2011 - The year of the Android tablet

2011 - The year of the Android tablet

Summary: It's not often that I agree with Robert Scoble. In fact, every time I do find myself agreeing with him I get all scared and worry that the apocalypse is going to descend upon us all. Well, if you fear such things it might be time to get your affairs in order because I think that he's right that Android is going to see huge gains in tablet marketshare this year.

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It's not often that I agree with Robert Scoble. In fact, every time I do find myself agreeing with him I get all scared and worry that the apocalypse is going to descend upon us all. Well, if you fear such things it might be time to get your affairs in order because I think that he's right that Android is going to see huge gains in tablet marketshare this year.

Here Scoble hits the nail on the head:

But, there are a whole range of uses that don't need an iPad, but need a good tablet.

For instance, let's say you are outfitting a school with tablets and all you need is a good web browser at a very low cost? Vizio wins here. Apple doesn't.

Or, say you are a restaurant and need to put a tablet at every table with a menu on it? Vizio wins here. Apple doesn't.

Or, like we just saw at Oakley's headquarters, let's say you are building a custom retail experience where you can order custom sunglasses. Are you going to spend $500 on an iPad when a $350 one from Vizio will do? No way. Vizio wins. Apple doesn't.

BINGO!

See, Apple came into the tablet market with the iPad and set some of the standards by which consumers would measure tablets. Form-factor, screen size, weight, storage and so on. But one of these metrics wasn't price, but I'm surprised how many companies failed to realize this.

Just because Apple started the iPad pricing at $500 doesn't mean that every other tablet maker out there can do the same thing. No way. You need one heck of a shiny halo (the sort of shiny halo that Macs and the iPod and the iPhone create) to be able to pull that off. While Apple can pull off a starting price of $500, most tech OEMs can't. They don't have the marketing, brand presence, retail presence and sheer customer base to pull it off. Sure, they can try, but as we've seen so far, they can also fail. RIM might have been able to sell 500,000 PlayBooks, and Motorola might have been able to ship 250,000 Xooms, but these companies soon realize that the customer well runs dry. Unless you're Apple, you need to be competing on price against Apple. 'Buy OUR $500 tablet as opposed to Apple's iPad' won't work.

So that leaves tablet makers with one card to play - Price. And it's an attractive card. Scoble's right when he says that some people will only buy an iPad, but there are plenty of people out there willing to not buy an iPad as long as the price is right. If people are going to have to spend $500 on a tablet, the evidence seems to support the fact that they'd rather buy an iPad, but I think that if you get a decent tablet out there and price it in the $350 region, that going to appeal to those who feel neutral towards Apple and its products. In fact, it might be the only way to get the tablet buying masses to pay attention to a non-Apple tablet.

Price matters.

Now, how much money can be made from a $350 Android (especially one of decent quality) is another question, but if an OEM can sell plenty of them, it should be OK.

Wait, I hear a sound ... is that the apocalypse?

Topics: Hardware, Android, Laptops, Mobility, Tablets

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  • Razor or razor blades

    Your argument seems reasonable but i think a problem here is that Android OEMs are trying to make money on just the razor whereas apple makes money on both the razor and the blades. I bet I've purchased 100% of the price of my iPad in apps over time --- and I'm sure I'll get others. The ecosystem is fragmented with Android and the OEMs get nothing but the initial purchase.

    Don't get me wrong, it's not the end of the world and I actually am hoping to see lots of sales of different android tablets. I'm just not sure how good theyll be --- been hoping for more than just cheap.

    Personally, I think Amazon has the best shot at doing a really good tablet. They have a good android AppStore, so they'd get money from the 'blades' and the experience of the Kindle shows they know how to make a good device. I just wish they'd hurry up.
    ZeroGeeZ0
    • You must purchase a lot of game apps.

      @ZeroGeeZ0

      With an average app cost of two dollars or ten dollars for a game app, five hundred to six hundred dollars will buy quite a few apps.

      The most I've spent on an app was forty dollars for the FileMaker Go for iPad app. I suspect my sizable app download collection cost around two hundred dollars - maybe slightly more.
      kenosha77a
      • RE: 2011 - The year of the Android tablet

        @kenosha7777

        Not really ... a few but not many. I have a core set with numbers, pages, keynote, good reader, notetakerhd, ithoughtshd, spb wallet, and a couple others that hit above 200 pretty quickly. I didnt really mind because those are really well done apps (particularly notetakerhd).

        I'm probably unusual though in that the iPad sits next to me all day every day as an adjunct to my PC/laptop ... I've moved some things there entirely.

        I have noticed that pricier apps are arriving over time. But generally they've been better and better so often worth it.
        Of late, the content apps have been more and more useful to me --- but increased the cost.

        My key argument is really that it's a battle of the ecosystems not the tablets --- that was just the first volley. For example, I've been loving buying/renting) 2.99 - 4.99 movies on Amazon (did a few on Xbox to be fair and worked great) ... It seems to save us money over cable. Problem for some some device makers is thats not revenue they can touch.
        ZeroGeeZ0
    • RE: 2011 - The year of the Android tablet

      @ZeroGeeZ0
      This is where the OEM and especially phone carriers get it all wrong. Their "customizations" are the problem with Android and push up the costs with negative benefits.

