The tablet computer form factor is finally emerging after years of effort and many failed attempts. This is singularly the result of Apple’s iPad. With the excitement of 40m iPad units sold up to October 2011 there is a gold rush mentality in tablet activity. Yet, emulating Apple’s success has been elusive. Consider:
- HP TouchPad – lasted only 7 weeks in the market
- Rim PlayBook–Poor execution in RIMs core business resulted in a $485m write down
- Adam Tablet – Promises but no delivery
- Kindle Fire – Numerous execution issues including the User Interface but initial excellent sales
- Dell Streak 5 Android tablet – Discontinued
- Motorola Xoom – Poor sales, replaced by Xoom 2 on November 2011
- Samsung Galaxy Tab 10.1 – Delayed by Patent disputes with Apple
Given the success of Apple why has competition been so elusive? We offer the following:
- Android has not had a version of the OS which is effective competition against Apple. Ice Cream Sandwich (ICS) may be it but it is too early to tell. Just because Android is free does not make it an effective competitor with iOS. The same can be said, with even less confidence of success for WebOS, which HP just made Open Source.
- Price competition with Apple has proved difficult. Only Kindle Fire has taken on Apple from a pricing perspective. With PCs dropping to $300 price points it makes no sense having a table in the $500+ price bracket.
- Apple apps are just superior, consistent and continually expanding.
- There must be a compelling reason NOT to buy an iPad. With some 80% market share the only way the competition will gain share is that there must be market pull for competitive products. Only Fire with Amazon’s ecosystem has come even close. It has created a significant pull by its pricing and reputation. In many respects the greatest content play is what Amazon has to offer in its stores and media. This is not trying to compete with Apple on its own grounds, such as music. Eventually Apple and Amazon may compete against their content offerings.
- The lack of success of Android as a tablet OS means it has not been able to migrate to enterprises and vertical markets. The iPad is doing just that now and it will become more difficult dislodge Apple from these long term markets. Already Apple has been approved for use in commercial airline cockpits – a critical vertical market.
Our initial impression was that competition for the iPad would emerge at CES 2011. At this show the market was flooded with Android based tablets or soon-to-be tablets. This market has not materialized for many of the reasons cited above. At the center of Apple’s success is the following:
- Near flawless execution.
- Management of the supply chain from components parts to the final product.
- Phobic attention to the total user experience which no other company has matched – the Steve Jobs legacy.
- Content is as important as the device – be it apps, music or video.
- Price is a significant competitive advantage – this latter factor is not typical Apple.
For non-iPad tablets to gain market traction they must be more that a “me too” product. Prospective buyers must want a non-Apple tablet and given the bar that Apple has set with the iPad that is one difficult hurdle to cross. The bottom line is that Apple has been successful where all the products before it failed. Its unique strengths and execution are responsible for that success. Just knowing what is successful does not imply that another company will have competitive products which seek to emulate that success. In 2011 the marketplace has learned that difficult and expensive lesson.
What does this mean for the future of tablets? We offer the following:
Competitors should seek niche markets which allow them to compete in ways which Apple is not strong. The first serious attempt to do this is with the Amazon Fire.
Any direct competitor to the iPad must be at least at parity in user utility, interface and pricing which must be less than the iPad. Pricing is an entry position in consumer markets.
Another niche is to have a unique and compelling feature which drives buyers. One may be NFC, for example, but it requires an ecosystem behind it. There are others but these have not been developed in the market.
We seriously doubt that 2012 will be the year of the non-Apple tablet. Effective competition is both a corporate culture issue and about driving in ways which demand consumer attention and money to be spent.