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Why the Tablet Market is Really the iPad Market

Posted by samzenpus on from the price-war-has-started dept.

Hugh Pickens writes writes "James Kendrick writes that after Apple introduced the iPad, companies shifted gears to go after this undiscovered new tablet market but in spite of the number of players in tablets, no company has discovered the magic bullet to knock the iPad off the top of the tablet heap. 'What's happening to the 7-inch tablet market is what happened to the PC market several times. Big name desktop PC OEMs, realizing that consumers didn't care about megahertz and megabytes — yes, that long ago — turned to a price war in order to keep sales buoyant,' writes Adrian Kingsley-Hughes. 'Price becomes the differentiating factor, and this in turns competition into a race to the bottom.' Historically, when a race to the bottom is dictated by the market, it's more a sign of a lack of a market in general. If enough buyers aren't willing to pay enough for a product to make producers a profit, the market is just not sufficient. Price is a metric that most people know and understand because it's nowhere as ethereal or complicated as CPU power or screen resolution. Given a $199 tablet next to another for $299, the $100 difference in the price tag will catch the eye before anything else. But if price is such an important metric, why is the iPad — with its premium price tag — so popular? Simple, it was the first tablet to go mass market, and cumulative sales of around 85 million gives the iPad credibility in the eye on potential buyers. 'So the problem with the Kindle Fire — and the Nexus 7 — is the same problem that's plagued the PC industry. Deep and extreme price cuts give the makers no wriggle room to innovate,' writes Kingsley-Hughes. 'By driving prices down to this level so rapidly, both Amazon and Google have irrevocably harmed the tablet market by creating unrealistic price expectations.'"

6 of 657 comments (clear)

  1. People want cheaper tablets by AmiMoJo · · Score: 5, Insightful

    The Nexus 7 is certainly not a "race to the bottom". It has an excellent spec, including a better CPU than the iPad and similar graphics capability. Okay, it doesn't have everything that the iPad has, but it costs a fraction as much and for most people does the same thing (display web pages, email, Facebook, photos etc).

    As for innovation Android itself is innovative, and even on very low end tablets all the features work. Much of the software that makes tablets useful doesn't even run on the tablet anyway, it runs on a server somewhere over the net.

    The tablet market is about to explode with the Nexus 7 and Surface. These are devices that people want - cheap but powerful devices for some casual web browsing, ebook reading and Angry Birds. Apple fanbois are getting nervous.

    --
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    1. Re:People want cheaper tablets by Anonymous Coward · · Score: 5, Insightful

      Exactly. The biggest reason that the Nexus 7 is able to undercut the iPad in price is because it's a smaller screen and because Google isn't making a profit on hardware, not because of significantly less features. It's still as every bit capable and more internally, but the smaller screen on a device being sold at near cost is what makes it $200.

      According to financial reports Apple has close to 50% margin on the iPad. That is a lot of dollars to shave off a device price tag, or use to offer superior specs, if you have a different business model or can live with more normal margins.

    2. Re:People want cheaper tablets by chrb · · Score: 5, Insightful
      From the article:

      But if price is such an important metric, why is the iPad — with its premium price tag — so popular? Simple, it was the first tablet to go mass market, and cumulative sales of around 85 million gives the iPad credibility in the eye on potential buyers.

      This is just stating the obvious - the iPad has had more sales, because it has been available for longer. If the Nexus 7 had been released in April two years ago (like the iPad), and the iPad were released last month, then the Nexus 7 would have sold more units.

      By driving prices down to this level so rapidly, both Amazon and Google have irrevocably harmed the tablet market by creating unrealistic price expectations.

      This is not true. Did Nokia irrevocably harm the phone market by constantly driving down the price of a phone until it hit a low of $19? Did Asus irrevocably harm the laptop market by releasing the first cheap netbook? Did Dell harm the PC market by pursuing lower and lower prices? Sure, you could argue that, or you could argue that cheaper technology expands the market - by making it accessible to people on a lower income. Cell phones are cheaper now than ever before, but the market has expanded so that 5.2 billion people now have cell phones, and the total market is still growing (two years ago revenue from phone sales passed $1 trillion and revenue from associated mobile services like calls etc. is also about $1 trillion).

    3. Re:People want cheaper tablets by peragrin · · Score: 5, Insightful

      Because customizing takes time away from product and usability testing.

      There are some features in UI's which shouldn't be messed about with. It is also why android ports of iOS apps generally are easier to use and behave better than android only apps.

      Yes android has better features than iOS. Linux has better features than windows 7. Guess which ones sell more?

      Having a feature means nothing if using it is to complicated.

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    4. Re:People want cheaper tablets by steveha · · Score: 5, Insightful

      So why do [tablets] cost so much more?

      Because Apple enjoys making a 40% margin on tablets, and Apple's customers don't mind paying it. Then Android competitors have (I think) set their prices using iPad prices as a guide.

      The iPad is still selling for about three reasons: Apple has been milking their first-mover advantage, Apple has done a great job on the user experience, and the iPad hardware is excellent quality. This has been enough, especially given the problems in the Android tablets until about this year or so.

      But now, with Jellybean, Android is a great tablet experience. Some folks will say it still doesn't match the iPad, but it's way better than before. Now, quality tablets are here, at attractive price points.

      I love my Nexus 7 tablet. It's everything I want in a tablet. (Well, I guess I'd like HDMI and a card reader, but I really haven't needed them.) Do I wish I had spent twice as much for an iPad 2? No, I really don't.

      I can see the day coming when more Android tablets are sold than Apple tablets, in a replay of what happened in the smartphone market.

      steveha

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    5. Re:People want cheaper tablets by Dixie_Flatline · · Score: 5, Insightful

      Your analysis is needlessly insulting and, frankly, wrong as near as I can tell.

      I make video games for a living. I've worked on triple-A Xbox (original and 360) titles as a programmer. I've got a decent math background, more than a passing interest in physics, climate science, etc., etc. I don't really feel it's necessary to divulge all my credentials, but I'm trying to make the point that I'm not just some random idiot. I was a pro Unix sysadmin in University to help pay for school. I ran my own Slackware and FreeBSD mail servers.

      I'm typing this on an iPad. It's not because it's so simple it saves me from myself, it's because it's so simple it saves me any extra hassle. It's a good environment. I get things done on my iPad. I use it more than I was expecting to, to the point where I don't feel it terribly necessary to sit at my desktop machine more than a couple times a week.

      Having my own servers opened my eyes to the tyranny of choice. I think Linux and BSD are great, but I spent just as much time obsessively fiddling with things as anything. Different window managers, new browsers, random command line tools...none of which objectively added to my productivity.

      And that's what studies find, too. You can offer users choices that make them feel subjectively better and more productive while having the opposite effect. Users don't always know what they want or need. Sometimes you have to give them just one thing that works really well and leave it at that. I could design a door a thousand different ways, and 950 of them would be terrible. (Don't believe me? Read "The Design of Everyday Things". You'll never look at a door the same again.) Why would I give people the choice of a zillion bad doors? I should just give them one or two really good ones.

      iPads are popular because they fulfil their function very well. Don't sit and bash on both Apple and Apple users for a well designed product and the desire to use a well designed product. I won't cast aspersions on Android tablets; I'm sure many of them are also quite good. But all you're doing here is calling names and vaguely dressing up some Apple hate.