79 Comments

Summary:

Despite mixed reviews and a version of Android “not optimized” for tablets, Samsung sold 600,000 Galaxy Tabs in its first month, and recently claimed to have sold a million. If Steve Jobs isn’t concerned by those numbers, he should be.

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Despite mixed reviews and a version of Android “not optimized” for tablets, Samsung sold 600,000 Galaxy Tabs in its first month, and recently claimed to have sold a million. If Steve Jobs isn’t concerned by those numbers, he should be. It was a just over a year ago the Motorola Droid launched with Android on Verizon’s network, and we all know how that turned out for iPhone market share.

Setting aside the expected iPad 2 improvements, a faster CPU, more memory and storage, cameras, Apple needs to look at what the competition is doing today and tomorrow. With a yearly release schedule, Apple needs to match the Android tablets of 2012 in 2011, but first needs to look at 2007.

Past Mistakes and Future Connectivity

The first step in preventing Android world domination of tablets is not to repeat mistakes made with the iPhone. In 2007, Apple launched the 8GB iPhone at $599, only to drop the price $200 two months later. In 2010, the iPad launched the 16GB Wi-Fi iPad for $499, and nine months later competitors like Samsung are struggling to match that price point with smaller tablets. Lesson learned, Apple.

Unfortunately, Apple is still learning the hard way about carrier exclusivity, since the iPhone is still exclusive in countries like the U.S., though that’s expected to change soon. Likewise, the iPad 3G only works out of the box with AT&T, though this is mitigated by mobile wireless routers which allows the Wi-Fi version to theoretically use any network. An extra dongle, however, is a very un-Apple solution. In contrast, the Galaxy Tab is available on all four major U.S. carriers with built-in connectivity.

Apple needs to match that kind of accessibility and take it a step further, making 3G standard on every iPad sold. If this can’t be done without raising prices, the increase should be minimized, as market share matters more than margins with a new platform like tablets. Let Samsung try to compete with a $529 3G iPad that works with any wireless data provider.

Size Matters

At the last conference call, Steve Jobs attempted to dismiss tablets with 7-inch screens as being unable to “compete with iPads.” Nearly a million Galaxy Tab owners would seem to disagree. Jobs also asserted there were “clear limits” on how small and close elements could be on a display, and yet more than a hundred million iPod touch and iPhone owners seem to be doing just fine.

What Jobs should have said was, “a 7-inch iPad would put downward pressure on iPod touch and iPhone prices, and we don’t want that.” Nonetheless, Apple needs a 7-inch iPad to undercut an expected deluge of Android competitors, perhaps at $349 for an 8GB model, $399 for 16GB. If it becomes necessary to to sell the 8GB, 16GB, and 32GB iPod touch at $199, $249, and $299, then so be it. The Galaxy Tab has already proven 7-inch tablets sell, and the RIM PlayBook is next. A 7-inch iPad would provide a smaller, lighter iOS alternative, and one that should be more than price competitive with Google and RIM offerings.

Flash Compromises

If it seems difficult for Steve Jobs to put out a 7-inch tablet after dismissing them, that’s nothing compared to allowing Flash on iOS tablets. Steve Jobs has said Flash hurts battery life and performance, causes crashes and has security issues, but if Flash is so terrible, then why not make it incompatible with OS X?

It’s because Flash is expected on a “traditional” computer. On handhelds and tablets, Apple hopes to keep such expectations from ever developing. That seems unlikely. Flash is or will be everywhere, except iOS. Can you imagine people switching from PCs to Macs and finding out Flash doesn’t work and there’s nothing to be done about it? That’s what will increasingly be happening with handhelds and tablets as they become just another computer.

iPad Independence

The iPad needs a computer, a proprietary cable, and iTunes for syncing content and software updates. The Galaxy Tab at least can do OTA updates, though it still requires a cable with a proprietary 30-pin connector for some syncing. Presumably, webOS tablets from HP will be more advanced OTA devices in 2011, as will future Android tablets. This is where Apple really needs to go with the iPad, making it a computer unto itself. If a cable connection is needed, it should use the new MicroUSB standard instead of the proprietary dock connector.

If it sounds like I’m saying Apple needs to make a lot of concessions regarding its current ideas around tablet design, it doesn’t, so long as the company is happy with a minority (if highly profitable) share of the tablet market. Of course, a plurality, or even majority, could pay more in the long run, but that requires paying more attention to the competition today, and down the road.

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  1. I think your last paragraph is the clincher….

