$199 Galaxy vs. iPad: Has Samsung Already Won?

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Samsung hast just announced its carrier partners for the Galaxy tablet. It is now clear that the Galaxy is not an experiment. It is positioned to scale with the market and outrun Apple (Nasdaq: AAPL  ) with sheer market volume and aggressive pricing.

Yesterday, we ran an article commenting on new research that shows that Android has become much more than a headache for Apple. It is not difficult to predict that Android has all the genes it needs to dwarf Apple's walled garden product approach. Now we are seeing Samsung's Android tablet being prepped for launch, and it appears that Apple's rivals have learned how they can effectively compete with Apple.

The Samsung Galaxy tablet will not be available just from AT&T (NYSE: T  ) . It will also be sold through T-Mobile, Verizon and Sprint. There is no official pricing available yet, but a local T-Mobile sales representative told us during an informal information request call that the device will be offered for $199 with a 2-year service contract for the model with 2 GB memory and an additional 16 GB microSD card. Needless to say, T-Mobile did not officially confirm this information, and there was no information on how much the Galaxy tab may cost without a contract.

We do not know yet when the tablet will be available, and each provider has different versions to announce the expected availability. Sprint, for example, notes a "Fall" availability, while Verizon says the tablet will come in the coming weeks. What we do know, however, are the specs.

It will run a 1 GHz Hummingbird processor and use a 7" screen. There is a 3-megapixel camcorder (720p support) and a 1.3 megapixel webcam. The device has Wi-Fi b/g/n support and integrates GPS. It will be able to run Flash through Android 2.2 and support 3G networks for data.

Samsung will launch the Galaxy tab in the U.S. with what we hear is "limited availability," as our T-Mobile rep said that the company anticipates strong demand. However, there are now four providers that will bring the device to market, which is a clear advantage for Samsung over Apple, which has decided to only go with Apple. As time moves on, the AT&T partnership could turn into a mess for Apple as it limits its market expansion. Perhaps it is also time for Apple to consider its own manufacturing facilities as it has obviously hit production limits with its current partners.

The Apple of the iPhone/iPad/iPod is still a money printing machine, but Android is getting stronger and is attracting more customers already. If Apple does not want Android to turn into its second Windows experience, Apple will need to make some decisions to expand the availability of its iOS platform.

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Read/Post Comments (16) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 17, 2010, at 3:35 PM, Uruzone wrote:

    So the answer is no, right?

  • Report this Comment On September 17, 2010, at 3:42 PM, xmmj wrote:

    That is $199 with a contract. If you already have a cell phone then you will have to pay full prices which is what? Probably about the same as an iPad.

    What do you get? Well you will get a camera and video. That seems to be the bigest plus.

    My guess is that the system will be sluggish compared to iPad. All the reviewers have commented how snappy the iPad is and I am pretty sure that Apple has gone a long way with their custom chips to improve speed in ways that will others will not be able to imitate. (This, however is conjecture.)

    One thing IS clear. It will not have iPad's iOS and the Apple ecosystem.

    So you will be paying just as much (or almost as much) for a device that is smaller, possibly slower, and does not have Apples look/feel nor its ecosystem.

    This does not sound like a particularly great deal to me.

  • Report this Comment On September 17, 2010, at 3:44 PM, xmmj wrote:

    BTW - the reviews I have seen of Flash on Android have all been very negative.

  • Report this Comment On September 17, 2010, at 3:51 PM, Henry3Dogg wrote:

    If Samsung had launched this before the iPad, they would have been lucky to sell 503.

    There will always be people who can't afford the real thing, so they are tricked into paying even more, in installments, for a second rate fake.

  • Report this Comment On September 17, 2010, at 3:56 PM, gskorich wrote:

    android a headache for Apple? i think the only people comparing the apple ios to the android os is the media. when will we see true numbers from other phone makers about this android threat and how come we never hear about how this threat is affecting motorla sales against HTC or samsung? aren't these companies affected by each other? google is supplying the software to these phone makers but sooner or later the ywill need their own os to compete against each other. and what about apps? will there be apps for the TAB? i guess we will see when you break out the cost of making one if samsung is giving the consumer quality or quantity. android is here to stay but is it becauses its better or cheaper?

  • Report this Comment On September 17, 2010, at 3:58 PM, DefunctAcct wrote:

    Answer is NO. It is a silly question. There is no winning, there is only continuing competition.

    Equating iOS + Android competition with rise of Windows well back in early 1980's is another fallacy. Too many people who know little to nothing of that history keep falling into that trap.

    Simplistic stating of hardware specification as compelling factors for purchase is yet another trap for those ignorant of current mobile product market dynamics. It often shows a mindset mired in the olden PC days.

    Confusing market share with profitability is the silliest of all considering this article appears in "Motley Fools", a site that is supposedly for investors. If market share automatically implies "winning" and "dominance", Nokia would have won, GM would have won, IBM would have won, Microsoft would have also won.

    THis is a meaningless write-up. I hope investors who are too busy to educate themselves and too rush to perform the necessary critical thinking do not easily be swayed by such a shallow and ill-researched article. Don't rush to buy Samsung shares or sell your AAPL shares.

