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Summary:

Just ask any upset-minded team this week during the NCAA Tournament: the games don’t end in the first half.

A week after Apple’s second-gen…

iPad 2
photo: Engadget

Just ask any upset-minded team this week during the NCAA Tournament: the games don’t end in the first half.

A week after Apple’s second-generation iPad made its debut, it’s pretty clear Apple (NSDQ: AAPL) has another winner on its hands. Lines were longer than expected across the country at Apple’s retail stores and supply was short, leading to increased shipping times online. And once you got past all the hoopla, it became clear that the iPad 2 really was a cut above its fledging competitors: clearly a #1 seed going into the tablet tournament against a brand-new Android tablet operating system and devices from RIM (NSDQ: RIMM) and HP (NYSE: HPQ) that have yet to even take the court.

But such an early lead doesn’t mean it’s guaranteed a trip to the finals. After Apple previewed the device two weeks ago, entrepreneur Mark Sigal looked at the state of the tablet market on O’Reilly and argued that not only is Apple well on its way to dominating the market the way it came to dominate the portable music player argument with the iPod, but that it was “running up the score.” (Sigal’s column was highlighted by John Gruber of Daring Fireball earlier this week, who wrote “… count me in with Sigal on the big picture: the iPad is more like the iPod than the iPhone, and that’s bad news for Android.”)

Somewhat surprisingly, Apple has yet to release sales numbers for the iPad 2, so we don’t exactly know what the score is quite yet. There’s little doubt that Apple is out to a big lead, but despite Sigal’s well-argued piece it seems a bit presumptuous to declare the tablet market essentially over basically one year into its existence for one major reason: the tablet, unlike the MP3 player, is a platform for multibillion dollar media and software constituencies that are essential to making the device a hit with consumers.

Sigal makes several excellent points regarding why Android competitors won’t be able to chip away at the iPad the way they did at the iPhone. Unlike the iPhone, Apple has managed to secure iPad sales without required wireless contracts, meaning that carriers have less control over how the iPad is distributed and promoted. Apple’s network of retail stores is unmatched by any would-be tablet competitor. And hardware makers, like Motorola (NYSE: MMI), Samsung, RIM, and HP, are notoriously bad when it comes to their history of innovative and intuitive software development, the true differentiating factor in the modern mobile device and Apple’s greatest strength.

I’d even add a fourth: the iPad defined a category previously unknown to consumers, whereas the iPhone was merely the first smartphone that made the average person–not the traditional smartphone customer, the harried senior executive–pay attention to the concept. The iPhone was really chipping away at well-established brands like the BlackBerry, the Treo, and various Nokia (NYSE: NOK) devices, whereas the iPad didn’t really have a competitor until late last year in the Galaxy Tab, and didn’t have an inspired competitor until Google’s Honeycomb tablet software was ready for Motorola’s Xoom.

But the fact is there is simply too much at stake as the world shifts its computing habits more and more toward mobile devices like tablets for an industry to coalesce around a single player. MP3 players like the iPod didn’t offer other service providers a chance to play atop the device: it was Apple’s smart hardware design choices combined with the breadth and depth of the iTunes Store, rather than software and services running on the device, that made the iPod such a runaway hit. With the notable exception of the iPod Touch (really a phoneless iPhone), iPods didn’t really do anything except play music, videos, and maybe a few rudimentary games.

Tablets, on the other hand, offer enormous opportunities for media companies, game developers, and budding entrepreneurs with ideas no one has thought of yet to build businesses on these devices. They also give carriers–even without contracts–chances to sell more expensive data plans and another lifeline at avoiding their eventual dumb-pipe fates.

It’s true, however, that right now there’s no incentive to spend time building services around Android tablets: those businesses aren’t short-sighted enough in the near term enough to overlook the fact that Apple has both the best device and the most volume. But Apple’s insistence on keeping strict control of its platform tends to rub many of those people the wrong way, and there are still enough people in this business who remember chafing under Microsoft’s dominant thumb in the 1990s. They’re going to want options, and they’re going to want to help at least one other player keep Apple on its toes.

