Apple CEO Steve Jobs recently took the stage to pound the drum for the company's dominance of the nascent tablet market. "We own 90 per cent of the tablet market!" he crowed during the launch event of the iPad 2. It's not surprising that Jobs chose to focus on the iPad's success. After all, despite a similar keynote with nearly …
Are you really sure about that?
"Apple's high-margin, premium-pricing business model demands that the company cede market share as it hordes the high end of a market"
Given the bang for buck you get with an ipad, it looks an awful lot like Apple are competing very heavily on price here. Given their premium product reputation and generally quite reasonable standard of engineering, android devices that aren't half the price of the apple equivalent are going to look overpriced to joe public, no?
They still cost less and do more.
Bang for buck
I think this is true...for now. But make no mistake: Apple set the iPad price at a rate that gives is a big profit margin. I'm watching the Samsung Galaxy 10.1 and 8.9's. They start to drive price downward while delivering equal or better hardware than the iPad.
Which one costs less and does more?
Galaxy Tab? Nope, cost about the same (or sometimes more) than ipad.
Ditto for xoom.
El'cheapo chipads? Don't make me laugh.
Too expensive for sensible people
I think the real problem is that most people can't find any reasonable justification for spending that kind of money on a device with such limited functionality. But most Apple fans don't need reasonable justification, they just need Steve to tell them they want one.
"Apple is fantastic at fostering growth in new markets. It is terrible at maintaining market share."
Apple still holds the mobile music player market share - and this is not a unique occurrence.
The mobile phone market is very different from the tablet market. Cut throat competitiveness and high subsidies from the carriers are not going to be able to attract new customers with tablets if those customers are up to their necks attempting to recoup their phone subsidies.
Yes, there will be lots of entrants to the tablet market - but how many will stick?
At the moment Honeycomb isn't ready. Yes it is shipping on some devices but that doesn't make it actually ready. When it is ready then will it be "good enough"? Well we shall see but until Google implement some form of DRM then Netflix won't be on the boxes for example and that is a pretty large use of the tablet form thrown out the window.
I think you are making some huge assumptions here to get page hits, Matt. And I think that you are wrong when it comes to the future of tablets.
What music player market?
Apple still hold the music player market, what use is that when the advent of smartphones/converged devices is cannibalising it until it no longer exists ?
There is some urban legend that subsidies from carriers are helping android prices/competitive position. Lets check that out by looking at approximately equivalent PAYG devices.
ZTE Blade - £99 at argos
iPhone 3Gs £428.00 at Apple
There is a simple reason the Android devices are competitively priced, Android manufacturers actually compete!
As is said in the article, all the detraction around the xoom/tab were made about the G1, Android generally gets better/runs faster with updates, H/W gets cheaper and the range is larger. Some will cry fragmentation, and call things cheap and nasty iDevice knock offs, but people will generally buy a device that is £328 cheaper than an Apple equivalent regardless!
Dont disagree with your point about price, but I think there is more to it than jut price. It can be summed up by " choice". Some want the latest phone, some want it pink, some want it waterproof. For some battery life is paramount. Some. want a keypad. My wife was happy as lon as it fitted imto the space in her handbag. Some dont like the idea of being wall up inside the apple wallled garden. Point is different people have different needs, wants and desires and a single device, no matter how good, can satisfy them all.
I can't remember whether it was Bill or Dave who once commented "Any fool can buy market share". Why would Apple be worried about their market share? Apple have made a brilliant, profitable business by selling as a premium brand. This allows them to make a good margin and a good return on investment and hence a nice tidy profit. Apple are a business, profits are what they are interested in. That they are being outsold by products that in some cases cost between 10-20% of theirs is hardly surprising. The important question for them is who makes the most profit, Apple or the likes of ZTE.
But that's kind of my point: the media went wild ridiculing Xoom's paltry 100K opening, which shows a distinct lack of appreciation for history. Apple doesn't care about owning all of the market. It can't. Its high-margin approach almost demands that it give up the mass-market to instead win the mass-margin.
Monkeys with money & no sense - iMonkeys...
