good option

33

Going forward, with launch of 4G services in India, carriers could
potentially launch their services bundled with LTE enabled tablets
Key Milestones for LTE Services Launch in India

•  Invitation to vendors for •  Awarding network •  Launch of commercial
appraisal on requirements
contracts
services

Jan ‘11
Apr ‘11
Jun ‘11
Sep ‘11
Dec ‘11
Apr ‘12

•  Technology evaluation •  Test network setup &
•  RFP & vendor evaluation
& standards deﬁnition
ongoing network rollout

•  Going forward, as the LTE service are launched in India, Convergence Catalyst expects the carriers to offer
LTE enabled tablets, bundled with services
•  The carriers can leverage higher data speeds of LTE technology to offer better connectivity and optimized
user experience to the consumers
•  Although, currently the cost of LTE enabled tablets is high, pan-India LTE carriers such as Reliance-Infotel
can help drive the scale and decrease in devices cost
•  Reliance-Infotel is reported to be in discussion with content providers such as Walt Disney, Extramarks Edu,
etc and tablet ODMs from Taiwan to source both content and devices and sell them at subsidized prices,
bundled with TD-LTE services

34

Contents











35

A combination of Affordability, User Experience, Aspiration and Utility
will make Tablets a strong proposition for Indian consumers

•  Indian consumers are price-sensitive and the device
Affordability
price needs to be in a ‘sweet spot’ for faster uptake

User •  The overall user experience of the tablet (including the
Experience
device user interface) is key to hold the users’ interest
Tablet Value
Proposition
for Indian
Consumer
•  Tablet’s positioning should have strong aspirational
Aspiration
value, so that the consumers upgrade from their
existing devices

•  Something for everyone makes tablet the ultimate All-
Utility
in-One device

36

Most of the product categories in India witness steep uptake only after
the price becomes affordable to the mass market levels
Affordability

India Smartphone ASP Vs Sales Trend
(2010 – 2011)
‘000
USD
2,500
500

•  For a price-sensitive market such as
2,000
400
India, the cost of ownership (including

Smartphone Average Selling Price
Smartphone Sales (in Thousands)

device and service cost) is a key factor
•  For tablets to be adopted by the mass
1,500
300

market, the pricing of the device has
to be in the “sweet spot”
•  The smartphones (adjacent product
1,000
200

category to tablets) sales in India have
increased signiﬁcantly once the
average selling price of the device has
500
100
reached approximately USD 250

0
0

Q1'10
Q2'10
Q3'10
Q4'10
Q1'11
Q2'11
Q3'11

Smartphone Sales Trend
Smartphone ASP Trend

37

A combination of fast data connectivity, slick user interface and relevant
content lend to the overall user experience on the tablets
User Experience

Factors Lending to Overall Tablet User Experience

+
+

Faster Data Slick Device Relevant
Connectivity
User Interface
Content

•  For an overall, optimized user experience on a tablet, along with the device user interface, availability
of fast data connectivity (3G/4G/Wi-Fi) and access to relevant and compelling content is necessary
•  While the device user interface is a function of the software (OS and UI layer), hardware features (such as
processor, RAM and display), wireless data connectivity is provided by various telecom service providers
•  Tablet OEMs and carriers should potentially partner with each other along with content developers and
application developers (for localized content and apps) to provide compelling user experience to the
consumers

38

Functional exposure breeds familiarity, which leads to aspiration of
devices upgradation among Indian consumers
Aspiration

Typical Indian Consumer’s Gadget Current Installed Base of Product
Ownership & Upgrade Cycle
Categories Adjacent to Tablets

>20 mn
~20 mn

Exposure
Wants
Needs

~12 mn
Aspires for More
Breeds Familiarity
Owns

Upgrades
Progresses to Other Categories

Flat Screen TVs
Notebooks
Smartphones

•  Typically Indian consumers aspire for their next device post exposure to functionality on an adjacent
category product
•  This aspiration is also driven by device ownership by the peer group
•  Tablets could potentially be positioned as the ‘cool, must-have’, device targeting the existing laptop and
smartphone owners who can supplement their current devices

39

The tablets’ ability to be ‘something for everybody’ needs to be
optimally exploited by the players for Indian market
Ultimate Convergence
Utility

Computing

•  Understanding the key utility and
applications of a device is important
for consumers
•  Multiple use cases such as book
reading, internet access, gaming,
Consumption
email, music & video consumption,
video chat, etc for which different
segments of consumers use
different devices can be performed
by tablet
•  The industry players can potentially
position the tablet as the ultimate
Communication
convergence device which caters to
the users’ various computing,
consumption and communication
needs

