Amy Schatz
December 01, 2003
Dec. 1--A year ago, Microsoft Corp. founder Bill Gates predicted that the next time he took the stage at the Comdex computer trade show in Las Vegas, a large percentage of the audience would be using tablet PCs.
So much for that prediction. Notebooks were still the computer of choice at the 2003 show two weeks ago. A year after their introduction, sales of the Etch-a-Sketch-like PCs are still slow compared with overall computer sales.
Expectations for the new PCs may have been set a little high by Microsoft, says Mike Stinson, Gateway Inc.'s vice president of mobile products.
But the computers are beginning to win converts.
As wireless Internet access grows, corporations are starting to buy the ultra-portable PCs, which use a special version of Microsoft's Windows software featuring hand-writing recognition.
It's too early to say whether tablets could one day replace laptops as the mobile PC of choice for corporate America. But Austin-based companies Motion Computer Inc. and Xplore Technologies Corp. are counting on significant growth.
Motion and Xplore make slate tablet PCs -- flat, light computers that require a PDA-like stylus instead of a mouse. An attachable keyboard allows them to be used like more traditional PCs.
Computer giants Toshiba Corp. and Hewlett-Packard Co. dominate the market with about a 25 percent share each, followed by Fujitsu Siemens Computers and Acer Inc., with 18 percent and 17 percent, respectively, according to research firm IDC.
Including its partnership with Gateway, Motion has about 7 percent of the tablet PC market, according to research firm IDC. Xplore's sales account for about 2 percent.
"This market is certainly not a mainstream market yet," says Scott Eckert, Motion's chief executive officer.
As expected, the biggest adopters so far are in public safety and health care. Insurance agents are using them to help sell new policies and complete claim forms. Doctors and nurses are using them to access patient records at a growing number of hospitals and clinics.
Health care providers account for roughly 40 percent of Motion's customers. Xplore's tablets have been popular with police departments across the country.
"It's taking a little more time to grow that market," says IDC analyst Alan Promisel.
About half a million tablet PCs will be sold this year, growing to more than 13 million by 2007, IDC estimates.
"More and more people will use (tablet PCs)," Gateway's Stinson said.
Gateway introduced a new hybrid Tablet PC earlier this month, which incorporates elements from laptops and tablet PCs. The company also resells a tablet built by Motion.
Two things need to happen for tablet PC sales to take off, Promisel says: Prices need to drop closer to the average price of a notebook PC, and some sort of productivity-increasing "killer ap" needs to be developed.
Eckert said sales growth is being driven by the dozens of new industry-specific software packages now under development by small vendors.
Motion and Xplore are getting a boost from Dell Inc., which resells machines from both companies. CEO Michael Dell said recently that the market is still too small for the company to introduce its own products.
That's welcome news for Motion executives, who know a bit about what happens when the world's largest PC maker decides to enter new markets.
Motion was the brainchild of David Altounian, a retired Dell executive who now leads the company's product development team. Two years ago, Altounian decided tablet PCs could be the next big thing, after having lunch with a friend who worked on the Tablet PC software development team at Microsoft.
He convinced a group of fellow, mostly middle-age retirees -- from Dell and other PC companies -- to join him. Within a year, the startup had a small office on Bee Cave Road and began developing an ultra-portable PC.
Just three months after landing $6.5 million in funding in August 2002, the company launched its first tablet PC, a 3-pound slate PC with a larger-than-average, 12.1-inch monitor that sells for about $2,000.
On Tuesday, the company will introduce a new screen that can be seen clearly outside as well as indoors. It uses technology initially developed for the military.
Although the company downplays its Dell roots, the experience and connections Motion executives made there help explain how a 70-person startup could launch a new product in three months and become profitable in its first year.
The company outsources production of its PCs to Compal Electronics, the same Taiwanese manufacturer that Dell uses to make some of its laptops.
Motion keeps inventory and other expenses to a minimum. It auctions off its two covered parking spaces to the highest internal bidders each year to keep the company fridge stocked with soft drinks.
But that's where the similarities end. Unlike Dell, which leaves much of the research and development of core PC technology to others, Motion is focusing on providing the most innovative tablet PCs on the market, Altounian said.
Just a few miles away, Xplore engineers are concentrating on developing an entirely different kind of tablet PC -- one built to withstand water, snow, dust and other extreme weather conditions.
The company recently signed a deal with Dell that will allow Xplore to sell its products to the Department of Homeland Security and other government agencies.
Like Motion, it outsources the manufacturing overseas. Still, the company has a long way to go to reach profitability. Last year, Xplore had a net loss of $13.3 million on sales of $19.8 million. Its shares trade on the Toronto Stock Exchange, but the company plans to apply for a listing on either the Nasdaq or the American Stock Exchange next year.
The company's stock has nearly tripled in the past year to $1.18 a share from 40 cents.
By the end of next summer, Xplore is expected to complete relocating its corporate headquarters to North Austin. Most of the Canadian company's 70 employees already were working in sales and engineering here, so executives decided earlier this year to move the entire operation to Austin.
"A majority of our customers are in the U.S. It made a lot more sense to grow our operations there," said Brian Groh, Xplore's chief executive officer.
-----
To see more of the Austin American-Statesman, or to subscribe to the newspaper, go to http://www.statesman.com
(c) 2003, Austin American-Statesman, Texas. Distributed by Knight Ridder/Tribune Business News.
Keep up with the latest in mobile computing news with a free subscription to our mobile computing news alerts service. Each week, Synchrologic delivers a summary of the most significant mobile computing news to your inbox. To sign up for this service, click here
.
|