If you understood the whole Apple thing versus Android, you would at least think about Android rather than monkey see monkey do...
Yup, Apple's hoarding strategy will usually come back to bite its ass; it happened with Macs, it's happening with the iGadgets. However:
"Apple would be all but gone were it not for Microsoft releasing office for the Mac,"
IIRC, Office was *born* in the Mac. A lot of people in the Windows world suddenly got their Word 2.0 upgraded to "Word 6" ... what happened to the other versions? Oh, that's because "Word 6" was MS standarizing the version numbering on all platforms; Mac was already on 5.1 while Windows had only "version 2".
Hell, Word was the poor man's productivity app, we were all using Aldus PageMaker those days. A lot of "desktop software" was born in the Mac, and had Apple opened up in the late 80's-early 90's, we would all be using MacOS by now, and RISC-based PPC machines instead of the x86 garbage the PC industry got stuck with.
Oh well ... lost opportunites. And that was without control-freak Jobs in the helm; these days it is *less* probable for Apple to open itself up.
I do not own a tablet.
...and never will. It is a solution for a problem that never existed...
Tablets are the 21st Century version of the Hula Hoop. Useless, but all the "cool kids" have to have one cuz the others do.
I beg to differ
I've had an iPad 2 for a couple of weeks and I couldn't disagree more strongly. I'm an old geek (my first computer was a TRS-80 Model III purchased in 1980). I have found quite a few uses for the iPad that simply would not work with another form factor. It's just a matter of imagination, and I've still got plenty of that - and lots of time to use it since I've been retired for years. It's always easy to criticize something you have no experience with...
You missed "IMHO"
Reminds me of "I think there is a world market for about five computers." attributed to a certain IBM chairman.
And they are???
Having played with an iPad (and a Galaxy Tab), and watching the hordes of Apple fans in the offie play with the iPads during meetings I have still yet to find a use for one...
I have an ultra portable machine (about the footprint of an iPad, with a much better screen, keyboard etc) that does everything they do, plus so much more, with much less effort on my part. The battery life and instant on-ness is even comparable... And it has all the ports I need for eveyday use and even a DVD built in.
Where is the advantage and use of an iPad? I'll go with it's a much cheaper solution than an ultra portable, but then it's also a much lesser machine and has many more limitations.
If you have to use your imaganation to make a use for it then it's kind of proving the point that it's a solution for a problem no one had... Doesn't stop me wondering just what your imaganation came up with though that you can't do with an ultra portable or smart phone...
Uses for an iPad or other tablet...
Commuting - excellent for catching up with your email, diary, browsing the intarwebs, listening to music or podcast, reading a book, whilst sitting or standing on a train/bus/plane.
Reading in bed. Excellent device that doesn't need the light on (thus not disturbing my partner). Also listening to the iPlayer, podcasts, etc. (much better sound quality from the built-in speaker than an iPhone). The screen's much bigger than a phone, so it's easier to read without my glasses.
Lightweight browsing in front of the telly, in the kitchen, on the bog...
Excellent mapping applications for use as a GPS substitute in a car.
Excellent charting applications when sailing (a tenth of the price of normal charts).
Playing the odd game - nothing like flinging a few birds at pigs.
In short it's an excellent consumer of information that's an excellent form factor - no keyboard, instant on, portrait format screen, etc.
It's not as good as the normal laptop/desktop when using it for serious browsing, development, writing, drawing.... All the sorts of things you'd use your ultra-portable for (but not in portrait format).
I'm absolutely delighted with my iPad and use it daily ever since I got it last May.
Here are some suggestions...
You don't have to try too hard to use your imagination to find out uses for it.
Your argument Stacy is "I don't want one, therefore there aren't any uses I can see".
Here's the thing - I am getting old - and having a large screen which I can prop up against a pillow in bed to watch an episode or two of a TV series or a movie before going to sleep is a perfect use. No dumb keyboard banging against your chin or fans kicking in to make it impossible to hear what is being said... And that is just one use...
Giant GPS device when in the car.
Giant phone with Skype for emergencies if you don't have a mobile - there are some of us you know.
Classic Games machine - have you seen the Atari collection? - pretty awesome for those of us of a certain age.
