Tuesday, March 29, 2011

Tablet - King of the Hill

The Story:

I think we can all agree that Apple is the King of the Hill in market share at somewhere around 75-80% market share (although I am currently finding it difficult to find an official number). Will anyone be able to dethrone them?

This is my Opinion:

Before I even get started on this post, let me say that I love Android due to its ability to support flash, multitude of free apps, handset selection, and for being a 'mostly' open source platform. I was an early adopter in one of the first waves of T-Mobile G1 owners. I also love Google as a company and think that they have a great culture. I think it should also be stated that I am not a fan of Apple, I think that they are bullies.

Okay, now to get to the root of the issue. Apple has positioned itself as the primary brand in tablets the same way it did in MP3 players (which many people still call iPods regardless of the device manufacturer). They did not accomplish this by making sure they had most features, the best specs, or the most affordable price tag. They weren't the first one to do make a tablet, or even the first one to advertise one. They did make a device that is stable with a visually appealing smooth moving operating system and did launch an advertising/marketing blitz that only Apple seems to be willing to do at this point in consumer electronics, I will get to the Apple equation for success a little later though.

Apple has about 75-80% of the tablet market share now (depending on who you listen to). Currently I don't see any single table that will have the much market share coming from any other company, but lets take a look at some of the competition (and why I don't believe they stand a chance).

Motorola Xoom

This tablet is bigger, with a better mega-pixel rating on its front camera (and a rating on its back camera), flash support, a 4g upgrade, and since it is running Android more of the apps are free. The price is close; $799 with no contract (the comparable iPad 2 is $729) but can be subsidized to as low as $599 with a 2 year contract with Verizon. There is also a WiFi only version at $599 (the same price as the equivalent version of the iPad 2). On paper it looks like a much better tablet and it is the one that I would recommend for most people who were trying to decide between the two.

What is Motorola doing wrong - how can they make this more of a contender?

First - Pricing. When you are competing against an Apple product the first thing you want to do is come in at a lower price than anything in their pricing chain. This is a success that I first noticed in the MP3 player era and has repeated itself in the smartphone battle as well. Android is gaining market share vs the iPhone being stagnant and RIM's Blackberry losing. If you want to out sell the iPad with a device that has essentially the same features (with slightly better specs) you have to crush their price. I would assume that if the Xoom were $499 for the 3G version and $299 for the WiFi and subsidized price it would do much better.

Second - Advertising. Everyone and their mom knows what an iPad is and will likely confuse all tablets with the iPad. Motorola isn't doing a good enough job whipping the public into a frenzy about their product and that is sad, because as I mentioned I do recommend this product for most people.

Blackberry Playbook

Another amazing product idea from RIM. Not trying to compete on a larger size with a 7" display it seems like they opted for portability. They also went Dual-Core like the above tablet and the iPad 2 which should make for a fast device. They may have realized that their app world can't compete with that of the iOS or Android and have included the option to run Android apps (this adds an estimated 200,000 apps to their 80,000 app list). This product boosts a really cool feature that allows it to connect to your current Blackberry(BB) - though RIM says that you don't have to have a BB to enjoy this tablet.

Why it doesn't have a shot.

First, RIM lacks relevance. The most amazing thing they did was convince teenagers that they needed a Blackberry, but they didn't adapt or change which has kept their core audience of business users happy, but they lost the rest of the smartphone market. It would be amazing if this device would allow for an iPhone or an Android phone to unlock the same features that a Blackberry phone can. I think that it is an amazing concept and will be even more amazing when someone else does this for those two platforms.

Second, Advertising. Again this is something that is coming soon and they haven't yet whipped their fan base into a frenzy. It will be interesting to see if they do anything big before it comes out, but as it stands I don't believe they are doing enough.

Third, Pricing. Once again the price is too high to compete directly with the iPad 2. I think that this smaller tablet should be coming in closer to the $299 that I stated for the Xoom. I realize that this may be close to the cost to manufacture either device (Xoom or Playbook), but at this point I think that the companies have to make the decision not to profit from the tablet, but to find a way to profit from the media consumption (although this is a dangerous game because Apple is doing both).

Palm Touchpad

Let me start by saying that while I love the idea of this tablet - with features that are similar to everything above (including the Blackberry Playbook, replacing RIM's phones with the Palm phones). I am not going to go into details here. Palm lost the smartphone war - got purchased by HP, and is going to try to reenter. Let me say that the smartphone war reminds me of the processor war from the late nineties where AMD and Intel crushed Cyrix, and I feel that Android and the iOS are the two systems to look at for the future - everyone else will have their good ideas taken by one of these two and will be forgotten about by most people.

The Apple Equation for success

Okay, this is what I have figured out from Apple that other companies should probably mimic (I know that if I were running a company right now I would want to be able to make the profit they make).

Start by building a fan base - They have done this by having decent customer service, passionate people running the company that aren't too different from the customers they want to attract (geeks), and got people to root for them as they were the underdog (facing off against big blue).

Market to this fan base - Every Apple product is announced in a pep rally environment (or so it seems). Every announcement is a secret to be revealed, making this a news story (free press).

Planned shortages - if you think you will sell 1 million of a device make 500,000 units available. Get people to stand in line for a product if you can as well - these are things that also make good news stories (more free press).

Simple advertising everywhere - Make your message very simple. Have a commercial for each feature a product has, don't ever talk about more than one feature within 10 seconds. Run as many commercials as you can afford. Connect these features to how they can benefit someone.

Sacrifice ability for performance - It doesn't matter how many things your new whirly-gig can do, if it doesn't do them fast and without crashing. People HATE it when something doesn't work right and will typically buy the product that does less things as long as it does all of those things well. The iPad doesn't do flash, widgets, or have the same customization as any of the other tablets - but it is stable and moves from one operation to another very smoothly, it wins.

One last off the cuff remark
I don't know if any other company is going to challenge Apple right now, because no one seems to be willing to bring down the price. Maybe a carrier will get smart and start dropping the price of a comparable tablet to $100 or less (free) with a 2 year agreement. That would really move them...

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