The emergence of tablets as an alternative to PCs has caught the attention of chip makers, which are preparing next-generation processors to boost application and graphics performance on the devices.
Following the launch of the iPad in April, Apple sold close to 7 million tablets by the end of September, with consumers using them to view video, read e-books, surf the Web and play games. The appetite for tablets has pushed chip companies like Arm and Intel to develop next-generation processors designed to make tablets faster and more power-efficient.
Prominent consumer electronics companies like Samsung, Dell, Hewlett-Packard and Research in Motion are joining Apple in a race to gain tablet market share. These tablets run Google's Android, Microsoft's Windows, or internally developed operating systems.
Not everyone is convinced there really is a tablet market beyond the iPad. "All these new Android and Windows tablets have yet to prove there's really a market beyond Apple," said Roger Kay, president of Endpoint Technologies Associates.
Apple may simply be benefitting from pent-up demand for its products at lower price points. "Essentially, people are able to get an Apple for half of what it used to cost," Kay said.
Research firm Gartner, however, has pegged tablet shipments to reach 54.8 million in 2011, so there could very well be room for multiple players. Gartner in November said that tablets could displace around 10 percent of PC units by 2014.
The tablet market is in its early stages, poised to grow, and the competition will only intensify with the release of next-generation chips, said Michael Palma, senior research analyst at IDC.
Arm, Intel and MIPS are designing low-power chips with video and communication capabilities to fit the tablet profile. Arm has announced the Cortex-A15, a faster and more power-efficient processor than its predecessor, the Cortex-A9, which is used in tablets such as Toshiba's Folio 100.
Intel has already announced the Moorestown chip, which will go into tablets next year, and is developing the Oak Trail chip for tablets. The Oak Trail chips are faster and more power-efficient than Intel's current Atom chips, which are mainly used in netbooks.
On its part, MIPS Technologies has said it wants to push its architecture into tablets, with products perhaps appearing next year.
The current tablets are shipping mostly with chips designed for smartphones, and there is room for improvement, Palma said.
"[Tablets] have special requirements, the processor needs to be small and focused on power conservation while still providing video processing capabilities," Palma said.
Tablets are not just super smartphones, Kay said. Chip makers are looking at designing smartphone-like chips that generate less heat, but which also integrate voice and stronger multimedia capabilities.
"Basically they need a smallish heat envelope, but not as small as a smartphone, and media decode functions. [Intel's] Oak Trail has an embedded video decode module, so streaming can be done with very low overhead," Kay said.
The emergence of tablets is triggering a chip war of the type previously witnessed when PCs became a hot-ticket product during the mid-80s, said Dean McCarron, principal analyst at Mercury Research.
A number of chip architectures -- like Apple's early Motorola 68000, Intel's x86 designs and initial Arm designs -- were competing to be at the core of PCs at the time. The story resonates now, as Arm, Intel and MIPS battle to put their architectures at the center of tablets.
"The processor suppliers today, like those of 25 years ago, are hoping to be designed into a de-facto standard that will provide revenue for years to come," McCarron said.
The chip battle will spark innovation and pricing competition that will benefit consumers, McCarron said, noting that upcoming chips will bring new features to tablets at different price points. Apple's iPad is priced starting at US$499, but some low-end tablets based on Arm processors, such as Creative's Ziio and Velocity Micro's Cruz, are being priced at less than $300.
Processor suppliers also have to establish the right ecosystem -- including operating systems and software -- to marry performance, content, and ease of use, analysts said. Apple's iOS, used on the iPad, and Google's Android operating system are used on most tablets today.
However, there is no dominant operating system player to drive the tablet market yet, and there will not likely be one any time soon, said Jack Gold , principal analyst at J. Gold Associates.
"As long as the chip companies are supporting multiple Oses -- but primarily Android at this point if you are tying your wagon to the rising star -- they can play," Gold said.
For now, most chip vendors are designing chips to support multiple operating systems. For example, Intel is offering support for both Windows and Android on its Oak Trail chip.
Chip makers already established in the smartphone market, however, will continue to have an upper hand in the tablet market, analysts said. Chips based on Arm architecture go into most of the world's smartphones and tablets, including Apple's iPad and Samsung's Galaxy Tab. Arm licenses chip designs to companies like Apple, Nvidia, Samsung, Texas Instruments and Qualcomm, whose chips are being used in tablets.
Much of the Android development revolves around the Arm architecture. That technology ecosystem is growing stronger, said IDC's Palma, who also noted that it may be difficult for rivals like Intel and MIPS to gain a foothold.
"Intel is challenged as it is just now trying to enter the smartphone market and also given its previous focus on netbooks," Palma said.
But Intel is in the handheld space for the long run and has the resources and developer support necessary to challenge Arm, other analysts noted. Intel's chips go into 80 percent world of the world's PCs, and the company has a larger goal of putting its chips into other devices such as smartphones, tablets, TVs and cars.
Arm also does not support a full Windows OS, which can run on Intel's Atom chips, analysts said. That is a disadvantage for Arm, considering many PC users are familiar with Windows. Intel is also backing the development of a version of the Linux-based Meego OS for tablets.
"They have an uphill battle against Arm, but I expect them to capture a significant portion of the market in the next one to two years," J. Gold Associates' Gold said.
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