Use iSwifter to watch streaming Flash sites such as Hulu, there really is no end of possibilities.
But it's far easier to say that there are "no advantages" when you have invested in another product though.
I 100% agree with you Matt. I am an engineer, and in 2009 I was in my last semester of college taking a class on Android and my teacher gave the same speech you did. Android will dominate the market just because there are going to be soooo many innovative devices running it, how can it not. Everyone laughed at me when I spouted the same thing after learning about it (look at Android now betches). It's not 100% as polished as the iOS at the moment, but it is better in some other software areas and also with so many more powerful devices then the iPhone 4 and probably even 5 already out, paired with so many options (and some even free with a new two year), it tells everyone this OS is for all, and not just the elite. I see the Apple tablet market taking a few hits this year alone with so many awesome (and some even better options then the iPad 2). Patience my Apple loving mindless cows, your precious iPad will fall to excogitation just like your iPhone did last year. :)
No innovation required
Android dominates the phone market not by being on any innovative devices — in truth nobody has innovated for years — just by being on a lot of different handsets, relatively cheaply. It ticks all the boxes that a large proportion of the market care about, which is enough.
Your making the implicit assumption that it can only be an iOS vs Android game, that likely won't be the case long term.
If your a developer wanting to make money now, I would bet on an iOS app vs an Android one.
I think there is only room in the operating system for two operating systems long term.
In desktops there is Windows (mass market), OSX (premium niche)
In servers there is Linux (mass market), Windows (premium niche) + maybe Solaris for storage
For phones it looks like there will be Android (mass market), iOS (premium niche) and Blackberry will survive for a while in the same way that OS/2 did.
For tablets, Android's position as the mass market leader is not guaranteed. If something else comes out in the next six months or so that can perform better than Android, it will have a chance. After that, it will be too late. It won't be WebOS or Blackberry as they are tied to single vendors, and I don't think Windows 8 will be out in time, or will be good enough, so it is very likely that Android will be the winner.
"In desktops there is Windows (mass market), OSX (premium niche)
In servers there is Linux (mass market), Windows (premium niche) + maybe Solaris for storage."
Since when is Widows a premium niche server? If that were true, then Red Hat wouldn't have shattered the billion a year in sales mark with an OS that is basically free. Wall Street could hardly be called "mass market, nor NASA, the JPL, and a score of mission-critical huge premium niche servers. Let's face it, Windows has gone around it's thumb, to get to its elbow, to come up with a server that is not UNIX. Which has led to their downfall and ever dwindling market share. Once taxpayers and government bodies take a peek at what the Windows Tax costs, in term of licenses that allow them to run and maintain their own hardware on a network, the pitchforks and burning torches will surely follow. That WOULD make a great article in the near future. I double-dog dare the author to research and write that one.
What colour is the sky on your planet?
Windows Server is strong in the Small Business Server, Exchange Server and Sharepoint markets. Linux runs in everything from the world's fastest supercomputer to el cheapo Linksys routers. Linux is mass market because it runs on all the things you mention + many more; and most people are running linux machines without even realising it.
Re; Windows Server
The sky is grey on my planet most of the time. It was blue for a few days last week.
You have to pay lots of money for Windows Server, whereas you can generally download a copy of linux for free. That in marketing terms makes Windows Server a premium product. You may think the free one works better, I do, but from a marketing perspective that doesn't change anything.
Betamax vs VHS
I'd have to agree with jonathanb
These days when I hear a network team discuss deploying a new server, the first question asked is whether or not it deploys to Linux. That makes Linux the mass market server OS. Remember the other catch here is that Premium =/= Quality, it means the piece you pay more for. The premium you pay may be for a piece of crap, but its still a premium.
Maybe Linux will displace Windows in the desktop mass market but it hasn't done so yet.
Shouldn't Unix be considered premium ?
When you say premium, you imply costs + quality. That's UNIX.
