2011 – Tablet competition heating up for second position?

16/01/2011 1 Comment

Recently quite a few tablets are announced at CES 2011 and most of the predictions are that we will see these tablets in consumer’s hands this year. This reminds me the CES 2011 when everyone was expecting a tablet from Apple and a number of companies announced their own plans for tablets in 2010. Nothing materialised really in 2010 but 2011 is poised to be a different year because of advances of technology and also a viable market for tablets which is currently dominated by Apple. With a keen interest in tablets I want to know how the market will shape up when all these tablets are launched.

I wrote a few months back that why iPad will be a winner regardless of the emerging competition. That prediction was based upon Apple’s first mover advantage, product development theory and brand recognition. Lets see whether Apple can whether this new competition?

More exciting challengers to iPad are Motorola Xoom, Blackberry Playbook and Toshiba Tablet. There are also some more tablets from Samsung, Asus, MSI etc which will be running Windows 7 as well as a HP tablet which will be running on WebOS. Out of these Motorola, Toshiba and Blackberry’s offerings have gathered a lot of positive press. Blackberry has a considerable market in smart phones and with the launch of its app store last year, it has offered its customers a good channel to purchase applications. Motorola and Toshiba will be relying on the strengths of Android and its app store. Google which develops Android is poised to launch version 3.0 (honeycomb) of Android in the first quarter of this year and is also rapidly increasing the capabilities of its app store.

All of these companies has taken a note of Apple’s success in developing an ecosystem of its products and various channels such as app store which has become a key winning factor. This is why Google, Blackberry, Nokia and Microsoft has launched their own app stores for smart phones and are now extending those to tablets.

iPad is at the crucial stage of its life cycle and I believe as the market is ready to be exploded in this segment, iPad has all the chance to move from early adaptors to the mainstream users with the launch of its iPad 2 later this year. I believe iPad will still dominate the market because its designers and developers has the most experience in the market and they will be able to offer the most polished experience to users. No doubt the companies such as Blackberry, Motorola, Toshiba, Microsoft all will be offering very powerful tablets, but the hardware specifications will not be the only factor in success. In order to reach to the mass market beyond techies they need to offer a simple and intuitive experience and that is where I think Apple will dominate.

I think the competition will be fierce in tablet market but that competition will be for the second position and iPad will keep its domination by just adding enough muscles to it iPad and offering more features.

Filed under Product Strategy, technology Tagged with , , , , ,

Why iPad is a winner and why eeePad and windPad are going to lose?

03/06/2010 Leave a comment

Asus and MSI has yesterday announced their foray into the emerging tablet market by announcing two tablets each called eeePad and windPad respectively. Each will have one tablet for each Android and Windows 7 where Android based tablet will be 20% cheaper than the Windows 7 based tablet. According to the product manager of MSI, they are convinced that consumers want a product in a sub $500 segment with more computing options.

This announcement from Asus and MSI gives me an impression that they are trying to take advantage of the hype created by iPad. They are trying to extend their EeePc and Wind brands into tablets and hoping to benefit from the initial success of iPad and the potential market which iPad has created for tablets. But their focus on below $500 and choice of features sounds a bad decicion to me.
In this blog I will explain further why so.
By offering a tablet each with Android and Windows 7 both of these companies are indicating that they are not sure which OS is the best choice or they have not done their market research properly. By claiming that consumers want the features of a PC in a tablet shell, and pitching their products against iPad, they are clearly unaware of the positioing of iPad. iPad has never claimed to offer the features of a PC. Neither it has the features of a phone. The choice of two operating systems will increase the cost of after sale service and support for Asus and MSI. This will have a direct impact on the bottom line which will already be thin due to higher production costs during the introduct phase of product life cycle (also remember that these tablets will have more features compared to iPad).
By moving first into this tablet market (so far more than 2 million iPads have been sold) Apple will be able to grab a bigger market share of this market. They have a very strong brand and are associated with innovations. They have offered a core iPad product which they can easily augment with some more features such as camera or usb port if there is serious competition. The price of iPad is higher which will give healthy margins to Apple. As the scale of production will grow the fixed costs will become a lower fraction of the costs of iPad and Apple will be able to drop the price and further boost the production. Any competitor such as Asus or MSI who enters at this stage into this market will face annihilation. Apple will have the choice of reducing the price of current iPad and offer a new augmented version of iPad at a higher price point.
Given that both Asus and MSI are targeting the sub $500 segment with more features means that their profit margins will be lower and ultimately they will be commoditizing their products themselves. Because they will not have the economies of scale due to late entry, they will face the dilemma of high production cost and lower prices and will be unable to compete against Apple. Their only bet will be against other non-Apple customers to get some market share. But none of these players will have any competitive advantage.
This is classic case of first mover advantage which Apple has got and now the competitors will play the game Apple wants them to play.

Filed under Product Strategy, technology Tagged with

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