The iPad's Surprising Competition

After watching tablet after tablet fail to launch, one might wonder whether the tablet market exists beyond Apple's (Nasdaq: AAPL  ) iPad. However, a few recent surveys suggest that the tablet wars won't really get started until Microsoft (Nasdaq: MSFT  ) releases Windows 8.

I'm as shocked as you
I'm generally optimistic about Microsoft's future, but I expected demand for Windows tablets to build slowly. It turns out that more consumers want a tablet running Windows more than any other operating system. A new survey from the Boston Consulting Group says that 42% of U.S. consumers would prefer one running Windows. Even though Apple gets the most attention, only 27% of consumers prefer iOS. Meanwhile, 20% of consumers prefer Google's (Nasdaq: GOOG  ) Android.

What's even more startling is that the BSG poll is not the first to discover the desire for Windows tablet. An earlier poll by Forrester found that 46% of consumers considering a tablet preferred Windows, while 16% preferred iOS and 9% preferred Android.

Perhaps we've thought about this wrong
When Apple dropped iOS into the iPad, it redefined tablets as mobile devices rather than another form of computer. Working under this model, Android makes sense as a tablet OS. It's already the most popular smartphone OS and has begun to attract more app developers. Throw it in a tablet form factor, and you have an instant hit.

As we know, that hasn't really happened. It seems that -- thanks to Apple -- consumers want to see how their devices plug into a larger ecosystem. Unfortunately, Android on its own suffers from fragmentation and doesn't give the impression as being part of a network of devices.

In this light, it seems that the best way to sell an Android tablet is to rebrand it. Barnes & Noble (NYSE: BKS  ) scored a surprise hit with the Android-powered Nook Color, and Amazon.com's (Nasdaq: AMZN  ) Kindle Fire has reportedly already racked up more than 250,000 preorders. However, neither of these companies markets its device as an Android tablet. Instead, the tablets are sold as reasonably priced portable media devices tied into well-established ecosystems.

The more things change …
Microsoft's solution to the ecosystem problem is actually pretty simple. Rather than make a separate operating system or reconfiguring Windows Phone for tablets, the company made Windows 8 tablet-friendly. The devices will have an ecosystem because they'll essentially be PCs, only flat. Users won't have to worry about finding good Office alternatives -- which always seem to lack that one key feature you absolutely must have for work -- because you can just run Office.

Granted, this doesn't mean Windows 8 is a guaranteed success. If the first tablets fail to impress, or the company rushes the release of the OS, skittish hardware manufacturers might bail on their tablet plans prematurely. However, I think the odds are pretty good that the big rivalry of the post-PC world will once again be Apple vs. Microsoft.

If you want to keep an eye on the coming tablet battles, then you should add these companies to your Watchlist, so you can stay up to date on all the latest news and analysis.

The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, Google, and Amazon.com and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Patrick Martin owns no shares of any of the companies mentioned here. You can follow him on Twitter, where he goes by @TMFpcmart03. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (5)

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 October 09, 2011, at 5:54 PM, makelvin wrote:

    "A new survey from the Boston Consulting Group says that 42% of U.S. consumers would prefer one running Windows..."

    I find this survey highly suspicious. This is completely inconsistent with the actual sales result of the tablets. Remember, Windows tablets have been available for some time already; not to mention that HP has very recently released their HP Slate using Windows. None of these tablets have any significant sales.

    Perhaps, you can argue that these Windows tablets are not using Windows 8 yet. Well, let's look at why Windows 8 would be so much better than Windows 7. Clearly, both Windows 8 and Windows 7 allows users to run the same eco-system of programs. So that is clearly not the reason. Is it just a matter of the user interface? Windows 8 will have a similar user interface as Windows Phone 7. Since Windows Phone 7 only constitute about 1% of the market share, that would also indicate it can be the differentiation factor that would turn the tide.

    To make matter worse is that Windows OS requires a minimum of 2GB of RAM and over 100GB of storage just to have an adequate experience. A recommended 4GB of RAM and 500GB of storage is really needed to have a truly satisfactory experience. All of these requirements are going to make the Windows tablet very expensive to manufacture and a huge drain on the battery. Apple's iOS devices can easily be run with only 256MB of RAM with 16GB of storage.

    Of course, Microsoft have announced that their Windows 8 will be supporting the ARM processor and thereby allowing OEM manufacturers to make tablet on par with iOS in terms of battery performance. But in order to do so, these ARM based Windows tablet will no longer be able to run the Intel based Windows program; thereby removing their existing PC eco-system in the process. In other words, you cannot simply just run the same version of Office.

    I seriously doubt that Windows 8 will really be a serious contender in the tablet war. There is a better chance that Amazon Kindle Fire can help usher in the Android similar to what Motorola Droid did to the phone market because it will help Android build up its tablet specific apps.

    "Granted, this doesn't mean Windows 8 is a guaranteed success. If the first tablets fail to impress, or the company rushes the release of the OS, skittish hardware manufacturers might bail on their tablet plans prematurely.."

    Nice cop out. I guess now, no matter how things turn out, you can always blame Microsoft for rushing their releases or the hardware manufacturers not doing it right somehow.