Windows, on the other hand, is just expensive shit.
hehe ... you sparked a flame! Probably people took offense on Windows being "premium" ;)
Well, you're kinda right, except Windows isn't quite "premium" even though it's expensive. Commercial UNIX, Mainframe stuff is the one that still owns the "premium" market:
Linux (mass market)
Windows Server (SMBs, expensive OS but shit performance, used at orgs where CEO/CTOs have been misguided)
Commercial UNIX like Solaris, HP/UX, AIX (premium market)
AS/400 (premium market)
Mainframe z/OS, Tandem NonStop et al (VERY premium market!)
Of course, a good bunch of Commercial UNIX installs are usually legacy platforms, and are being substituted by Linux boxes. But the exotic stuff like OS/400 and Mainframe isn't going to move that easily....
One point that the author has missed here:
Phones are subsided, and cheaper phones = lower monthly contract fee, so android phones are very popular.
Most people who have tablets buy them without data plans - and apple is currently pretty low on the price:feature scale compared to their competitors.
So I don't see their dominance in the tablet market being eroded anywhere nearly as quickly as it was in the phone market.
I have a feeling that HP and RIM might be giving apple more of a challenge than any of the android competitors.
Good point, but...
I think you're right to point out the different economics driving tablets. Also, it's a much higher price point, regardless of subsidies from the carriers, so the turnover on devices will be slower. So, I think it will take longer for the iPad to fall behind. But I still hold that the iPad necessarily will give way to "lesser" rivals.
Ah! it's the PC vs Mac all over again.
Hate to be the guy who says it but...
...Android is often GIVEN AWAY and that matters in this discussions.
A customer with a dumb phones goes into the store for their upgrade, sees less dumb phones then when they took out/renewed their contract 2 years ago and leaves with a cheap or free Android.
Is that a bad thing? Absolutely not. But a lot of people 'just get' a phone which happens to run Android, they're not all making a conscious decision to purchase one.
In contrast, if you stump up £200 to O2 for your iPhone 4 you're more likely to be spending money on apps and content then if you got given a free Android phone when you popped into Carphone Warehouse.
Of course in a pure numbers game that doesn't matter but if we're looking at the profitability or desirability of a platform - which are the only basis on which market share really matter - it does need to be factored into.
I went in to buy a cheap phone, my old one was dying and was told if I came back under contract I could keep the same tarrif and choose any phone in the shop except an iPhone. As I have no problem with the carrier I said thank you very much and got an HTC Desire. It is nice and I don't doubt the iPhone is nice but it cost me exactly nothing. No brainer that one
So you're saying that the only real way to tell which platform is best is to artificially float the prices so they are equal in cost?
You have a point if the discussion is limited to functionality (though I don't necessarily agree the iPhone would win even then), but such is not the case.
History has shown that the market leader is not chosen merely on the strength of its features otherwise we'd never have had to suffer VHS domination of the video market when the self evidently superior signal reproduction of the Betamax was there for the buying, and I'd be typing this on a Mac.
Market share is decided on many factors, chief of them being how much do I need to pay and what features can I live without in order to be able to afford the thing?
The iPad is a nice toy. In an earlier life I would have bought one as soon as I could, just because of the coolness of the idea. But should I ever acquire the *need* for a tablet device, you can bet that I'll be factoring TCO into the equation and if accepting an extra 1/8 inch thickness means I can shave $50 off that cost, I'll take that deal, and I don't think I'm in any way unique in my buying habits.
P.S. Just because I see no need for an iPad does not translate into "I think you're | a dolt | brainwashed | Hitler | for buying one". Enjoy your tablet with my completely unnecessary blessing and some wistful jealousy.
Many form factors of Android
Let's not forget android comes in many form factors unlike the iphone.
I prefer a large screen, integrated Google services, and live widgets.
swap "Windows" for "Android" rinse & repeat
...."Is that a bad thing? Absolutely not. But a lot of people 'just get' a Computer which happens to run Windows, they're not all making a conscious decision to purchase one"....
See how that works?
Don't forget what is driving Google here....