    Why on earth would Apple be interested in market share when it’s already able to take the vast majority of profit share from the markets it competes in…

    Seems like Apple doesn’t really need to do any of the things you’re suggesting…

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    1. Apple does not need to do anything, and I believe events will play out like the iPhone, which will be great. However, imagine if an aggressive strategy sacrificing more profit now resulted in the iPad being like the iPod. There is risk, but the reward could be 70 percent market share in countries like the US.

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      1. Hamranhansenhansen Thursday, December 9, 2010

        iPad is already like iPod. iPad has overwhelming market share (95%) followed by Samsung and then everyone else. Same with iPod. Many people call all digital music players “iPods” and many call all tablets “iPads”. The reason other companies are having trouble competing with either Apple device is Apple’s strategy of making 1 per year and selling many, many millions, so they have the best economies of scale, they get components much cheaper than anyone else.

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      2. Hamranhansenhansen Thursday, December 9, 2010

        Also, Apple already has 95% market share in tablets, including in the US. They don’t have to do anything differently to achieve 70% plus market share, that has already been achieved. And tablets is a kore mature market than music players were when iPod entered, and iPad is a more mature product than the original iPod. For example, it is running iOS v4.2, not 1.0, and iTunes is on something like 95% of consumer PC’s.

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    2. Because resting on your laurels is the first step on the road to irrelevancy.

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      1. That said, Apple is inching closer to competing with itself, it has to walk a fine line.

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      2. Hamranhansenhansen Thursday, December 9, 2010

        If there is one thing Apple does not do it is rest on their laurels. That is the mistake the non-Jobs Apple made with the Mac. The new Apple clearly learned from that.

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  2. Stop harping on about flash it is buggy and drains battery life and I’ve not missed it one bit. And why is snycing to a computer so bad once u have done your first sync how often do normal people need to resync. 7″ tablet is too small if u want ultra portable buy a smart phone. If u want a smart phone experience with big screen real-estate 7″ just won’t cut it.

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    1. it doesn’t matter if it won’t cut it – there will be sufficient amount of people that will purchase it. How can diversity really hurt someone the scale of Apple?

      We can’t really look at these things from our personal lenses wondering if we’d use it or not.

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    2. “And why is synching to a computer so bad” ….. because we would like to get our ageing parents to be “silver surfers” on iPads but the additional cost/inconvenience of them having to own a computer is a deal breaker.
      Apple are no longer the “must have” manufacturers any more. I’ve owned an iPhone 3GS since launch and the iPhone 4 offers nothing that would make me upgrade and competitors like the Nexus S are comparable if not better in certain areas (telephony especially).

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      1. “the additional cost/inconvenience of them having to own a computer is a deal breaker”
        You are aware that you only need a computer for the initial setup/config and Apple will do that for you in-store. From there on out it works just fine stand-alone. Sync to dropbox or some other online service if one needs backup.

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      2. Hamranhansenhansen Thursday, December 9, 2010

        A computer is only used for backup and for upgrading the operating system. Many consumers own PC’s they never backup or upgrade the operating system. So an iPad that is activated in-store and documents stored on iDisk or Dropbox is a step ahead of a typical PC for many consumers.

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      3. Really the Nexus S comparable? bc the original Nexus was such a success.

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  3. It would be interesting to know how many of the 600,000 (or 1 million) Galaxy Tabs made it from the retail outlets that Samsung sold them to and into the hands of real consumers/users.

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  4. The gist of your article is that Apple should turn the iPad into a netbook, engage in model proliferation and join the race to the bottom on price. I doubt that you’re going to receive a job offer from Apple any time soon. You might want to try Dell or Asus, they think a lot like you do.

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    1. LOL! You got that right!

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    2. Perfect Response :-)

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    3. Pretty much spot on.

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    4. Couldn’t have said it better! :)

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    5. The only “race to the bottom” Apple competes in is market share. History (see Android OS vs iOS in smart phones) tells us that the iPad will lose market share rapidly in 2011. By the end of the year it should stand at about 50% compared to 95% now. 2012 will see further loss in market share to about 30%.
      Apple will continue to make good money on their products but because of the way Steve Jobs demands things are done
      the iPod will remain as the only dominate product from Apple where market share is concerned.

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  5. Market share has way more stickiness than profit share.

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    1. Ya right – Tell that to BMW etc.

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      1. BMW? Bad example – in EU you’ll find that BMW nearly matches volume producers such as Ford, Opel, etc. on competing model market share on retail sales.

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    2. Hamranhansenhansen Thursday, December 9, 2010

      BS.

