Citigroup’s Walter Pritchard, Richard Gardner, Mark Mahaney, and Glen Yeung late last night offered up an update to Citi’s thinking about tablet computers, based on a survey of 1,800 consumers in the U.S., the United Kingdom, and China conducted through online surveys in July and August.
Broad conclusions are that the tablet computer could be a personal computer replacement in China, though maybe not in developed markets, and that the dominance of Apple’s (AAPL) iPad has increased since Citi conducted a similar survey in November of last year.
Tablet computer ownership has jumped from 3% to 18% of survey respondents since the year-earlier study, they write. Interestingly, so has PC ownership: laptops are now owned by 81%, up from 62%. Smartphone use has gone from 28% to 59%.
The number of people intending to buy a tablet has risen from 14% to 31%. Though smartphone and laptop ownership intentions have also risen, albeit by a smaller proportion.
In China, 26% of the survey respondents indicate they are “very likely” to buy a tablet computer, way more than the 12% found in the U.S. and the U.K. And 21% say they already have a tablet, versus 17% in the U.S. and U.K.
Moreover, they write, “Those that plan to purchase tablet [in China] as likely to use for PC replacement as ‘toy / gadget’,” and “More likely to use tablet for broad set of activities, suggests tablet is less of a ‘niche’ device in China.”
Those considering a tablet now express a preference for Apple 77% of the time versus 73% back in November. Interest in Microsoft’s (MSFT) Windows on a tablet has slipped from 52% to 40%, while enthusiasm for Google’s (GOOG) “Android” software on a tablet is “stable” at 36% versus 38% a year earlier, the authors write.
The good news for the PC market is that there is no increase evident in cannibalization of PCs by tablets, the authors write. But the story is mixed: Tablet owners, they find, are more likely to buy a laptop in the next 12 months than are people who don’t yet have a laptop; but tablet owners are also “less likely to purchase traditional PC (laptop/desktop)” than people who don’t own a tablet.
The tablet is “even more of a ‘toy/gadget’ than a year ago,” they note, with 62% justifying purchase as such, up from 44% when it came out. Buying for work has risen, to 18% from 13%, while buying as a gift has dropped from 27% to 18%. Slightly more people are considering one now as a notebook or netbook replacement, while buying as a “starter” PC or a desktop replacement has declined as a percentage.
Price is still the “primary inhibitor” to tablet purchases, they note, but a “lack of functionality of the device” compared to PCs is also a factor. 39% of survey respondents said a tablet was “too expensive.”
As with notebook computers, the authors expect tablet purchasing to increase with lower prices. right now, the most prominent tablets, including the iPad, the Samsung Electronics (SSNLF) “Galaxy Tab” and others all start in a range of $399 to $499.
Out of 75 million tablet units that may be shipped in 2012, “We currently forecast 50 million iPads for, but Apple appears on track to sell >45M units in CY11, suggesting our estimate is likely conservative,” they write. “Every 1M iPads is worth $0.04-0.05 of incremental EPS (depending on mix).”
Despite a healthy growth outlook, the iPad faces the challenge of Windows running on tablets using chip designs based on ARM Holdings’s (ARMH) licensees (Nvidia (NVDA), etc.), and also from Amazon.com’s (AMZN) willingness to sell a tablet computer for nothing.
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