...Advertising. Google can afford to subsidize the cost of Android because it makes its money elsewhere, in advertising. That's what makes it such a difficult competitor for Apple (just as Linux is a tough competitor to Microsoft Windows and Unix systems: IBM can afford to dump a lot of innovation into Linux, knowing that it's going to make it back on services and hardware sales). It's what makes the tech market so interesting these days: different businesses are competing on very different value propositions.
you mention that apple's domination of the music players is an aberration. Instead apple is a premium player only. Definitely true for computers e.g macs but is that true for ipads? Can apple produce cheaper ipads? Well, they could definitely reduce the screen size to 7inc. Can they produce an equivalent ipod nano for the iphone or ipad? Do they want to? I think they do.
Issue is whether they can succeed as they did in the ipod market.
Android only wins...
...because they give it away for free.
It's like the Nokia numbers in the market place, people just buy the latest shiny thing on the shelf. They will buy anything as long as it sparkles and costs next to nothing. They don't buy into Android, they just buy into a phone.
The problem with the tablet market is that price and quality are heavily linked. So someone may buy an Android tablet, but will they actually use it? If they don't, then the sale was worthless.
And you can already see this in the existing Android slabs out there. The cheap ones get bought, but largely discarded because they don't work very well. The expensive ones work well, but lose the price war because they are the same price.
So what does a punter buy into when it is their cash buying the tablet and price isn't an issue? The unknown slab or the developed iPad?
The final problem with Android slabs is - where are all the customers? We've been told for so long that techies will buy a slab if it has Flash, SD card reader, bigger memory, more proc, but - where are all these people? They haven't bought into it.
I'm sure Android will catch up sooner than later, but wake me when it does because it won't be for some time.
My nephew was of exactly the same opinion as you. "free means free cos thats wha it says on the label." I tried explaining that he still paid for it over a 18 month contract, but the concept of paying for it did not involve the concept of future. But then he is 10 and his father is paying the bills.
Are you kidding me!
"And yet they sell. They sell because they're everywhere, they're cheaper, and they're good enough. Just like Windows on the desktop, back in its day."
Good enough? How about the choice of Apples products aren't good enough? I can get a wide range of choices with android and PC.
Henry Ford once said "You can have any color you want, as long as it's black".
Steve Jobs should place this quote on his headstone
"Henry Ford once said "You can have any color you want, as long as it's black"."
Only he didn't. Oh yeah and he was a real nasty piece of work too. As much as you obviously hate jobs, he's nowhere near the same league.
Apple products available in several colours
newsflash for the terminally prejudiced.
Several colours! Wow
That just blown all the android competition out thr water
I find it interesting that it has become popular to hate on Apple products in the media. It would not surprise me if there is a concerted effort by other manufactures to have articles written trashing Apple.
First off, most people that could care less about a smart phone and have no idea what they are doing, they buy an Android because it is cheap and that is the only reason. If you did a graph of market share of phones in the $199+ range then Apple would be supreme. Apple already takes in 52% of all smart phone profits, think about that. And most of those people wish they had spent the extra money on the iphone.
IPad is a whole different group of people. No one has to have a tablet like they do a phone. So people have to decide they really want one and then which one. iPads will dominate this market and everyone else will just become woot offs over time.
Finally, if Apple has to lose to Android and still be the second largest Market Cap company then I guess that is a cross they will have to bare.
All fair points - just one small thing
Tell me the one competitor that offers a better price/feature ratio than Apple in this case?
I know of tons of cheaper (and much worse) competitors, just as I know of some (better?) but more expensive products.
I believe that aside from the huge advantage of Apple's App universe the price is exactly the reason these guys see to be winning this game right now. Both Xoom and the Galaxy are way more expensive.
However, if the competition manages to get subsidized ("free") tablets into the channels, then you may have a point...
Asus Eee Pad Transformer. Just launched. Not subsidized, just cheaper than the iPad at same spec and just one of many devices in the next few months that run Android 3.0. By year end there will likely be many Android 3.0 tablets retailing from £200 up.
Of course if you don't care for Android 3.0, there are numerous tablets in the sub £300 market already. Some like the Archos 101 are perfectly fine tablets.
I also expect that Amazon will be turning up with a tablet soon enough though I would not be surprised if the Android 3.0 open source / not open source shenanigans are specifically related to that happening.
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