Report: PC makers to cede tablet market

DigiTimes' sources are usually pretty solid, and the latest speculation to slip through their lips is that PC hardware makers like Acer, Asus, Dell, and HP will bow out of the tablet market. Say what? According to moles buried deep within the supply chain, it will become too difficult to compete on price with tablet makers that also derive revenue from content sold through their devices. Apple has iTunes and its vast App Store, the Nook has Barnes & Noble, and Amazon is, well, Amazon.

DigiTimes contends Amazon and Barnes & Noble are primarily profiting from content sales—something that will be difficult for traditional PC makers to match. Apple is in the enviable position of being able to extract profit wherever it wants, although competition from cheaper tablets might put downward pressure on iPad prices.

While it's true PC makers are at somewhat of a disadvantage, it seems unlikely they'll be willing to give up on slates entirely. Further segmentation within the tablet space seems far more probable. Device makers who profit primarily on content sales will be able to offer basic slates at bargain prices. These budget tablets will likely have low-res screens, relatively slow hardware, and much less functionality than the Windows 8-powered alternatives offered by PC makers, whose systems will look much more like convertible notebooks or Asus' Eee Pad Transformer. Apple, for its part, should be poised to compete with both camps.

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