Monday, January 31, 2011

Possible Component Issues in 2011?

This year is shaping up to be a banner year for tablet makers with estimates pegged between 30 and 60 million devices being shipped this year. That’s a lot of tablets – almost 15% of the total PC market right now and growing rapidly, but as we all know, these devices don’t necessarily use the same components as a lot of traditional devices. Along with bloggers and pundits weighing in, many market analysts have added their opinion to the fray – some even downgrading shipment expectations due to potential shortages.

We already saw shortages to some degree in 2010 with some areas not getting iPad access nearly as quickly or in as great a number as the demand might signal. Other gadgets contributed to this shortage as Asian supplies of the components in LED backlights were stretched to the limit. So, it’s no surprise to anyone involved with the market that there may be a squeeze in 2011 as dozens of new manufacturers enter the market and attempt to shore up components.

Apple probably won’t hurt. This is a company notorious for measuring and quickly responding to demand for their products. Even when shortages have hit the Cupertino based tech giant, they have responded quickly. What really remains to be seen is how the other companies can respond to the heightened demand. Many companies need to buy components and that means getting orders in early without taking on too much financial burden before a product goes to market.

What this probably means is that most of the companies out there with big names and sure demand like Samsung with their Galaxy Tab and Motorola with their forthcoming Xoom will be fine. However, smaller companies who want to get into the market without over investing will likely produce a limited amount of initial stock. That could mean that if a device breaks through and becomes extremely popular that it will be faced with inevitable supply problems.

It will be interesting to see what all of these means for an industry that is already in upheaval mode right now. Will we see new players who were smart about their component orders and big companies fail because they didn’t think ahead? Or will everyone simply have trouble finding their next device this year? 

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