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Tablet craze a boon to contract manufacturers
Dylan McGrath
9/24/2012 6:07 PM EDT
Foxconn vs. ODMs
Foxconn is by far the biggest beneficiary of this trend. According to IHS, the firm—which builds iPads—accounted for 62 percent of tablet shipments last year. According to IHS, Foxconn also holds a unique position in the tablet market because of its close relationship with Apple. Foxconn holds the right to produce the iPad, leaving original design manufacturers (ODMs) it competes with to scramble for leftovers in the tablet market.
But IHS believes that ODMs have a better change of breaking Foxconn's grip on the market, thanks to the emergence of Android-based tablets and the anticipated appearance of Windows-based tablets. IHS projects that ODMs could grow their share of the tablet outsourcing market to as much as 53 percent by 2016, assuming consumers embrace iPad alternatives.
Most ODMs make notebook PCs as well. Choosing to produce tablets for other clients could mean endangering their own stake in the PC market, much as tablets are now eating into the share traditionally enjoyed by notebook computers among consumers, IHS said. But strengthening their foothold in the tablet space is inevitable for ODMs, especially as tablets continue to gain momentum at the expense of notebook computers, according to the firm.
Click on image to enlarge.
IHS warned that even Foxconn is not entirely worry free. If Apple decided to shift some of its iPad production to other contract manufacturers in an effort to diversity, Foxconn could suffer a blow, the firm said.
Firms that do their tablet production in-house—such as Samsung and Motorola—are expected to fight it out over a stagnant-sized pie. Their share of tablet manufacturing is not expected to exceed the 12.5 percent they saw, cumulatively, in 2011, IHS said. The firm predicts that in-house manufactured tablets will amount to about 9 to 10 percent of total tablets manufactured going forward, as ODMs and EMS providers duke it out for a bigger stake in the hotly contested tablet market.
Related stories:
Foxconn is by far the biggest beneficiary of this trend. According to IHS, the firm—which builds iPads—accounted for 62 percent of tablet shipments last year. According to IHS, Foxconn also holds a unique position in the tablet market because of its close relationship with Apple. Foxconn holds the right to produce the iPad, leaving original design manufacturers (ODMs) it competes with to scramble for leftovers in the tablet market.
But IHS believes that ODMs have a better change of breaking Foxconn's grip on the market, thanks to the emergence of Android-based tablets and the anticipated appearance of Windows-based tablets. IHS projects that ODMs could grow their share of the tablet outsourcing market to as much as 53 percent by 2016, assuming consumers embrace iPad alternatives.
Most ODMs make notebook PCs as well. Choosing to produce tablets for other clients could mean endangering their own stake in the PC market, much as tablets are now eating into the share traditionally enjoyed by notebook computers among consumers, IHS said. But strengthening their foothold in the tablet space is inevitable for ODMs, especially as tablets continue to gain momentum at the expense of notebook computers, according to the firm.
Click on image to enlarge.
IHS warned that even Foxconn is not entirely worry free. If Apple decided to shift some of its iPad production to other contract manufacturers in an effort to diversity, Foxconn could suffer a blow, the firm said.
Firms that do their tablet production in-house—such as Samsung and Motorola—are expected to fight it out over a stagnant-sized pie. Their share of tablet manufacturing is not expected to exceed the 12.5 percent they saw, cumulatively, in 2011, IHS said. The firm predicts that in-house manufactured tablets will amount to about 9 to 10 percent of total tablets manufactured going forward, as ODMs and EMS providers duke it out for a bigger stake in the hotly contested tablet market.
Related stories:
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- Teardown: Inside Apple's iPhone 5
- Sharp calls for tougher wage cuts
- Foxconn confirms male employee found dead
- Foxconn owner seeks 20 percent stake in Sharp
- Delusions about 'conflict-free' minerals
- Yoshida in China: Worries about declining U.S. investors
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