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White-Box Tablet PCs Growing Rapidly

“White-box” products from Chinese domestic makers are typically symbols of low end and low cost products. Indeed, when big brands release a new product into the market with high selling prices, end users can always try to find another cost-effective solution. That is what enables white-box products to survive, at least in the early stages.

White-box products are varied in terms of numbers and levels of features and quality. One common element is the low price compared to name brands. However, while many white-box products can hit the market with acceptable price, quality and features, when the name brands have better supply chain management and cost reduction, the white-box products lose their competitive edge and often get pushed out of the market.

The story seems different for tablet PCs. The white-box tablet PC has been growing rapidly, and considering that tablet PCs have been in the market for nearly 3 years, this is noteworthy. There are some observers who claim that there will be over 50 M white-box tablet PCs shipped in 2012. This is an amazing number, as it would mean that the white box market is as big as Apple’s iPad.

Our upcoming Quarterly Mobile PC Shipment and Forecast Report will report the results of our research in to whether a 50 M white-box tablet PC market is possible or not. We found that in 2012, there will be approximately 55 M modules shipped from touch suppliers like HannsTouch to whitebox tablet PC makers. Meanwhile, ARM-based chip makers (VIA, Rockchip, amlogic, Vimicro, infoTMIC, Allwinner Tech., among others) are combining to produce approximately 60 M chips in 2012. LCD panel shipments also indicate that the 50M white box tablet PC is possible.

50 M units would account for approximately 30% of the total tablet PC market. What could be the reasons for such success for white-box tablet PCs? We believe the reasons include:

  1. First of all of course, price. Apple’s new iPad 16GB Wifi version sells for CNY 3,388 ($545) in China and dominates the high-end market, while other brands’ comparable products are $400-500. Lenovo’s 7” LePad is very attractive at CNY 1,499 ($242), while the 7” Google Nexus & Kindle Fire (not sold in China) are very attractive at $199. However, mainstream 9.7”/10.1” white-box tablet PCs are $90-120, and 7” are $50-80 or even lower.
  2. Latest hardware configuration enables strong performance. White-box makers are always sensitive to market dynamics and very flexible, and when new hardware is available they quickly integrate it into their products, usually without extensive hardware testing or qualification, so they are always faster than big brands.
  3. Open Android OS platform bringing in plenty of free apps. White-box tablet PCs rely heavily on the free Android OS and free apps associated with the OS, which use data flow and advertising for revenue generation.
  4. Rich & Fancy features. Some white-box tablet PCs support MS Office and Adobe PDF, as well as all kinds of games and other applications, and multiple languages (up to 18), enabling consumers in every corner of the world to use the device easily.

With most PC brands not so successful up to now in fighting against Apple, as well as with big brands lack of existence in low end market, white-box tablet PCs have found a comfortable position in this market and still see very big market opportunities. It is very possible that this success could extend into 2013.