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This week I moderated a panel on tablet computers at the Freescale Technology Forum with tablet and eBook specialist Stewart Wolpin, Chuong Nguyen, and In-Stat's Stephanie Ether. We discussed why non-iPad tablets weren't selling, the fight between ARM and x86 for the future of computing, and whether Android or Windows 8 would have a chance in what is being termed the post-PC era.
Beating the iPad
The issue with competing with Apple (Nasdaq: AAPL ) is that Apple monetizes their entire eco-system, designs products to be marketed, and out-spends and out executes their competitors by a factor of anywhere from 2x to more than 10x. Companies that try to compete with them tend to under-resource their efforts, which is why Apple dominated the iPod market and dominates the iPad market. Apple also crafts an entire experience, where most others do just one part. The result is that the product that comes out of this process appears to be much better for most buyers than what the competition offers. In combination with Apple's talent to create demand, the company is nearly unbeatable.
Until a vendor is willing to step up to this level of competition, the only way to compete effectively with Apple is to either create products that go where Apple doesn't want to go geographically or sharpen the product focus. Dell, for instance, is focusing on China first where Apple is weak, and Lenovo and Panasonic are focusing on business first where Apple is weak as well. Panasonic, in particular, is adding outdoor capability and heavy hardening so their tablet can be used in weather or simply outside.
ARM vs. x86
The sense is that consumers just don't want to care about the technology that is in their products. They buy an experience (which is, coincidently, what Apple sells). The panel made fun of current ads that focused on the number of cores in a tablet or the wireless technology that is in them rather than the experience, because it showcases that many tablet builders/marketers simply don't understand the market.
The trend is toward ARM for this new class of devices, but ARM as a platform is divided between competing vendors that don't supply enough cash to effectively co-fund the marketing for the devices they create. Intel has historically been much better funded and they, along with Microsoft (Nasdaq: MSFT ) and Apple, fund most of the PC marketing in the world. Intel could reverse the current ARM trend, if it can bring an ability to create demand to acceptably competitive products.
Android vs. Windows 8 vs. iOS
As mentioned above, Apple is both focused and well-funded. Google (Nasdaq: GOOG ) and Microsoft both have the capability to fund at Apple levels, but Microsoft has a history of starving the marketing of their own groups and Google of not funding marketing much at all. This is all about capturing the hearts and minds of people who increasingly believe that Apple is the only real choice. The longer Apple dominates tablets, the more expensive it will be to effectively challenge this dominance. Google is in the market now, but with three versions of Android on tablets and ChromeOS trying to enter the market at the same time. They are the exact opposite of Apple's focus and that, coupled with the severe lack of marketing, would suggest they are simply not willing to step up and compete at even a fraction of the level that is needed.
Microsoft is vastly more focused and potentially stronger, but they won't really enter the segment until late 2012, which gives Apple a significant period of time to consolidate and lock in the market. By waiting as long as they are they have, they significantly increased the cost of breaking Apple's market lock-in, but are unlikely to match their marketing budget to that requirement. They have one of the strongest marketing teams on the planet, but it is under resourced or otherwise constrained against a better funded and less constrained dominant vendor. Their odds are better than Android's long-term chances (unless Google takes this more seriously), but they aren't especially great either, at least not for tablets.
Tablets vs. eBooks
In-Stat just completed a survey with some interesting results. It showcased that, as you would expect, eBooks like the Kindle are bought and beloved by heavy readers, while tablets are bought by those wanting a better multi-media experience. A Kindle buyer is willing to pay over $500 for a tablet while a non-Kindle buyer was highly resistant to prices over $300. This suggests that a Kindle is actually a strong bridge to a tablet and that buyers use both devices, but for different reasons. In effect, the Kindle and the iPad, far from being the competitors we have always thought they were, are actually complimentary. These results suggest that if Apple brought out a successful eBook reader, it would be additive and complimentary to the iPad, particularly if the two would sync in the iCloud. Apple doesn't normally miss opportunities like this.
There was an overall sense that this tablet market is still very young and that different sizes and form factor products may eventually eclipse the iPad, but not without a better investment in marketing and the overall user experience than what currently exists in the market. There wasn't a lot of love for RIM or HP, the two vendors with their own platforms, because neither vendor has demonstrated the ability to step up to the huge burden of going against Apple alone. We all saw some amazing hardware designs that differentiate well against the iPad at Freescale's Forum, but we are waiting for a vendor to step up to the other requirements that would result in a device that would sell like an iPad.
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