iPad Revives China's Portable Electronics Industry

ARM-based systems and the Android open-source OS are helping netbook
and PMP suppliers to capitalize on the iPad's popularity. The latest
tablet PCs from China have resistive touchscreens and 720 or 1080p
playback.Apple's iPad is reshaping and energizing the netbook and
portable media player industries in China.The Sangda Electronic Market
in Shenzhen, Guangdong province, has been a reliable barometer of the
consumer electronics industry's pulse. It was a lively marketplace for
white-box netbooks and mobile Internet devices until H2 2009, when the
crowds started to dwindle and many sellers closed shop because of
waning demand.But just three months after the iPad was released,
Sangda was revitalized and once again became a bustling trading
center, this time for devices and tablets that look and function very
much like an iPad. New shops opened and a recently decorated second
floor now displays mostly tablet PCs. Buyers not just from mainland
China but even Hong Kong, Taiwan and neighboring countries flock to
Sangda, all eager to score nifty tablets at much more affordable
prices.Netbooks and mobile Internet devices are still available, but
there are just a handful of stalls offering them and fewer models are
on hand.Sangda's transformation is a reflection of changes in China's
portable electronic devices industry.ARM, Android spur development of
iPad-like tabletsThe iPad is generally regarded as more powerful and
user-friendlier than a smartphone. Compared with a netbook or a
laptop, it is lighter and has a battery life. Mobile Internet devices
were once touted as the bridge between smartphones and laptops, but
their high cost, short battery life and limited OS and software
options made it difficult for them to gain acceptance in the
mainstream. Save for the price, the iPad does not have such drawbacks.
This development has consequently opened the door for white-box makers
in China to develop their own, lower-cost versions of the iPad.Netbook
companies were one of the first to launch touchscreen tablets sans
keypads. The devices were fitted with the same hardware and OS as
netbooks, but had decreased user experience and convenience. They were
more expensive as well, which made it difficult to gain mainstream
acceptance.Slate tablets fitted with ARM-based systems made for a
viable solution, particularly since Apple's iPads have an Arm Core
CPU. Additionally, unlike ARM-based mobile Internet devices that ran
on Windows CE or Linux, the new tablets have an Android OS, which is
generally regarded as the OS that can compete head-on with Apple's iOS
in the smartphone arena.But although ARM-based CPUs have advantages
over x86 structures, they have weak multimedia capability and support
Windows CE and Mobile, and Linux. There are very few applications that
run on Windows CE and Linux. Windows Mobile is expensive, costing
between $10 and $20 per unit, and is still not regarded as a suitable
option for smartphones.The release of the Android OS strengthened
ARM-based CPUs' smartphone capabilities. Because the free OS is open
source, developers can create a multitude of applications for a richer
multimedia experience.Despite the fact that Android is open source,
most of the available applications were developed by industry leaders,
including HTC and Motorola. Such companies will not share their codes
and experiences developing the applications with competitors. As such,
China makers need to work closely with design houses in developing
their own applications.Further, not all netbook and PMP makers have
the capability to develop tablets running on the Android OS. Such
companies also turn to design houses that specialize in smartphones
for R&D assistance.Impact on portable electronics industryAs of May
2010, more than 60 percent of China's netbook makers have launched
tablet PCs. Suppliers of portable media players have also jumped into
the fray.Compared with netbook makers, PMP suppliers are more familiar
with handheld devices. Most have established marketing channels,
mature production lines and long-term cooperation with design houses.
As such, nearly all PMP companies are launching tablets patterned
after the iPad. The only exception is the small group that focuses on
audio-only devices.Between the netbook and PMP industries, the latter
is more likely to be affected adversely by sales of iPads and other
slate tablets. Sales of white-box netbooks have been on the wane even
before the iPad transformed the industry. Additionally, although sales
are declining, there remains a stable market for netbooks that can
handle basic PC functions such as word processing and computing.
Similarly, while sales of e-book readers are also affected negatively,
there is a niche for such products.The newest tablets, however, are
more likely to cannibalize PMP sales. Although they have similar
functions, the tablets perform better and provide a richer user
experience, be it in Web browsing, social network services or video
streaming.As with netbooks and e-book readers, slate tablets are not
expected to wipe out sales of GPS units and smartphones. The tablets
can be integrated with a GPS module and antenna, but doing so can
generate signal noise, which can affect the GPS receiver. Smartphones,
on the other hand, require wireless connectivity and location-based
services, features that are not fully functional in most tablets. The
main advantage such tablets have over smartphones, however, is cost.
The price of an entry-level tablet is roughly 30 percent that of an
Android smartphone.Product rangeAlthough the latest tablets from China
are made to look and perform like an iPad, some have features the
Apple device does not have. These include HDMI output and 720 or 1080p
playback. Most models, however, have a resistive touchscreen, which
does not support multitouch and is more suitable for use with a
stylus. A few units have a capacitive touchscreen, but these are
priced $30 to $40 higher.Most China-made slate tablets have 7, 8 and
10in touchscreen panels with a 16:9 aspect ratio. A few companies,
including Fujian Sanxi Electronics Co. Ltd, fit the tablets with the
same LG Display touchscreens used on the iPad. Prices, however, can
reach $350 per unit.In general, low-end tablets are priced between $65
and $85 each. They have a 7in screen with an 800x480 resolution.
Models run on Android 1.5 or 1.6, and support Wi-Fi connectivity, 720p
playback, and MKV, AVI, WMA, RMVB and MPEG formats. Their OS cannot be
updated to Android 2.0 or higher, but some have a G-sensor.At $85 to
$120 per unit, midrange versions have a 7 or 8in screen with an
800x480 resolution, 256MB RAM and Wi-Fi connectivity. They run on
Android 2.1, have an HDMI output and G-sensor, and support 1080p
playback and AVI, RM/RMVB, FLV, DAT, VOB, WMV, MPG, MPEG-1, MPEG-2,
MPEG- 11, MP4/M4V and VC-1 formats.High-end devices are from $120 to
$350 each. In addition to midrange features, models may have a 9.7 or
10in capacitive touchscreen with a 4:3 aspect ratio, 3G connectivity
and GPS.