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No iPad Killers Yet, but Notebook Upgrades May Fuel Growth

Jeremy Glaser

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser at the 2012 Consumer Electronics Show in Las Vegas. Like the past couple of years, tablets have been on the top of everybody's mind. Now the question is not, if the tablet is going to be a successful device. Apple's iPad and to some extent Amazon's Kindle Fire have proved that consumers have a demand for the tablet. But the questions are how big can the tablets become and can anyone dethrone Apple from the top of the tablet heap?

And what we have seen so far at the show is that we haven't really seen a tablet that can really go toe-to-toe with the iPad, and it's going to gain a lot of mind share at least from consumers who are looking to get into the tablet space. We have seen a lot of offerings from a bunch of different manufacturers, from Motorola, from BlackBerry again with the second generation of the Playbook, and from Lenovo. There are a lot of good devices, but none of them really has a big differentiating factor that's going to make them seem to really stand out.

They don't have the level of apps that the iPad still has. The hardware is very similar in terms of screen size, battery life, and a lot of the different features. One thing that we're starting to see are tablets that are accessible to 4G networks in the United States, which something the iPad doesn't do yet, but I'm not sure that that's something that is really going to drive people into the stores and into looking at alternative devices or Android-driven devices.

I think the idea is that these products really need to do something else special. They need to do something else different, something that we have heard from a lot of people here on the floor.

Shawn DuBravac: The key thing to think about when we think about these devices generally, certainly with the computer devices is what new attribute are they bringing to the mix? How are they differentiating what's already in the marketplace? How are they providing a unique experience with consumers, and if you look at tablets for example, they did one thing and one thing well. They changed the real estate that's available to the consumers. If you go back and look at netbooks, they did one thing, and they did one thing well. They lowered the entry price point for notebooklike devices, and so for a while netbooks did very well. Tablets are doing very well today.

What I see happening with computers is consumers will be thinking about their computing needs in a much more holistic way. So they're going to buy the computing devices that make the most sense for them at a given time. That might be upgrading a notebook to something. That might be upgrading a tablet to another tablet. Or it might be buying a completely different computing experience.

Glaser: Of course, Microsoft believes that with Windows 8 and Windows 8 running on tablets, the firm will be able to differentiate itself enough to make a splash in the marketplace, and I think that the Windows 8 interface that Microsoft is going to use for tablets, called Metro, which is very similar to what the firm is using on Windows phone at the moment and also on the Xbox console, certainly is differentiated. It does look a little bit different than what you're going to get out of an Android tablet or the iPad, but I still don't really know. We don't know exactly what the hardware is going to look like or exactly how well Windows 8 is going to run performance-wise on different tablets.

This is the first time that Windows is going to run on some of the ARM-based processors, which are the lower-powered processors that tend to be on tablets. So, until we really see those performance specs and see it in the wild, it is going to be difficult to know if Microsoft has a winner on its hands, at least in the tablet space with Windows 8.

Now another category in the portable market that has been getting a lot of attention are the Ultrabooks. Ultrabook is a spec that Intel created, to create thin and light laptops to compete against products like the MacBook Air, and other really thin laptops that have great battery life, that have solid-state hard drives that really speed things up, and that just are incredibly thin.

We have seen a lot of really great examples of these, particularly from Lenovo which had ones that just really felt very sturdy and really felt like, at least on the hardware-construction standpoint, were on par with any laptop you can get from any manufacturer. And then we have seen really just a number of such products from a bunch of different people, from Hewlett-Packard, from Samsung, and from Dell. And I think really the question will be, if these notebooks are going to be able to take market share from traditional consumer notebooks, which will still be obviously available at a lower price point as some of these Ultrabooks are coming in, can the manufacturers create the marketing message around these new notebooks to get people to spend a little bit extra, to get the thin and light models, and to get the good battery life?

We also spoke with the Morningstar analyst team about the Ultrabooks and here is what they had to say.

Michael Holt: The Ultrabooks are compelling. They are slick devices. It is going to help PC sales on the margin, and that's for sure. A couple of years ago when we had netbooks, Steve Jobs was right, and he said they weren't good at anything. But these are full-blown machines with a compelling form factor, and it is going to drive a lot of interest over the next couple of years.