There’s no question that several things need to happen before Apple’s lead is threatened, but it seems unimaginative to say they can’t happen.

First, Google (NSDQ: GOOG) and its partners need to find something to set their products apart from the iPad. Whether that’s pricing (the first Android tablets were too expensive), exclusive deals with media companies (like, say, the rights to the NFL’s GameDay package for streaming in a special app), or highlighting areas it already does better than Apple (wireless syncing, for example), the Android crew needs to find a way to replicate the “Droid Does” campaign that turned Android into a household name for phones. They’ll likely be able to find help from partners both among wireless carriers or software/media companies who are looking for an alternative to Apple’s way of doing business.

Second, the software has simply got to get better: even if Google and partners manage to cut extremely compelling deals, like the hypothetical NFL deal, if the software is subpar people just won’t buy the product. But Google operates a very quick iteration machine, releasing Android updates at a rapid-fire pace that made the original G1-era Android phone much more competitive with the iPhone in about a year, and HP’s advantages in areas like notifications may be more interesting on a tablet than on a phone.

Third, some combination of Android, RIM, or HP (to be sure, they won’t all pull this off) has to secure prominent shelf space at places like Best Buy and find a way to incent salespeople to promote their products. This was a huge problem for Palm (NSDQ: PALM) when trying to sell its Pre smartphones in Verizon stores; the salespeople simply didn’t understand or didn’t care about promoting the Pre. On a recent visit to Best Buy, Motorola’s Xoom tablet was buried in the computer department, just about the farthest away from the front door and main aisles as one could get in that department. Even Samsung’s Galaxy Tab got better placement than the iPad, which at least had its own placard next to the Apple-only tables at Best Buy.

To be clear, this is not a recipe for an “iPad killer,” or any of those other tired clichés about how the computer industry is going to evolve. All I’m talking about here is a scenario in which both Apple and other tablet makers fight for market share on the merits of their product, rather than the timing of their entry. It’s very likely that Apple settles once again in a comfortable role as the most profitable vendor in the space with excellent market share, and that’s a spot that would keep the company flush with cash.

For all their bluster, it’s unlikely that Apple executives are taking tablet competitors lightly. The first Android smartphone, the G1, didn’t arrive until October 2008, a year after the formation of the Open Handset Alliance, which itself was only formed about 5 months after the iPhone began shipping in June 2007. The first Android phone to really take off in the market, the Motorola Droid, didn’t arrive until a year after the G1 made its debut. And yet about a year after the original Droid was launched, Android-powered phones had eclipsed the iPhone as measured by market share.

There’s certainly no guarantee the same thing will happen when it comes to tablets, but neither should we all assume Apple has locked up a market that has barely gotten started.

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  1. Your first point is a big point, probably THE point. I would say even that is just part of a bigger problem for the whole Android ecosystem of parts providers. They aren’t creating anything to compete, only copying something successful. They can’t be seen as simply the alternative or just like iPad but more of it. iPad shouldn’t even be a comparison. They can’t keep up with the person making the rules.

    And secondly (and really these two points are it) they have to do so consistently. Apple didn’t just come out with the iPad and change everything. Apple had iPod, THEN iPhone, THEN iPad. And all this came out of a consistent culture of development since Jobs return (consider the iMac and iBook). With that kind of track record marketing becomes less about making ONE product a break away, but becomes this foundation that can be built upon without re-doing the same leg work each time.

    The problem with the “Droid does” campaign, is n one has built on that since. And actually the “Droid” itself is now technological ancient history. To use that as a foundation would be like build a new bridge on a crumbling foundation. “Droid what? Oh, yeah, that was that thing-a-ma-bob that came out how long ago?” Apple doesn’t just market A product, they market a way of life that is accomplished through a series of products. Each product is responsible for one part of a larger puzzle. No redundancy.