      If they've got a good idea they can sell it separately to any other Android phone besides their own and like Apple be in the razor and blade business if they've got the skills.

      But judging by most of the "carrier enhancements" (aka crapware) they should stay out of the razor blade business entirely!
      wkulecz
      • RE: 2011 - The year of the Android tablet

        @wkulecz

        Yeah I wish I could rip the NASCAR app off my evo. Ticks me off that you cannot uninstall it!
        ZeroGeeZ0
      • RE: 2011 - The year of the Android tablet

        @wkulecz On this I agree - I picked up a Pure Android phone because I wanted proper OS updates and no OEM Crapware. For now on that is the only way I plan to by Android devices.
        DS-Solutions
    • RE: 2011 - The year of the Android tablet

      @ZeroGeeZ0 That's why I'm waiting for the Amazon tablet with such interest - they're hard to beat when it comes to selling razor blades, and they already have relevant design and supply chain experience form the Kindle.
      francis.norton@...
  • RE: 2011 - The year of the Android tablet

    Until Apple is no longer the largest consumer of tablet screens and CPUs no one can actually compete with them on price and make decent money. I don't see that happening. A $350 tablet running the buggy Android for tablets OS is going to be a minor footnote in this market. Schools and small businesses have to look at ROI and not just sticker price. The days of having to toe the line with being "IBM Compatible" giving Microsoft a false standard and a monopoly are over. Products have to stand on their own now. And iOS and the iPad are standing on very firm ground: customer satisfaction and unparalleled quality and ecosystem.
    dheady@...
    • RE: 2011 - The year of the Android tablet

      @dheady@... Of course others can compete with Apple.

      As with all Apple products, Apple prices their devices to optimize profits. They're also one of the largest single PC manufacturers, and probably still the largest MP3/PMP manufacturer, and yet, their PCs and PMPs are the most expensive in the industry. Why would the ARM-based tablet be any different?

      Apple has spent a small fortune on building their corporate image. They are an acknowledged high-end brand, and very successful and maintaining price as well as volume. They're like Mercedes, but doing Ford or Toyota volumes. That doesn't mean an actual Ford or Toyota can't do better.

      Take Samsung, for example. They're the world's second largest semiconductor manufacturer, and they make many of the most expensive parts in pretty much every recent iOS device, as well as just about everything in their own phones and tablets. Apple may have huge volumes, but they don't actually make a single part in their device -- it's all bought from other companies, assembled by a CM, etc. There's a markup on every one of those components -- a markup Samsung doesn't have.

      Others, like Viewsonic, will deliver something every bit as functional as an iPad, but a bit lower end: cheaper screen, smaller battery, whatever they want to do. They may also be happy with lower margins -- Apple's typically making something like 40-50% margins, way above those typical in the CE or computer industries.

      At some point, Apple may lose on volume, too. Sure, they're contract manufacturing their own SOC (A4, A5), but that doesn't mean that some other SOCs won't get higher aggregate volume. Big and successful semiconductor companies like Samsung, TI, nVidia, etc. are pushing the development and margins on these parts, too. So Apple may have less of a real advantage than you'd think -- same reason all PC and nearly all workstation companies stopped developing their own CPUs (obviously, Apple's starting with the Cortex cores, they're not developing anything from scratch -- but then again, they're not delivering anything you can't get elsewhere, either).

      Apple could take on more of the market -- they could fight back against Android in the phone market, and the eventual rise of Android in the tablet market. But that would require them lowering their profit margins. In the long run, that would hurt Apple.... if they lose the power of the brand, if people start seeing iPhones in the $50 rack next to the mid-to-cheap Android models, some of the polish on that Apple will be lost. That's back to my original point -- Apple is optimizing their entire strategy to maximum profits, not volume. The only way they can sell more (assuming there are no production bottlenecks) is to lower their profits.
      Hazydave
      • RE: 2011 - The year of the Android tablet

        <ul><i>Apple may have huge volumes, but they don't actually make a single part in their device -- it's all bought from other companies, assembled by a CM, etc. There's a markup on every one of those components -- a markup Samsung doesn't have. </i></ul><p>
        What, Samsung is willing to invest billions in property, plant, and equipment and then earn zero return on it? That's what you're saying when you assert that Samsung need not "mark up" components it manufactures in-house.

        Mark-ups are not idle numbers made up by evil gnomes. They represent the return on the assets employed in the business. If Apple doesn't have to invest in the machinery, then they have to pay a mark-up to the guy who did so he can recover his investment in the machinery. If you think Samsung allows one of its divisions to operate another one at zero return on investment, you're wrong.
        Robert Hahn
      • I dont think so ....

        @dave@...
        I think apple with its ecosystem can rule the entire market... just by lowering the price... They could drive other oems to bankruptcy... if an iphone is available to the same price as an cheap looking andriod... andriod will certainly fail... That is what has happened to all tablets in comparison to ipad
        tejasmodi@...
  • OMG... this is a stupid artcle..