      Market share is only good if it gets you profits and developer support. Apple already had over 50% of the profits and over 50% of the developer support. The apps make a device sticky. A highly-profitable company can be expected to stay in the market for years. Apple has the most desirable products and the most loyal users, as shown in every survey. They have the only mobiles with a desktop class operating system and desktop class apps. They are in a great position to scale as technologies in mobile become more desktop-like.

      There isn’t anything bad that can be said about Apple’s position in mobile. They were not even in the market 4 years ago and they came in and spanked every single player.

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  6. “sold” – be careful of the definition of this word. Did Samsung sell to end-users or just into the distribution channel? Microsoft once claimed to have “sold” millions of Xbox consoles, but later we find that those sales were into the channel, because several quarters of little sales followed.

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    1. Click on the “a million” link and the article it takes you to says “it’s unclear” whether that number is retail sales or into the channel. I think it’s into the channel.

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    2. Retailers are not stupid, maybe you are..?

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    3. Arguing “sold” versus “shipped” is whistling past the graveyard. The Tab is demonstrating the iPad is not the iPod, though I’d argue it still could be.

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      1. Eg: You’re sticking to your conclusion, which looks more like a prejudice, despite the removal of the only supporting evidence you tried to posit.

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      2. Hamranhansenhansen Thursday, December 9, 2010

        Samsung releasing a copycat iPad makes iPad MORE like iPod. Go look at the digital music player market: it is Apple, Samsung, everybody else. Tablets is: Apple, Samsung, everybody else. In both cases, Apple has the vast majority of sales and a leadership position that is so strong that people say “iPod market” and “iPad market.”

        You are simply wrong when you say iPad is not iPod all over again. It is exactly the same. iPhone is the exception because phones are such an old and large market and it is dominated by freebies, and because it requires interactions with carriers. iPod is iTunes-to-go, while iPad is Mac-to-go. Same exact value proposition, just on a larger scale.

        What is also the same is others can’t compete with iPad/iPod because Apple takes the best advantage of economies of scale, buying components in truly massive quantities, and using them again and again in a limited number of devices that sell in huge quantities. For example, iPad, iPhone, and iPod touch all use the same storage chips. All Android phones do not.

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  7. I own both the iPad and the Galaxy Tab and people who dismiss the Samsung are wrong. Yes, if I had to choose one I would keep the iPad but there are things which the Tab does better. It’s better to read since it’s lighter and easier to hold for a long time. It can work as a phone (with a bluetooth earpiece, of course), something the iPad can’t, even the 3G model. Since it has a camera, it can do video calls…and so on.

    Yeah…the importance of all those things will vary from people to people but my point is that some people may actually prefer the Galaxy Tab.

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    1. The market needs stories about winners and losers, when in fact the devices do vastly different things as you aptly describe. There are things that Android does better, and there are markets that Android will dominate. Apple will be a solid competitor as the Mac is now. We simply won’t see a flavor of Android dominate, so I think the comparison to Windows is really off-base.

      The mistake of Apple is to neglect features that users want, such as making a call from a tablet. For business situations, there is a solid case for this. The iPad 2 will be better, and so will the next Android tablets. I will likely have both as well.

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    2. Hamranhansenhansen Friday, December 10, 2010

      Galaxy Tab works as a phone because it is a phone.

      iPad runs Skype. A Skype number is $5 per month. Even with that, iPad’s monthly fee is less than Galaxy Tab. The next iPad likely runs FaceTime. If you want to make calls from your iPad, it is easy to do.

      So iPad can sub for a phone more readily than Galaxy Tab can sub for a notebook. Galaxy Tab has no full-size apps, no full-size screen. It’s not going to replace 80% of your PC use like iPad does.

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  8. Fwiw I don’t agree with much of this. Android tablets are being positioned as consumer netbook replacments. I think Apple is secretly positioning iPad (10 inches and all) as a collaborative enterprise tool.

    http://brianshall.com/content/communal-computing-ipad-changes-everything-again-because-tablets-are-designed-collaboration-

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  9. The iPad has been cleared by TSA and need NOT be taken out of your bag during screening. However the Samsung Galaxy Tab at 7″ can be too easily concealed and will therefore require me and my buds to possibly perform a closer examination of your junk if you knows what I mean. I know you and your seven incher will be happy to see me.

    Moe “Big Hands” Lester

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  10. Apple wont change & they will lose the smartphone/tablet game to Android just like they lost the desktop to Windows.

    in fact this will be Steve Jobs legacy, the great visionary that could never get beyond his own ego & caused his own company to lose 2 major wars.

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