    The iPhone/Android phone comparison is still in flux. Android has caught up and may have a slight lead, but hardly “over taken” (in the sense of dominating) yet. And even then it is only by cobbling together the meager efforts of a multitude of handset makers can any substantial competition be demonstrated. Outside of RIM domestically, and Nokia internationally, there is no single iPhone competitor. Only a culmination of bit players, and all of them followers, no innovators, so our first point is out of play.

    Joe

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  2. Take away the free ones the android’s marketshare lose out to the iPhone.

    But then comparing an OS to a phone, you got to be kidding me.

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  3. Android is apparently difficult to stabilize, at least that’s what I get from the stories accompanying the release of some Flash yesterday for Android. As W.S. Mossberg himself said, Android tabs all crashed on him. This doesn’t help the impression. And as Toni said, Android is a fragmented offering presenting challenges in the implementation.
    Read all about it:
    http://wereport.com

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  4. Your article doesn’t really state why it won’t be like the iPod, but rather, how it could not end up like the iPod.

    Dissecting your reasoning:

    1. “Somewhat surprisingly, Apple has yet to release sales numbers for the iPad 2, so we don’t exactly know what the score is quite yet.”

    I think we know enough. It’s been a week since it’s been released and there are long lines for the iPad.

    2. “Unlike the iPhone, Apple has managed to secure iPad sales without required wireless contracts, meaning that carriers have less control over how the iPad is distributed and promoted.”

    This is why it’s not the same as the smartphone market.

    3. “But Apple’s insistence on keeping strict control of its platform tends to rub many of those people the wrong way, and there are still enough people in this business who remember chafing under Microsoft’s dominant thumb in the 1990s. They’re going to want options, and they’re going to want to help at least one other player keep Apple on its toes.”

    This is true but many of these developers are small teams and they will go to where the money is first and think idealistically second. Instagram, for example, is developing an app for Andoid but it has been months since it’s release for iOS (similar to the way the Mac is treated). Android, as a platform, hasn’t shown that it can make money for devs other than through ads.

    4. “…like, say, the rights to the NFL’s GameDay package for streaming in a special app…”

    Doesn’t DirectTV have exclusive right to the NFL through 2014?

    5. “…the Android crew needs to find a way to replicate the “Droid Does” campaign that turned Android into a household name for phones. They’ll likely be able to find help from partners both among wireless carriers…”

    I have a hard time believing this would be very successful. Verizon created the ‘Droid Does’ campaign because they didn’t have the iPhone and they wanted to stop current customers from jumping ship. Even if they did these ads, they surely aren’t going to stop promoting that they have the iPad.

    6. “The software has simply got to get better.”

    It will get better but the bigger issue is that they don’t have apps that can compete with the aesthetics of iWork, GarageBand & iMovie. That is the kind of software that sells a device. Though Google has Maps, I’d suspect people are more interested in that for a phone and not necessarily a tablet.

    I hope there is some good competition but it’s a bad signal for other companies that there are long lines a week after release. I’ve never seen a product in such demand.

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  5. Android Honeycomb FTW Saturday, March 19, 2011

    Apple and Apple fans want to say they have won the game when the game hasn’t even started–this is exactly what Apple did with the Mac. How did that turn out Apple fans?

    Let’s look at numbers of devices sold:
    ~400M PCs/year
    ~400M smartphones/year
    ~1Billion cell phones/year
    15M iPad?!?!?!? Yeah, it looks like they have everything sewn-up! LMAO!

    The argument that it will be “different this time” is laughable and the argument that the iPad is more similar to the iPod is even more laughable. Only a delusional Apple fan can work those arguments into some semblance of logic. . .

    Apple is one company putting out one product and they are very closed and overly controlling even non tech people when asked about Apple know that they are over controlling and they just don’t want it. Apple pushes away more people than it attracts with all its shenanigans.

    Furthermore, anyone who thinks that numerous other hardware and software companies (MS, Google, Asus, Acer, HP, Dell, MSI, ZTE, Toshiba, Sony, etc. . . ) are going to sit around and do nothing like they pretty much did with MP3 players have lost their freakin’ mind. Computer technology is moving to the mobile arena and companies have looked at the tablet for decades with lust. Archos has been putting out good tablets way before Apple–the iPad is nothing more than a knockoff of an Archos tablet.