    You write all this slock about competing on price then at some point you must have come to the realization that realistically the other manufactures can't actually compete on price and have quality and MAKE MONEY.. you know the thing that businesses exist to do.. lol.. this point invalidates everything you've written before.. but I guess you are too lazy to rewrite your article so you chose to ignore the giant pink elephant in your article.. poking you in the eye with its giant pink trunk... LMAO..
    doctorSpoc
    • RE: 2011 - The year of the Android tablet

      @doctorSpoc <br>There's a more polite way to make the point. To wit:<br><br>The trouble with competing on price is it requires either lower cost components or reduced margins. We suspect that Apple is getting the best deal possible because it is the highest volume customer. That leaves margins, and this only makes sense if increased unit sales is achieved.<br><br>But Apple's investment in the platform is not limited to its components, but to the entire ecosystem. The app store, developer tools, and server support do not come cheap. Why does this matter? Because the buyer doesn't look at price, she looks at value. The value of the $350 tablet has to be greater than 70% of the value of the $500 tablet, but how does one quantify the "value," except in retrospect as the sales numbers come in?<br><br>If this year is the year of the Android tablet which, I guess, means that by June 2012, more people will be using Android tablets than iOS tablets, it will be - as with phones - because multiple manufacturers may use Android. As they will be likely providing less range with their value (call it user experience), i.e. Android this versus Android that, there is where the price competition is most likely to happen.<br><br>If Scoble, and you in agreement, are saying that an Android tablet will be the top seller by June, 2012, this I don't think is likely because an awful lot of mindshare has to be overcome. If you and Scoble are saying that price will allow an Android tablet manufacturer to be more profitable than Apple in the sector, I have to say, nope. Not in 12 months.<br><br>But, if you think Android will have a better market share (if understanding the sector via market share by oses has much meaning) in 12 months. Well, sure. <br><br>Besides, Apple has got to have more latitude to compete on price, if it has to go there.
      DannyO_0x98
  • The iPad is the best choice, so far, for an enterprise class tablet choice

    Corporations may not wish to invest sizable funds on a tablet that does not have a track record for enterprise markets.

    I'm not saying that the iPad is the ideal enterprise tablet solution but it does have a track record.

    A cheap Visio tablet might work for a "Mom and Pop" business but for a Fortune 500 Company, well, perhaps not.

    This is not a knock on the Android 3.1 OS or future versions of Android tablets in the marketplace. Please just read my post objectively and put yourself in the place of a Fortune 500 company. What current tablet would you choose if your business would benefit from deployment of this device?
    kenosha77a
    • Well, Well.

      @kenosha7777

      Who would've guessed? An Apple fanboi touting the iPad as the best for enterprise.

      "Please just read my post objectively..."

      Well, that'd be fine if your opinion was objective. But it's not; it's clouded by cultist Apple fanboyism and drunk off of the RDF.
      SonofaSailor
      • RE: 2011 - The year of the Android tablet

        @SonofaSailor

        I thought it was objective. Your opinion of my posting might be subjective.

        Once again. If you were a corporate IT manager for a Fortune 500 company and you needed to implement a plan for a tablet based solution, which current tablet would you choose and then defend that position to the board?

        Would you choose a tablet with an established enterprise track record or would you choose a low cost tablet solution without an enterprise track record?

        If the Win 8 tablet was available (and I've gone on record stating my admiration for that recently released demo), I would not fault that choice of a tablet for an enterprise tablet solution.

        The HP Tablet with WebOS is not shipping yet and the Playbook by RIM has not met with much positive reviews yet. (I have heard that for owners of Blackberries, the Playbook would compliment that ecosystem nicely. But as a stand-alone enterprise class machine .. perhaps not.)
        kenosha77a
      • As though you were objective

        @SonofaSailor, your own rebuttal here proves your lack of objectivity. If you look at the reviews of all the Android tablets currently on the market, you'll find that many of those tablets are great--despite Android's shortcomings. Right now the problem isn't with the hardware, it's with the operating system. Until that problem is fixed, Android simply doesn't have what it takes to be an enterprise-grade product.
        Vulpinemac
      • RE: 2011 - The year of the Android tablet

        @SonofaSailor If I were an enterprise IT manager, I would buy a tablet from a recognized enterprise hardware supplier. That might be RIM, it's even more likely HP, but it's not Apple.

        One big problem with Apple -- in-house developed applications. I need to be able to administer hundreds or thousands of tablets from a single location, send them site licensed or site developed software, etc. There's no room for the iTunes store in enterprise. Does Apple have a solution for this yet, or are they not really trying in Enterprise?
        Hazydave
      • RE: 2011 - The year of the Android tablet

        @dave@... yes they do... educate yourself before you come off looking foolish..

        http://developer.apple.com/programs/ios/enterprise/
        doctorSpoc
      • RE: 2011 - The year of the Android tablet

        @SonofaSailor Pot meet Kettle.
        non-biased