What impact the upcoming round of chipsets will have on the hybrid tablet and PC sector has been discussed in recent industry press. Notably, discussion around Intel's Bay Trail Atom chip for embedded devices has been interesting and potentially hopeful for the PC sector alongside of added opportunities for already expanding sectors such as automotive semi, set-top boxes, medical electronics, and, of course, smartphones and tablet-PCs.
Certainly the market and macro-economic conditions lead us to continue the search for the next high volume device driven by the next most-in-demand component. However, as we see a healthy sea of competition presently, and falling ASPs for both components and devices, can there be too many options, perhaps not of the right mix?
The consumer's "Goldilocks Question"
With product shipments for smartphones and tablets ever-increasing, consumers globally have been presented with more choices and wider ranges in terms of pricing, product styles and features as well as operating systems (OS). Although volume shipments are up, the question is, might there be a lower-end threshold for devices, a level at which while costs are low, the degraded user experience and feature options just are not worth the monetary savings that consumers have been presented with. Is there what I would call a "Goldilocks Question" pertaining to what is just right in terms of pricing for expected features and user experience? Data and industry discussions certainly point to this being a very real situation.
While the volume shipments for lower-priced tablets rise, one recent article by PCWorld underscored that many consumers have tried the low-cost tablets and dissatisfaction levels have been high. The resulting situation, particularly for consumers in mature markets, is that they are likely going to be unwilling to compromise features and user-experiences for only modest savings when purchasing tablets and smart devices.
There are thresholds for competitive diversification, particularly when significant price differences lure consumers only to provide an equally low level of functionality, applications, and limited user experiences – far short of what expectations are when compared to high-end devices. Certainly, this market situation holds a mix of opportunities and challenges. For one, it has provided a (albeit narrow) window of opportunity for new competitors to market devices; however, dissatisfied consumers now understand first-hand the value that higher-end (and higher priced) devices provide, and are likely to be more willing to choose leading OEMs for their next purchase.
Enter new chips to bridge the middle-ground
This brings us back full-circle to the discussion of Intel's latest Bay Trail Atom series. With lower pricing and versatility packaged to meet the "just right" price and feature points that OEMs are trying to provide consumers, Bay Trail holds opportunities for OEMs to be more flexible regarding both OS demands, pricing, and deliver higher quality devices that meet users' expectations. These are positives for a healthier market going forward.
Intel is not alone in the Goldilocks "just right" solution, as the PCWorld article notes clearly:
Intel isn’t acting in a vacuum; Bay Trail will be competing against ARM chips such as the Qualcomm Snapdragon 800, which has already been benchmarked, in traditional Android tablets. If Qualcomm or Nvidia can convince buyers that their chip is the premium offering—whether in an Android tablet or a refreshed Surface RT—Intel may have to sit on the sidelines for a generation.
Meanwhile, diversification opportunities for the latest slate of chips could provide greater impetus for pricing relief for OEMs as they seek to provide the best user experience alongside of reasonable pricing, particularly for mature market consumers and enterprises. The diversification opportunities come from the flexibility of the latest chips to be used across industry sectors, such as computing, mobile, automotive, health & fitness, and industrial products. What we are seeing is a commoditization of a broader type than we've typically seen before; one that will provide multiple sectors with solution sets for continued design options while holding pricing in check during the ongoing conservative economic climate.