Apple's [AAPL] iPad 2 hits US retail Friday, and already many of the 100 competing tablets shown at CES this year are being terminated, withdrawn, shelved or otherwise dumped. That's because competitors now know what I've been telling them: their expensive and less well-featured alternatives are DOA.
Among the many ways Apple has stitched-up its competitors, the company has held to a low $499 entry price. No one else can match this, in part through the cost of components and manufacturing.
Price pressure
Apple's low prices leave little margins for struggling third-party vendors, and word out from Taiwan/China is that already 2-3 notebook brand vendors that had intended introducing tablets are now postponing the release, while they go for a redesign and try to cut manufacturing costs.
Indeed, you can keep your much smaller, less well-designed (I mean ugly in my opinion) Dell Streak 7 so-called 'tablet/phone', you can ignore the poorly-selling Samsung Tab (on which more below); even the Xoom, currently bathed in a well of positive publicity, even Xoom fails on price. It will also fail in the market. It will not attract iPad-like levels of sale.
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The much-expected tablet wars have been delayed. Digitimes reports:
"The tablet PC war that was expected in April may turn out to played only by the iPad product line, since iPad 2 is lighter and thinner than the previous generation device and is faster and has even more features at the same price level than the previous model."
In other words the tablet war will be iPad 1 v iPad 2. Alternative devices are simply spectators, destined for land fill -- unless someone manages to reach the consumer audience.
Hearts and minds
Digitimes tells us that we may see more activity in the tablet wars come June, but with iOS 5 and the iPhone set to take a bow at that point, these will create scarcely a ripple in consumer mind-share, I feel.
Meanwhile, competing devices will be fighting over scraps. They'll need to cost $399 or less, some say, meaning we'll see poorly-designed or constructed devices, likely with high fault return rates. The result? If these non-iPads achieve even 20 percent of the tablet market, this will be a good outcome. Hanging onto consumers looking across the fence at the superior iPad 2 experience will be more challenging, I fear.
Apple is expected to ship in excess of 40 million iPads this year. Compare this with Samsung. There's been some big hoo-hah over Apple CEO Steve Jobs' comment that Samsung had admitted sales to channel were strong, but sales to consumers were "slow".
Apparently, stressed-out Samsung PR's subsequently rushed to inform, Samsung had meant to say sales to consumers were "smooth", but this was "mis-translated".
"Smooth"?
What are "smooth sales"?
- Are smooth sales sales in which industry insiders estimate that 200,000 of every 500,000 Galaxy tab's sold to telecoms carriers in the Korean market are gathering dust on store shelves?
- Are smooth sales sales in which Samsung must sell its Tab to US carriers at half the marked price?
- Are smooth sales sales in which Samsung already admits to an extremely high 15 percent return rate?
There's nothing "smooth" about these sales. If there is, I can't see it.
If you engage in a little mathematical calculation ('math') you can deduce these figures suggest that of 2.5 million tablets sold into channel, .375 million are returned faulty, while an additional 1 million aren't selling at all, just sitting on the shelves hoping to be sent off as a faulty product replacement.
This provides potential sales figures of just 1.125 million, much less than 10 percent of Apple's 14.8 million iPad sales, giving Apple in excess of 90 percent of the tablet market relative to the Tab.
This remains easy to imagine when you consider the complete lack of any sales figures for other devices, suggesting there's little to brag about. For the most part, these remain also-rans. No wonder competitors are thinking twice now about jumping into the 'Post PC' market. Lucrative as it seems.
Turn on, tune in, drop out
They are looking at Samsung's experience. Critically well-received by the technology press and driven by Google's Android OS, the Tab -- which even carries many of the same components as Apple's own iPad -- was the great hope of the anti-Apple massive.
Things haven't gone so smoothly.
The figures cited above suggest Samsung's facing the return of a potential million-plus unsold devices -- a huge markdown in the company's finances. Can anyone recall when former Apple CEO Michael Spindler found his sales channels stuffed with unsold Macs? He lost his job and the company almost died.
Samsung's fate will not be unique. All tablets entering the market in 2011 will simply be descending into fire. Quite simply, Apple's product is better-designed, better-priced, better-known, easier to use, with a stronger supporting ecosystem and has a much larger army of developers behind it.
Also, in the unlikely event Apple's unhappy with the outcome of summer sales, there's always that speculation as to an iPad Pro to think about -- though this may end up simply being the iPod pad, a 7-inch model iPod touch, designed to grab the market between the two devices.
Competitors are toast. I'm sorry, but it's true.
Let the flames begin. You know where to place your pro or anti-arguments. Please let me know in comments below, and I'd be most pleased if you chose to follow me on Twitter so I could let you know as new reports get published here first on Computerworld.