    This is a market that companies will not ignore or give a half hearted attempt to dominate. They will do whatever is necessary to dominate–that kind of effort was not seen in the MP3 market. And when you have tens of companies advertising to the public it creates a dominant mind share. They just needed a platform to get behind and they have it now.

    Sure, Google has things to overcome if they want Android to succeed in this area however, Microsoft will release a new OS that will unify all devices from phone to desktop and leverage THE largest software and hardware ecosystem in the word–it dwarfs anything and everything Apple has.

    And Google will begin a massive push with cloud services for books, music, content, etc. Any device will have access from anywhere–that will beat iTunes and no one has every really tried to beat iTunes till now.

    Only a delusional Apple Fanboi would think that Apple will control a majority of the most lucrative tech markets. The MP3 player is no where near as lucrative as the PC, phone, and tablet markets. Even Apple claims they make no real money off iTunes music and iPod sales have never reached 100M/year and it’s a cheap toy that everyone can buy & use–children to adults with no tech ability whatsoever, and it still didn’t reach the numbers. It’s never even sold near 1/10th of what cell phones are selling at or a quarter of what PCs & smartphones sell at. The price doesn’t matter! It’s the need and use of the product that matters. People need and want computer type devices. An iPod is just a toy that most of the world doesn’t care about and never will–they are luxury items which is what Apple sells the most of. A PC or smartphone are highly usable items for the entire world. Thus the massive sales and increase in sales. The world doesn’t need or want luxury items. They need and want highly usable items and that isn’t the iPad! Android Honeycomb however will prove to be highly usable and productive, and if Android can’t do it MS will step in and HP will be knocking at the door with WebOS all the time.

    /RANT

    Keep dreaming apple fans. . .. cause it ain’t gonna happin!

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  6. Actually, it’s your buggy Andr-iOS and nasty Zume that people don’t want. I predict that within a year Google tosses Andr-iOS completely (it’s a cost center, not a profit center), and your non-Apple junk will only be useful as landfill.

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  7. There was a big hype on sales on Ipad 1. Long lines and ifands camp[ing out. haha. Still Kinect beat it hands down without any lines and all the media dramas. It is production planning and shipping. Apple just relies on hyped marketing. If MS or Google android comes wiht what Apple releases as a prodcut, the media will nit pcik them like edges are not round, no cameras, no hdmi. Just note it down, in the final quarter of 2014, Iphone share will be less than 10 percent in the global market and all ipads will be out sold by the other products. Reason is apple selling the iproducts with less features and behind curve tech components.

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  8. Android Honeycomb FTW & Shri Yaja made my day – Laughing hysterically.

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  9. In the end what counts is: are enough people making money? Android outsold iOS therefore more money must have been made by Android developers than iOS developers, right? Also, those who made Android devices must have made more money than Apple, right? Consumers must be saving money getting an Android device rather than a similarly equipped Apple device, right?

    Up in Canada the problem is even worse as we have 3 year contracts. I recently pointed out to a friend at work who claimed to save over 60$ by NOT buying the iPhone that when we factor in a 3 year contract he saved all of (60$/36=1.66$) per month or 42 cents per week or 6 cents a day. When I asked him “would you have paid 6 cents a day to have a bigger and better screen, faster processor, GREAT camera both front and back (he has back only and it’s crap), fast processor, 16G instead of 2G and thinner / sturdier phone?”, he answered “yep!”.

    The iPad’s value comes from ease of use, thoughtful addition of features and a useful library of apps. Add to that this very important thing, where do you go when you have issues with your moto, samsung or BB tablet? A telco? Do you like your telco? In Canada most people would answer NO! to the last question. But if you have an iPad, the answer is “Chez Apple!” where the service is generally great and helpful.

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  10. RIM will handle itself just fine in this competitive environment. With TAT and QNX and a new slew of products this year, RIM will most certainly surprise the nay-sayers like Goldman-Sachs who seem to have a personal vendetta against RIM for some reason…

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