by Tom Kaneshige

Tablet Wars: 3 Reasons Why iPad Will Prevail

Oct 04, 2010
Consumer ElectronicsSmartphonesTablets

With the BlackBerry PlayBook and Android tablets poised to hit the market, the iPad faces its toughest challenge yet. But analysts are not betting against Apple.

Seriously, who bets against Apple in the tablet race? Maybe mobile tech giants such as RIM, Samsung and Dell, will, given that they’re readying Blackberry and Android tablets to compete with the iPad, but not many others.

When the super-hyped iPad arrived in Apple stores in April, Apple racked up three million sales in the first 80 days. Within a few weeks the iPad captured 16 percent of the e-reader market to take second place behind the established Amazon Kindle with 62 percent, according to ChangeWave Research. The iPad posted sales of $2 billion in its first quarter and is on pace to have 84 percent of the market this year, according to ISuppli.

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There’s speculation that the smash-hit iPad played a big role in slowing notebook and netbook sales. The iPad starts at $500, which is the netbook price sweet spot. Morgan Stanley reports that retail notebook growth in the United States fell 4 percent in August compared to the year prior.”We expect tablets to continue to pressure PCs as more vendors launch products and Apple expands its iPad distribution,” wrote analyst Katy Huberty, in a recent research note.

The iPad has thrown the proverbial monkey wrench in some tablet makers’ plans. Unable to compete with the iPad’s price, Plastic Logic recently halted plans to release its new product. Foxit Software also pulled the plug. Rumors of a Microsoft tablet petered out, and Hewlett-Packard’s Slate is a no-show so far.

But BlackBerry Playbook and Android tablets bring a higher level of competition, even more so than the Kindle. BlackBerries rule the mobile smartphone enterprise space, with iPhones carving out only a tiny piece so far. Sales of Android smartphones outsold iPhones for the first time last quarter, according to a Nielsen study.

Samsung, Toshiba, ViewSonic and Archos recently announced tablets running Android 2.2 OS that will support Flash. BlackBerry-maker RIM just unveiled its mobile tablet, the BlackBerry PlayBook, last week. “The BlackBerry PlayBook, like BlackBerry smartphones, will become the enterprise standard,” said co-CEO Mike Lazaridis.

Can BlackBerry and Android bring their mobile success to tablets? Many industry analysts think the iPad will prevail for a number of reasons. Here are three of them:

1. First Mover: A Bunch of Advantages

Apple’s ability to deliver great products is unparalleled in consumer tech. With a giant market lead, Apple might be uncatchable. As we already know, Apple reinvented the tablet market—that is, the iPad is much more than an e-reader that competes with Kindle—and brought touch technology to mobile devices.

First mover advantage is more than just consumer mindset and market share; there’s a supply chain advantage, too. Apple buys a ton of Flash and touch technology on a scale that will make it hard for tablet makers to compete with the iPad on price.

“We believe Apple’s lead in the tablet market will prove difficult to close by the onslaught of competing products coming over the next several quarters,” Deutsche Bank analyst Chris Whitmore wrote in a research note. “Ultimately, we expect the slew of upcoming competition to fall flat from a user experience standpoint while struggling to materially undercut the iPad on price.”

RIM and Hewlett-Packard have the best chance of igniting a price war with the iPad. RIM may eventually charge as little as $299 for the PlayBook, Vijay Rakesh, an analyst at Sterne Agee & Leach Inc., told Bloomberg. Then again, Apple could dramatically cut the price of older iPads when it announces a new model, a similar tactic Apple has taken with the iPhone.

2. It’s the Software, Stupid

When the iPad came out, all iPhone apps could run on it. Native iPad apps soon followed. Today, you can peruse business documents in all their glory on the Documents to Go app, watch movies over the Netflix app, and play addictive games such as Angry Birds—all on a big, colorful touchscreen.

The iPad also has the potential to serve up magazines and newspapers and become the standard device for publishers. The latest rumor has Apple creating powerful alliances with publishers such as Time Inc., Conde Nast, News Corp, and Hearst Corp., to sell newspaper and magazine subscription for the iPad, according to the Wall Street Journal.

It’s this kind of software, services and deal-making that will lead to the iPad prevailing over competitors, says Van Baker, analyst at Gartner. “The manufacturers have yet to figure out that this is about the software and services as much as it is about hardware,” he says.

To this end, Android has the best chance at unseating Apple because of its successful Android apps market. But there’s still a lot of work to be done. Almost all of the current apps are for the phones and will not scale to tablets without some additional work, Baker says.

“Can Apple be challenged? In a word, yes,” Baker says, “but it will take a manufacturer that understands the need for a robust set of software and services to drive the device in the market. This is precisely the reason that Samsung had to pay to have apps developed for the Galaxy Tab.”

3. Is This the Droid OS You’re Looking For?

Given the growing popularity of Android smartphones, most analysts agree that the Android tablets have the best shot at beating iPad. But they’ll have to quell a growing controversy about their OS first. Will Android tablets run Android 2.2 OS, Android 3.0 (which is rumored to be the tablet version) or Google’s Chrome OS?

Google, of course, wants Android tablets to run Chrome OS. Late last month, Sunday Times reported rumors that the Galaxy Tab will have Android OS installed but the OS can be replaced with Chrome by tech savvy people. Meanwhile, Chrome OS tablets are poorly funded and incomplete, says Rob Enderle, analyst at the Enderle Group.

All of this means that Android tablets likely won’t get the kind of marketing support that Google put behind Android smartphones. “There is little chance for a near-term Google upset,” Enderle says.

What about the BlackBerry PlayBook? Enderle doesn’t like its odds, either. “The RIM product is interesting, but I can’t seem to locate anyone that actually wants to buy one,” he says. “The playful name, heavy multimedia focus and smaller screen isn’t exciting business buyers.”

Hewlett-Packard, on the other hand, has the kind of size and technology that could give the iPad a challenge, Enderle says. However, Hewlett-Packard is going through a leadership transition and has the added distraction of Windows-based tablets in its line.

“By the time most of these products either arrive or mature, the next-generation iPad will have closed much of any competitive advantage they might have had,” Enderle says. “Pending an unknown product or unusually good execution from Hewlett-Packard, Apple likely holds through next year.”

Tom Kaneshige covers Apple and Networking for Follow Tom on Twitter @kaneshige. Follow everything from on Twitter @CIOonline. Email Tom at