  • Report this Comment On September 17, 2010, at 4:05 PM, ghostintheattic wrote:

    This is typical Motley Fool crap. Post a bunch of nonsense with a headline designed to get clicks. It worked I guess, I clicked on it and that's 60 seconds of my life I'll never get back. I usually notice the source of the link and don't bother with Motley Fool links, but I didn't pay enough attention this time.

  • Report this Comment On September 17, 2010, at 4:11 PM, Borbality wrote:

    If one thing is apparent about Apple, it's that NO ONE CARES how much it costs. They'll gladly pay extra for the "sexy" Apple products. It's truly mindblowing.

    I don't care what the price is. Competitors are going to have to absolutely blow Apple out of the water in the quality department to change the whole world's mindset. And I don't see that happening anytime soon.

  • Report this Comment On September 17, 2010, at 4:14 PM, hellomojo wrote:

    The fact they they require a 2 year contract will limit the sales. Unless they offer a contract free version like Apple does I don't see it doing that well. $200 for the device and at minimum (24 X $30/mo) $720 for the contract. Thats alot of dough to surf the web for 2 years. The great thing about the iPad is that you can buy and use it without a contract. $500 and your good for the life of the product. Odds are you are using it a home most of the time so you don't need a contract; if you are mobile most bars, restuarants, etc have free hot spots and now most phones also have allow other product connections. Not even mentioning the fact that even Googles says that the current Andriod OS is not ready for Tablets. Maybe in the future an Android tablet will compete with Apple.. but not before this Holiday season.

  • Report this Comment On September 17, 2010, at 5:16 PM, jbelkin wrote:

    Some investors like to look beyond the numbers of a press release - you might want to in the future but that's your call ... Apple has 55% of the PROFIT REVENUE MARKET SHARE of smartphones and this was BEFOre the iphone 4. Apple could care less how many scant profits Android phones are sold for $29 to $99 - Apple cares that they sell to the 555-75% of the PROFITABLE end of the market as they do with computers ... They made 32% of the profits of the PC market with about a 9% market share - again, which market share is more important - being number1 but losing money or being #5 and making 32% of EVERY dollar in the PC market?

    Android tablets have NO reason and no competitive reason other than price. It's a fine "free" smartphone OS but there's a reason 89% of iphone users are buying another one and as low as 30% of android users will buy another one. The android market place is a BOGO market with bargain hunters and DIYers and more important, Verizon customers cannot choose Apple - only Android or RIM.

    There are no two androids with the same OS look & feel - learn the iOS, use it for an iphone, ipad, ipod touch and nano ... same with itunes - android? every phone a different OS, every telco a different storefront and media store (if they even have one). Think of it as the water market. Android is tap water but Apple is bottled water - Android is pennies per gallon while Apple is dollars per pint.

    So, sure, a big company like Samsung might sell a million of these spread out over the 6 products over the next 2 years but will any sell at the rate of 2-4 MILLION a month like the ipad? No.

    If you add up all 100 android tablets, they might sell up to 35% of the tablet market but who will make money? No one - with the R&D, no one will sell more than a million of any model in a year - meanwhile, the ipad sells 2-4 MILLION per month.

    So, again, if you just read a press release - you'll get some numbers but real investors might want to read beyond a press release.

  • Report this Comment On September 17, 2010, at 6:22 PM, dandles2020 wrote:

    And good luck to them when Ipad 2 comes out with front and rear cameras, along with the rumored 7" version. I know which one I will be buying, and it's not made by Samsung.

  • Report this Comment On September 17, 2010, at 8:29 PM, deemery wrote:

    History says "no". So far Samsung (or anyone else) has been unable to gain any traction against either the iPod or iPhone.

    Here's something that might amaze financial analysts: Sometimes it's not just about price.

    It will be very interesting to see if hardware makers can produce some real breakthrough devices using Android. But for now, the fracturing of the Android marketplace (both in terms of which version of Android does each gadget run, and in terms of App dependencies on Android OS version and gadget properties) means that the Apple advantage of tightly integrated systems "that just work" remains.

    (p.s. I do not own an iPad.)

  • Report this Comment On September 17, 2010, at 8:48 PM, yetanothersteve wrote:

    Fool indeed.

    Apple has created a device that in a form factor that others failed at for a decade. And they're cannibalizing netbooks and low end PCs with it!

    A KEY feature of the iPad is the business model. It is contract free. It is not a phone.

    Samsung is entering with a very different product (smaller) and business model. With an OS whose creator says it "isn't optimized for tablets." They may do well with it, they may not. But they have the burden of proving why they'll do better than any other tablet besides the iPad has done. And you're really in Apple's territory here: the iPad is a computer not a phone.

    As for the Android is the new Windows argument: doesn't anyone read their history? Windows was built on the DOS/IBM PC standard that came 3 years earlier and always had the dominant share and the more robust ecosystem.

    But then again, isn't this an investor site? Have you seen the stats of what percent of PROFIT from PC sales Apple gets vs. Acer/HP/Dell/Lenovo?