  • Report this Comment On October 09, 2011, at 6:08 PM, SimchaStein wrote:

    Another eye catching headline, supported by shallow speculation. Tablet "wars". Drop that metaphor to the PC wars. The real question is; "Can a windows 8 tablet succeed?" Here are the challenges looking forward (not at the 80's): Can anyone deliver the performance, battery life, and ease of use to match Apple, who has a head start, a strong chip design pipleline, and the ability to maximize all elements? Will Windows 8 suffer the same fate as Palm, who brought some features but was too late to the game? Who needs MSOffice in a tablet, given that most MSOffice users already own at least one PC or laptop to runs MSOffice?

  • Report this Comment On October 09, 2011, at 6:38 PM, megoogler wrote:

    About Kindle Twinkle ... I mean Fire:

    - Kindle Fire doesn't have microSD slot that, for example, Nook Color has thus it is stuck with 6 GB usable internal storage unlike Nook Color that can get up to 32 GB card in. Kindles are made to be almost like a "dumb terminal" of the past to make sure you're tied up to Amazon's storage on the web (for which you need Wi-Fi connection to get to) and you can only store content you get from Amazon there, not other files. Quoting Amazon on Kindle Fire: "Free cloud storage for all Amazon content". Get it, Amazon content? 

    - The stats of how long the battery can last (Kindle Fire theory is 8 hours) are taken with Wi-Fi off. You can only imaging how much less Kindle Fire battery will last if you use it to access content from their Cloud storage over Wi-Fi. 

    - Amazon can spy on your web activity through their new cloud-integrated web browser of Kindle Fire. 

    - VERY IMPORTANT – lack of microSD slot means that if you decide to root your Kindle Fire, you’ll have to root the actual device thus there will be no coming back. On Nook Color, you can make it boot from a “rooted” microSD card and if you want to get back to the original Nook you can just take out the card and reboot. 

    - Kindle Fire doesn't have a camera. 

    - Kindle Fire has about 70% less usable screen area than iPad 2. 

    - Kindle doesn't support eBooks in ePub format that is the most used format in the world. 

    - Kindle app store contains only Amazon approved apps and it does not include (and will not include) Netflix app that iPad has and Nook Color is getting thus again you're stuck with Amazon content only. 

    I'd recommend waiting for a couple of weeks as Nook Color 2 is rumored to be released by Barnes & Noble.

  • Report this Comment On October 09, 2011, at 6:50 PM, SimchaStein wrote:

    Great points Makelvin. I agree. I think the root cause is that Jobs started the iOS development years before we saw the first iPhone; And all the time he drove the teams to optimize around a new chip and new interface experience. Neither Android nor Windows will match this, but Windows is clearly way behind. Makelvin, you have given us the proof points of why Ballmer's belated, rushed, hack job is failing.

  • Report this Comment On October 09, 2011, at 11:38 PM, investingcents wrote:

    ".. the company made Windows 8 tablet-friendly. The devices will have an ecosystem because they'll essentially be PCs, only flat. Users won't have to worry about finding good Office alternatives -- .."

    Sorry, but this borders on the ridiculous. So the theory is that the only difference between a tablet and a PC is that the former is flat?

    The tablet's (iPad in particular) popularity is because it fulfills (perhaps created) a unique set of needs that this type of device satisfies beautifully. Its success is not by replacing laptops (yet) .. most iPad users still own and use a laptop, and that wont change for a while, nor will it /has it hurt iPad sales.

    Corporate workers will still use laptops at work for some time to come .. and yes, maybe that's because they're stuck with Office as the corp standard. If Office is MS' tablet strategy to compete with iPad, I think they'll be in for much disappointment.

  • Report this Comment On October 10, 2011, at 2:29 AM, pmart wrote:

    @makelvin, The HP Slate is specifically geared towards enterprise customers. It's not meant to be a big consumer product. Microsoft scaled back the requirements for Windows 8. Finally, if Microsoft made an operating system capable of running on intel and arm processors, I'm pretty sure they can make applications do the same. Even if they do have to release two versions of Office, the features should be the same.

    Finally, because the purpose of the Fool is to provide a variety of perspectives, in order to help you make better investment decisions, it would be irresponsible of me to leave out potential risks I see. It wasn't a cop out.

    @megoogler, Amazon went out of its way during the Kindle Fire press event to say that the company was in talks with Netflix. Beyond that, I'm not going to speculate on the Nook Color 2 until it's officially announced.

    @investingcents, care to list those specific needs? Also, I wouldn't say Office is Microsoft's only strategy, but it is an advantage.

  • Report this Comment On October 10, 2011, at 2:31 AM, pmart wrote:

    I didn't mean to say finally twice in that last comment. That'll teach me to post after 2:00 A.M.

  • Report this Comment On October 13, 2011, at 7:07 AM, MattBancroft wrote:

    i thought i was the only one pro windows tablet and now the BCG survey has proved so, im glad that people prefer windows tablet over ipad to be honest i think that ipad is not a gadget but a toy and merely used as a status symbol specially in pakistan according to this article there is a twist seen in the tablet market theater that Windows will take over the tablet market in 2012 read more amazing future predictions http://tablettechtoday.com/blogposts/bcg-survey-windows-tabl...

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