Tablet Competitors Have Work to Do to Catch Apple

By Gary Kim March 15, 2011

Apple's iPad has raced to a pre-eminent position in the tablet market with startling speed, though many predict Android-based alternatives ultimately will start to take more market share, with most observers betting on Android. BMO Capital Markets, for example, predicts that shipments of Android tablets and iPads will draw even in the second half of 2011. 

"Android tablets will ‘reach unit parity’ with Apple’s iPad by late 2011," BMO analyst Keith Bachman said.

In the near term, though, many bet that Apple's iPad will continue to take the lion's share of new sales. Also, says Sarah Rotman Epps, Forrester Research analyst, could emerge as a key competitor to Apple and the Android community. 

In part, that thinking is spurred by Rotman Epps' analysis of "mistakes" early Android device manufacturers have made. For starters, though Apple prices as a "premium" device, it appears to have manufacturing cost advantages that have allowed it to offer retail pricing below competing Android-based alternatives, at least so far. 

In addition to having both the advantages of "buzz" and lower price, Apple can leverage its Apple Store network for distribution, while other competitors must rely exclusively on retail channels and mobile service provider partners. And the iTunes ecosystem and App Store are the most-developed among all the device ecosystems. 

Amazon is something of a wildcard for several reasons, says Rotman Epps. To the extent that tablets are "media consumption" devices, Amazon's strengths in content sales will be an advantage. Also, Amazon has a robust payments and catalog capability well suited to content-lead usage. Unlike most other contestants, Amazon has an incentive to sell lower-cost tablets so it can capitalize on content sales. It doesn't have to build most of the business model on profits from selling devices, as it has the content sales as a key revenue contributor. 

And though users might have a wide range of brand preference attitudes, probably most people are comfortable and trusting of Amazon, including willingness to buy a tablet directly from Amazon. 

Still, the market remains young. There likely is plenty of room for a variety of strategies, not all based on "buzz." Some manufacturers will try to attack the market on price, offering devices in the $250 range. Of the top three features important to respondents in a recent Forrester Research poll, price topped the list at 65 percent importance. Battery life was important to 51 percent of respondents, while operating system ranked third at 40 percent. 

Gary Kim is a contributing editor for TechZone360. To read more of Gary’s articles, please visit his columnist page.

Edited by Tammy Wolf

Contributing Editor

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