Why the first generation of iPad competitors will die on the vine

Nov 8, 2010
Finance

Apple (AAPL) CEO Steve Jobs is right when he says the first wave of competing tablets will “be DOA – dead on arrival.” It’s the next wave he’s going to have to worry about. Between now and Christmas, a number of companies are going to take their first shot at the market created by Apple’s […]

Apple (AAPL) CEO Steve Jobs is right when he says the first wave of competing tablets will “be DOA – dead on arrival.”

It’s the next wave he’s going to have to worry about.

Between now and Christmas, a number of companies are going to take their first shot at the market created by Apple’s iPad. At this point, iPad has 95 percent of the touch-screen tablet market. And it’s a fast-growing business: about 4.4 million tablets were sold in the quarter ending in September, vs. 3.5 million the previous quarter. Dell (DELL), Samsung (005930.KS), Hewlett-Packard (HPQ), Research In Motion (RIMM), Nokia (NOK)  and a host of unknowns are introducing their own tablets to try to grab a piece of that action. Most will be based on Google’s (GOOG) Android platform, though H-P will have a version on its WebOS from Palm, and RIM will use its own Blackberry-based platform.

Consumers won’t embrace smaller tablets, says Jobs

Jobs is completely dismissive of his would-be competitors. During Apple’s earnings conference call in October, Jobs got on the phone and asserted that the Android platform is a disparate mess that’s driving developers and consumers crazy. (Not entirely true – just a reflection of Apple’s view that a tightly-controlled ecosystem is better.)

Jobs also noted that most of the coming tablets will be smaller than the iPad – with screens of around 7 inches vs. nearly 10 inches for the iPad. Apple’s research shows that 7-inch screens are too small to be a good experience, Jobs noted, and the smaller tablets are too close to the size of a smartphone – so smartphone owners won’t see a good reason to buy a tiny tablet.

READ  Home Security Maximized with These Apps

Thus, Jobs pronounced the new entrants DOA.

No price break for most new tablets

Jobs was actually being – surprisingly – a little circumspect. He was kind enough not to mention price. If a gadget maker is going to compete against the iPad – especially with a smaller screen – it darn well better offer a product at a much lower price.

Most of the newcomers don’t.

iPads run from $499 to $829. Samsung’s Galaxy Tab has a 7-inch screen and a price expected to be about even with iPad’s. The Dell Streak: a 5-inch screen and $550 price tag. The HP Slate 500: 8.9-inch screen and starting at $799. RIM’s PlayBook will allegedly come with a 7-inch screen, and there’s no word on price.

Here’s what will go through most consumers’ heads: “If iPad is the shizzle right now, why would I spend just as much to buy an unproven competing product that has a screen not much bigger than my Droid phone and – oh, right – almost no apps built for it yet?” They’ll move on to the Apple Store, or just sit tight and wait. This first bunch of tablets will die on the vine.

Brighter future for all tablets

But is that the end of the story? Not by a long shot.

First of all, as happened with Android phones, the new tablets will get better and cheaper because so many companies and developers around the world are working on them. The iPad, of course, will get better and cheaper, too – but competing tablets will catch up.

READ  How to Set Up Apple and Google Pay

Second, Apple needs to watch out for what’s coming out of China. A number of little-known Chinese companies are already making tablets – some with 10-inch screens – that sell for under $200. They’re selling like crazy because the broad swath of Chinese consumers can’t afford a $500-plus iPad. As the Chinese tablets get better, they’ll show up as low-cost products in the West and will find an audience.

Within a year or two, the iPad will be facing a whole line-up of viable competitors.

Consumers should cheer this activity. Nothing could be better than having a competitive tablet market develop. It will drive Apple to make better and cheaper iPads, give us choices in the market, and motivate developers to produce great apps.

Jobs may wish death on competing tablets, but that’s only in his best interest, not ours.

Search for more

Home Apps Games