There is no tablet war. Apple won
Competitors are slashing prices but Canadians hungry to buy tablets will still go iPad
By Peter Wolchak
September 7, 2011
September 7, 2011
Everyone is talking tablets but there are two distinct sides to the conversation: Apple’s stellar sales numbers and everyone else’s Hail-Mary price cuts. I tested a representative selection of tablets recently: HP’s TouchPad, RIM’s PlayBook, an LG Android device, a Dell Windows 7 convertible and the iPad. And—surprise!—the iPad came out on top. I wrote: "If you want a tablet, buy an iPad" and I am clearly not alone, because only Apple can claim any real success in this space.
DigiTimes reported in August that dismal sales numbers will force everyone except Apple to slash prices. HP tried that: it cut $100 off its TouchPad on Aug. 10th only to kill the device entirely on Aug. 18th.
Analysts predict non-iPads may drop to $300 by end of year. We are also seeing significant retail incentives: “Free gift card/software/accessories if you buy now.” Apple’s sales incentive is “It’s an iPad” and it has trounced the competition. Reportedly, the number of devices shipped to retailers by Apple’s top three competitors combined do not reach one tenth of the total number of iPads sold to consumers. Large retailers, for example, were selling only about 10 per cent of the TouchPads they bought from HP.
I called the price cuts Hail-Mary plays but it may be even worse than that. Occasionally the wide receiver snags the ball and wins the game, but winning may no longer be an option. Consider that margins on hardware are always tight and then add in the huge cash outlays required for a product launch: design and testing, manufacturing, logistics, retail space, marketing, support, etc. Then imagine cutting $100 or even $200 off that $500 final product.
At this point, everyone but Apple is fighting to cut losses. Profit is yesterday’s dream.
A few survivors
What does this mean for the tablet industry? Within a couple of years Apple will essentially be it. Too extreme? Consider MP3 players. Hopeful manufacturers once pushed shiny players with a range of features, colours and price points. Most are now gone. Microsoft killed the Zune earlier this year after achieving about two per cent market share. When people think “MP3 player” they picture an iPod.
Oh, there will be a few tablet survivors. I would bet on the PlayBook playing off RIM’s installed base and making some decent numbers, especially once a new version fills in the first model’s gaps. And the Xoom will stick around. It’s one of the better Android tablets and Google’s purchase of Motorola can only help Xoom solidify its Android crown.
But, two years from now, when consumers and even corporate buyers think “tablet” they will picture an iPad.
There may be one exception to this: vertical markets. There is promising work occurring in verticals such as education and healthcare and these typically centre on the more open Android platform.
Put a tablet in your briefcase
Here’s an interesting finding: Canadian consumers are “among the most tech hungry and savvy in the world,” according to the TNS Mobile Life study. Forty-one per cent own a smartphone, compared to 28 per cent globally. And 31 per cent of Canadians plan to buy a tablet before year end. Yet the Science, Technology and Innovation Council reports that per-employee investment by Canadian businesses is less than 75 per cent of their American counterparts.
So with lots of tech at home and not much at work, Canadian businesses should encourage workers to bring their gear to the office. More importantly, they need to bring their enthusiasm for technology. Yes, this will create security and management headaches but, if businesses don’t have the funds or expertise to invest in tech, maybe their employees do.
Peter Wolchak, Editor
Also read:
PC sales are just fine, thank you
Are tablets the future for EMRs?
Which is the right tablet for you?
Tech predictions 2011 - more cloud, tablets and - hopefully - more efficiency
DigiTimes reported in August that dismal sales numbers will force everyone except Apple to slash prices. HP tried that: it cut $100 off its TouchPad on Aug. 10th only to kill the device entirely on Aug. 18th.
Analysts predict non-iPads may drop to $300 by end of year. We are also seeing significant retail incentives: “Free gift card/software/accessories if you buy now.” Apple’s sales incentive is “It’s an iPad” and it has trounced the competition. Reportedly, the number of devices shipped to retailers by Apple’s top three competitors combined do not reach one tenth of the total number of iPads sold to consumers. Large retailers, for example, were selling only about 10 per cent of the TouchPads they bought from HP.
I called the price cuts Hail-Mary plays but it may be even worse than that. Occasionally the wide receiver snags the ball and wins the game, but winning may no longer be an option. Consider that margins on hardware are always tight and then add in the huge cash outlays required for a product launch: design and testing, manufacturing, logistics, retail space, marketing, support, etc. Then imagine cutting $100 or even $200 off that $500 final product.
At this point, everyone but Apple is fighting to cut losses. Profit is yesterday’s dream.
A few survivors
What does this mean for the tablet industry? Within a couple of years Apple will essentially be it. Too extreme? Consider MP3 players. Hopeful manufacturers once pushed shiny players with a range of features, colours and price points. Most are now gone. Microsoft killed the Zune earlier this year after achieving about two per cent market share. When people think “MP3 player” they picture an iPod.
Oh, there will be a few tablet survivors. I would bet on the PlayBook playing off RIM’s installed base and making some decent numbers, especially once a new version fills in the first model’s gaps. And the Xoom will stick around. It’s one of the better Android tablets and Google’s purchase of Motorola can only help Xoom solidify its Android crown.
But, two years from now, when consumers and even corporate buyers think “tablet” they will picture an iPad.
There may be one exception to this: vertical markets. There is promising work occurring in verticals such as education and healthcare and these typically centre on the more open Android platform.
Put a tablet in your briefcase
Here’s an interesting finding: Canadian consumers are “among the most tech hungry and savvy in the world,” according to the TNS Mobile Life study. Forty-one per cent own a smartphone, compared to 28 per cent globally. And 31 per cent of Canadians plan to buy a tablet before year end. Yet the Science, Technology and Innovation Council reports that per-employee investment by Canadian businesses is less than 75 per cent of their American counterparts.
So with lots of tech at home and not much at work, Canadian businesses should encourage workers to bring their gear to the office. More importantly, they need to bring their enthusiasm for technology. Yes, this will create security and management headaches but, if businesses don’t have the funds or expertise to invest in tech, maybe their employees do.
Also read:
PC sales are just fine, thank you
Are tablets the future for EMRs?
Which is the right tablet for you?
Tech predictions 2011 - more cloud, tablets and - hopefully - more efficiency
