Will Apple Stay on Top in the Tablet Wars?

Thanks to the launch of Apple's (Nasdaq: AAPL  ) iPad, it looks as if the tablet-computing industry is ready to take off. Tablets are nothing new -- there have been Microsoft (Nasdaq: MSFT  ) Windows-based PC tablets around for years. But Apple has made tablets popular and cool with the iPad, and there's some serious competition coming over the next few months.

Research In Motion introduced its PlayBook tablet earlier this week. It's aimed at businesses and should launch early next year. Dell (Nasdaq: DELL  ) is already in the game and has plans for more. Hewlett-Packard (NYSE: HPQ  ) , Samsung, and Motorola (NYSE: MOT  ) are all expected to have something next year, and TechCrunch reports that even Amazon.com (Nasdaq: AMZN  ) might produce a tablet. (A Kindle combo, perhaps?)

How can investors begin to determine what this industry will look like in the next few years? Fool analyst Rex Moore recommends looking at what happened in the MP3-player market for guidance. Similar to tablets, Apple got into an existing market and blew its doors off with beautifully designed iPods that consumers loved. Now iPods account for roughly three-quarters of the market.

Apple always seems to stay one or two steps ahead of competitors with these types of products.  As an example, Microsoft came out with an MP3 player -- the Zune -- that was pretty good in its own right, but just not as good. Then Apple released new versions of the iPod and took it a couple of steps higher, frustrating competitors again. We can probably expect more of the same with tablets.

If you like to construct models, or just ponder the future, it's probably reasonable to start with a baseline assumption that Apple will have 50% to 75% of the tablet market after a few years. Then, adjust up or down as new data presents itself.

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Fool analyst Rex Moore does not validate parking. Of the companies mentioned here, he owns shares of Microsoft, which is a Motley Fool Inside Value selection. Apple and Amazon.com are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


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