    And Android... does anyone really believe there's a viable monetization strategy for Google here?

  • Report this Comment On September 17, 2010, at 9:34 PM, alexkhan2000 wrote:

    What a dumb article. Like another poster said, these bloggers are putting up "catchy" titles to make people click and read their inane "analysis" of things they have little information about.

    No one knows for sure what it's going to sell for but it seems that it's a given that it will require a 2-year contract. Two years is a long time for a product like this when Apple already has iPad 2 in the works to come out in 1Q of '11 and all the other Android tablet makers bring out their new iterations almost on a weekly basis.

    I say Samsung has already lost before this one even hits the market. Contracts for phones is obvious, but for a tablet that you could use with WiFi for free over 95% of the time?

  • Report this Comment On September 18, 2010, at 3:07 AM, Melci wrote:

    "Has Samsung already won?"

    Wolfgang, you are joking aren't you? The Samsung costs $1,000 without a contract making it double the price of the iPad even though it has a smaller 7" screen compared to the 10" iPad.

    The percentage of the market willing to sign up for another expensive 2-year contract for this thing in addition to their current cell phone plan is obviously going to be far smaller than a one-off $499.

    The only reason Samsung has gone the 2-year contract route is because Google wants tablets to run Google Chrome and use web apps, not Android or native apps, so they are fragmenting their platforms before they have even gotten off the ground.

    Google refuses to allow devices without expensive cellular phone capabilities to have access to the Android Marketplace which means Android devices that compete against either the iPod Touch or the iPad either lack the Android Marketplace placing them at an crippling disadvantage, or they have to bump the price way up to cover the 3G hardware costs.


  • Report this Comment On September 18, 2010, at 3:23 AM, Melci wrote:

    "If Apple does not want Android to turn into its second Windows experience, Apple will need to make some decisions to expand the availability of its iOS platform."

    What do you want Apple to do? Start charging other manufacturers to license iOS for their devices? Against Android which is free? Are you mad? Look what that has done to Microsoft's phone ambitions. Companies like HP have deserted WinPhone 7 and most other manufacturers are hedging their bets and going Android as well. Great way to shoot yourself in the foot. I bet you're the sort who recommended "sell at a loss and make it up on volume" too?

    Total unit sales per quarter from dozens of disparate manufacturers is not the metric that matters for consumers or developers (although even by that metric iOS still beats Android), unless it also leads to increased share in hardware peripherals, software, profit and developer mindshare. Users originally flocked to Windows because that's what all the software was written for and all hardware peripherals were compatible with. However, it is Apple that is the "Windows" of the tablet market and the smartphone market today.

    More iOS devices ship each day (230,000) than Android devices (200,000) and the iOS installed base is far larger (120 million) versus low tens of millions for Android and with the enormous growth in sales of the iPad and the newly re-designed iPod Touch, that is quite likely to continue.

    The Android tablet market is stillborn as Google wants manufacturers to use the Chrome OS and Web apps on tablets instead of Android. As a result Google refuses to allow Android tablets access to the Android Market unless they have expensive cell phone hardware as well.

    Developers continue to throng to Apple before Android because of the following facts:

    - App developers make 50x the income from iOS apps (1 billion dollars) compared to Android ($21 million over similar time period),

    - Piracy levels of 50-97% on Android and easily by-passed anti-piracy measures on Android

    - the non-curated free-for-all Android Marketplace has far less quality apps and is chock full of spam apps, bank phishing apps, spyware and other malware turning away customers by the droves.

    iOS has the advantages of:

    - fully integrated iTunes store which boasts 70-80% marketshare in the music and media markets

    - 50-60% of mobile web browsing marketshare

    - almost 100% of the HiFi dock integration market

    - 70% of new cars feature iPhone/iPod dock connector and steering wheel integration.

    With no individual Android model or manufacturer coming anywhere near the unit sales of the iPhone, iPod Touch or iPad, and no common Android dock connector standard or form factor there remains no motivation whatsoever for hardware peripheral manufacturers to stop giving Apple their virtually undivided attention.

    Apple captured 48% of the entire cell phone industry's profit share in Q2 2010 while Android manufacturers like Motorola and Samusung struggled with only 2% and 1% share, and LG plunged into the red. This fact matters to more than just the stock market - consumers don't want to be stuck with an orphaned Palm phone or for that matter, another orphaned Kin or Nexus One.

    Now the quarterly unit sales of Android devices may indeed exceed the number of iOS devices sold in the future, but with Android developer income 50x lower than iOS app developers, terrifying piracy rates, a marketplace riddled with spam apps, a growing malware problem and just plain low-quality apps, virtually no hardware peripheral ecosystem and far lower installed base, that metric turns out to be pretty meaningless.

    With Google not making any money on Android activations and carriers like Verizon choking off Google's ad-based income by exclusively licensing Microsoft's Bing as the default search engine, and the potential for massive Java licensing fees courtesy of the Oracle lawsuit, the potentially larger unit sales of Android devices in the future is turning out to be a very hollow victory indeed.


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