40

While utility of tablets is extremely important to the tech savvy segment,
the high end youth and prosumers aspire the most
Key Tablets Value Proposition Factors Relevance for
Various Consumer Segments

Consumer User
Deﬁnition
Affordability
Aspiration
Utility
Segment
Experience

•  Professionals who spend
Corporate most of the day in office
Professionals
•  Connectivity is high
priority

Tech Savvy/
•  Own latest device
Gadget Crazy
•  Early adopters

•  Aspirational Category
High End Youth •  May go beyond their
and Prosumers
means to own better
gadgets

•  May not be connected to
Mass Market
Internet but own a
communication device

Extremely Important
Highly Important
Important
Less Important
Insigniﬁcant

41

Contents











42

Indian consumers do not yet understand the core value proposition of
tablets
Television
Mobile Phone
Personal Computer
Tablet

•  While the average Indian consumer clearly understands the core value proposition of a Television, Mobile
Phone and a PC and is comfortable using them, lack of consumer education and established core value
proposition for a tablet is a major challenge in India currently
•  Many Indian consumers, even in urban areas, are unable to understand the need to own a third personal
device (apart from their smartphone and laptop) and justify the purchase of a tablet, especially since the price
of desired models such as Apple iPad and Samsung Galaxy Tab are quite high
•  The industry players need to educate the customer and the channel through both ATL1 and BTL2
communication channels to overcome this challenge

43
Sources: CC Analysis Note 1: ATL – Above The Line; 2: BTL – Below The Line

Lack of ubiquitous 3G network coverage and faster data speeds will fail
to provide optimum user experience on tablets

Voice and Data Capacity for 2G Site (Erlangs)
Voice and Data Capacity for 3G Site (Erlangs)

1 2 3 1 2 3

1
Total Site Capacity: 40 Er
1
Total Site Capacity: 105 Er

2
Voice Usage for 1100 Subscribers @ 0.035 2
Voice Usage for 1100 Subscribers @ 0.059 Er
Er per sub
per sub (assuming higher usage for 3G sub)

3
Total Capacity Available for Data Usage
3
Total Capacity Available for Data Usage

•  The 3G network coverage in India is still patchy and not ubiquitous
•  Most of the 3G networks in India (especially those of incumbent carriers) are not yet optimized for data. In some
cases, the cell sites are conﬁgured for a maximum of 0.5 Mbps data rates, which are insufficient to provide
optimum experience on tablets
•  Although Aircel has deployed about 50,000 Wi-Fi hot spots in areas with high, concentrated foot falls such as
malls and theaters in different cities, the usage and data traffic through these hot spots is signiﬁcantly low

44
Sources: CC Estimates, Industry inputs

Prevalent piracy, low digital content sales and lack of alternate payment
models are other challenges for uptake of Tablets in India

Various Modes of Mobile Music Online Music Sales in India
Total No. of Active Credit Card
Access for Indian Youth
(USD ‘000)
Users in India (mn)

91%
40
250

69%
200
30

150
20
220
100
29
10
22
18
50
<5%
40
0
0
Sharing With Dwnld From Paid Dwnld 2007
2010
2006
2008
2010
Friends
Pirated Sites
From Carrier

•  Majority of Indian consumers (including
•  The increased number of defaults and the
youth) do not pay for multimedia •  Easy availability of free, pirated content
clean-up of credit cards portfolio by the
content that they consume on their and high price of songs available from
banks has decreased the (already low)
mobile devices
DRM channels
number of credit cards between 2008 to
•  Such behavior of Indian consumers is •  In India there is approximately 1 legal 2010
discouraging for ecosystem players download for every 50 illegal
•  This is a hindrance for purchase of apps
trying to monetize multimedia content downloads
from tablet platform various app stores
on tablets

45
Source: Nokia Mobile Music Youth Survey – Oct 2011; I-Cube 2009 & 2010 Report; FICCI Frames – PWC Report; RBI

Contents











46

The tablets adoption in India has been projected basis the installed base
and growth of different mobile phones and other ecosystem enablers

Total Unique Classiﬁcation Split of Each Growth of Mobile Potential Ecosystem
Mobile Device of Mobile Type by ASP Phones (2012-14) Enablers Driving
Owners
Devices
Segment
by Type & ASP
Tablets Adoption

