Currently there is no Tablet Market; there is an iPad market that looks amazingly similar to the iPod market that preceded it. Apple controls the content, makes money on almost everything that goes on or around the product, and no other tablet is selling well at all. Competitors continue to try to clone the iPad but all fall short on the number of applications, user experience, size, and/or price of their competitive attempt. So is the iPad unbeatable? Yes, but only as long as everyone else plays Apple’s game.
Apple’s brilliance is to get everyone to think of their product in terms of hardware and ignore the parts that really make Apple successful. With the iPod there were many products that would do more than the iPod did throughout its history, they did video before Apple did, they had subscription music what Apple never got, and there were products that had wireless network connections before Apple. Buyers didn’t really care because each vendor positioned against Apple’s strengths and not a single one created a marketing effort in line with Apple’s in order to get buyers to see their products as other than iPod clones. Dell, Microsoft, Sony and a variety of very high powered companies were embarrassed by Apple over and over again.
In short Apple defined the field of battle with the iPod and forced every competitor to play Apple’s game. No one could stand out because “better” often got interpreted as “different” and Apple’s time in market always gave them inherent advantages in terms of amount of content, accessories, and brand recognition. By defining the battlefield other vendor’s advantages were broadly eliminated and Apple’s advantages carried the fight. The iPad is behaving in much the same way and, given their success, it shouldn’t be a surprise that Apple is repeating their successful iPod strategy with the iPad.
High Demand Device Specific Content Could Be Key
The iPod battle was defined by Apple owning the perceptions surrounding the product and the “killer application” became iTunes. However Tablets are not MP3 players and folks want to do more with them than they ever did with iPods. That means this market could behave more like the game console market in that people might chase a unique application to another product. Unique applications could include business applications critical to some vertical markets or security, access to content denied to the iPad (first run movies), unique popular games (Halo or World of Warcraft for instance), or unique tie-ins to popular websites coupled with desirable features (Amazon, Facebook, and/or Twitter).
However it has to be both unique to the device and highly desirable if you can get something that is acceptably close on the iPad buyers will still tend to gravitate to the more popular product.
One of the powerful ways to move a competing product is to appeal to some other affinity the buyer has and connect that affinity to the product and the product to related content. While unique content is still a major part of this it is enhanced by the co-brand. For instance a Porsche or Ferrari tablet coupled with an application that allowed you to diagnose or adjust your car and was brand tied to it. Cars often are seen as more of a status symbol than electronic devices and status drives purchases. As long as the offering was seen to provide a set of applications and abilities close to the iPad buyers may shift to another product that is more closely aligned and provisioned for the second brand. Think of an Oprah pad, or a Lady Gaga Pad which, if done right, would have the celebrity’s backing for the product and likely have their own unique application. Say for the Oprah pad a direct tie in to her network with membership privileges or with Lady Gaga a set of unique backgrounds, alert sounds, and fan club status/application.
Finally another path is to target a specific demographic with a custom offering. Kids need something that is sturdier and has stronger parental controls, older folks often need something the gift giver can better configure and remotely update and control. A generic product like the iPad is generally vulnerable to targeted offerings and moving from age to Soccer Moms, those with unique medical needs, disabilities, or requirements can carve out market segments that the general product can’t cost effectively address. Finally the affluent often like very exclusive offerings from products that are clad in rare materials to quality brands like Gucci. They like to stand out from the crowd and while they aren’t a huge group the margins on products that target them can be astronomical. However the result has to be seen as unique, desirable, and high quality because wealthy people aren’t stupid either.
The way not to compete with a dominant product like the iPad is to clone it as that gives the dominant vendor too much control over the battlefield. You have to attack the opportunity from a vector where the dominant vendor’s scale doesn’t work well by focusing on fans, unique demographics, or find and supply unique content that is both desirable and well differentiated from what the dominant vendor has. Currently no one is doing any of this and that is why the iPad continues to slam-dunk all challengers.
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President and Principal Analyst, Enderle Group
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