Phones (FP)
Adoption by
Total Installed Base of Unique
Mobile Device Users (2011)

Feature
High ASP
High ASP
Industry
Verticals

Medium Medium Carrier
ASP
ASP
Bundling
Smartphones
(SP)

Adoption by
Low ASP
Low ASP
Unconnected
Segment

Total Tablet Sales
by Year for Bullish
Base Case
Bearish
Different Scenarios

Assumptions:
•  All the Tablet owners will be existing owners of mobile phones for the forecast period. Tablets will coexist with mobile
phones and/or computers
•  High and Medium ASP smartphone owners will have greater share of (high and mid ASP) tablets and also will be the early
adopters, followed by high ASP feature phone users, who are expected to primarily buy mid and low end tablets
•  All the current and future computer (PC/Laptop/Netbook) owners will also own mobile phones (smartphone or feature phone)
47
Sources: CC Analysis, Industry inputs Note: ASP – Average Selling Price
- Input
- Output

Tablets could potentially reach the sales of over 5.5 million in 2014

Forecasts for Tablets Sales in India by Year
(2011 – 2014, in Thousands)
•  Globally, tablets are following the adoption
‘000
path of smartphones, and not of netbooks. We
6,000
believe it will be a similar case in India as well
5,537

•  In 2012, majority of the sales are expected to
come from the retail channels, and the
consumers (especially, mid-tier segment) will
4,000

choose to purchase either a smartphone or a
tablet but not both (at least within 6 to 9
months of purchase of the former)
2,375
2,256
•  Signiﬁcant adoption by verticals such as
2,000

education, retail, aviation, etc and also the
1,507

924
unconnected segment is not expected before
777
2013. By then we expect ecosystem to be
378
458

214
312
ready with mobile networks coverage, digitized
0

2011E
2012E
2013E
2014E
content, communicating the value proposition,
Bullish
Base Case
Bearish
etc

Feature Phone
Smartphone
Tablet
•  High ASP - $140 to $180
•  High ASP - > $400
•  High ASP - > $500
•  Mid ASP - $80 to $140
•  Mid ASP - $200 to $400
•  Mid ASP - $250 to $500
•  Low ASP - $40 to $80
•  Low ASP - <$200
•  Low ASP - <$500

48
Sources: CC Estimates and Analysis

Contents











49

Opportunities for Tablet ecosystem in India to explode (1/2)

There exist a number of potential drivers on the demand side…

Parameter
Key Statistic

• Number of active internet users in India
•  ~97 Million

• Number of existing PC users in India
•  Over 52 Million

•  Between 15 to 18
• Number of active 3G subscribers in India
Million

• Number of TV Households in India
•  ~ 141 Million

• Number of unique mobile device owners in India

• Number of unique smartphone users in India

• Number of IT and ITES workforce in India
•  ~ 2.3 Million

• Number of Facebook users in India
•  ~ 36 Million

50
Sources: CC Analysis; Industry Inputs, NASSCOM, TAM India, IAMAI, MAIT

Opportunities for Tablet ecosystem in India to explode (2/2)

…and, on the supply side

Parameter
Key Statistic

• There is an App for everything
•  NA

• Touch – The new paradigm
•  NA

• Indian government’s ambition for the education sector
•  USD 35 Tablet

• Number of global tablet sales in 2012 (projected)

• China and Taiwan based ODMs driving economies of scale
•  NA

It is up to the ecosystem players to navigate through a highly fragmented retail
universe, diverse consumer segments, unique consumer expectations & complex
market dynamics and capitalize on the opportunity called INDIA!

51
Sources: CC Estimates and Analysis

Contents











52

Convergence Catalyst brings vast telecom industry & consultancy
experience to offer research and consulting services in the TMT domain

Telecom Industry and Management Consulting Experience of Key Convergence Catalyst Core Team Members

Domain Experience
Companies Worked For
Key Functional Roles Held

•  Head, Product Marketing - Motorola
•  Head, Product Management – MTS
Telecom
Industry
•  Senior Manager – Tata Teleservices
•  Product Manager – Nokia
•  Test Lead, RF – Qualcomm
•  Network Planning & Optimization – ITI

Management •  Senior Management Consultant –
Consulting
Analysys Mason

Telecom
Media

Technology

53

India Tablets Market Report - By Convergence Catalyst

India Tablets Market Report - By Convergence Catalyst

Recommended

Recommended

More Related Content

India Tablets Market Report - By Convergence Catalyst