My friend S (he hates it when I invoke his name in print), a long-time IT pro, made a sage observation in the wake of HP effectively whacking its TouchPad, Motorola selling itself to Google, the great Samsung Galaxy Tab/Best Buy giveaway (more on this in a bit), and the general bloody state of the non-iPad tablet business.
"Apple's been perfecting its ecosystem for a decade, and these guys think they can duplicate it in a couple of months."
And then we laughed. Not at HP, but at the whole ridiculous state of the tablet business that S succinctly summed up.
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So, now that the tablet business has pretty much devolved to Apple and Android, where do we go from here?
Don't ask the pundits. They seem to have no more of a clue about the future of the tablet universe than Criswell did about the diabolical plans of vampires from outer space.
For some reason, tech pundits keep predicting the tablet industry will evolve similarly to the smartphone world, that Android would eventually catch up and pass Apple and iPad.
As my friend S noted, this is absurd on its face. I'll say it before and I'll say it again:
The Ecosystem Difference
Android smartphones — and other smartphones with other OSs — can compete somewhat equally with the iPhone because Android smartphones perform a primary function right out of the box.
A tablet, however, requires the user to define its functions. But Google does not offer an iTunes-like focal point for content transfer, syncing and acquisition for Android.
Considering how familiar and popular iPod and iTunes are, consumers implicitly understand how to get stuff on an iPad — they grok the Apple ecosystem and are completely comfortable with it.
Unless you're technically proficient, there isn't the same comfort with Android.
Secondly, as I've said before, the Android crowd can't seem to figure out what they're selling or, if you view their TV commercials, how to sell it.
But even if Android had its tablet act together, there are a plethora of other behind-the-scenes factors contributing to what's turning into a lopsided tablet battle.
The Supply Chain Difference
The biggest problem facing Apple's competitors is something called the "supply chain" — this is the manufacturing process, from procuring all the parts through assembly.
Apple has three huge iPad supply chain advantages: it essentially designs and makes its own iOS-specific processor rather than having to buy generic retail, it buys parts in such enormous volumes it can buy much more cheaply than other folks, and its Chinese factories know how to put it all together thanks to their experience with iPhone and iPod Touch.
This quick and dirty supply chain review is, of course, a vast over-simplification, but suffice it to say Apple can build iPads far more cheaply than anyone else can build other tablets.
Since iPad is cheaper to make, Apple maintains a much larger profit margin even though iPad is the same price or less than most of the competition. It can readily afford to pour more money back into R&D, which in turn keeps it technologically ahead.
In addition, Apple's voluminous supply chain demands acts like a black hole on everyone else. The Kindle Android tablet has reportedly been delayed and delayed because Apple is monopolizing LCD screen supplies.
And finally, there are the growing number of Apple retail stores, such as the new Grand Central Terminal outlet currently under construction in the heart of New York City.
Don't Bring A Knife To A Gunfight
Even if Android tablet vendors drop their prices in an attempt to lure Apple into a price war, they would be the only casualty.
With its cash reserves — I'm sure you'd seen the reports than indicate Apple has more cash than our own government and now we learn Apple is more valuable than the 32 biggest euro banks combined — Apple could outlast all of them without breaking a ledger page sweat.
But we know Apple won't lower its iPad prices. In fact, Jobs is planning a spring intro of a HIGHER-priced iPad 3, a sort of pro model with, among other things, a higher resolution screen. This brazen pricing attitude is akin to Indiana Jones being threaten by a huge Arab menacingly waving a sword — then just casually shooting him.
It's not that Android tablet makers aren't making money, just not enough to make competing with Apple a sustainable business model.
So like a gold rush, dozens of vendors flocked to Apple's iPad Sutter's Mill, the Klondike, the Comstock Lode. And like these historical gold booms, few actually struck it rich and the rest wandered off to try again somewhere else.
This gold rush scenario is duplicating itself in the tablet world. Consider:
- After just two months, HP gave up on its $1.2 billion dollar investment in webOS and the TouchPad. Ouch.
- Motorola shipped — not sold to real people, just shipped to retailers — only 440,000 Xooms in its second quarter — essentially the tablet's entire lifetime. I wouldn't be surprised if Google's first ownership act was to 86 the Xoom and retool its own tablet.
- Dell struck its Streak 5 Android Media player/tablet. Now T-Mobile is selling only refurbished Streak 7 tablets and the carrier can't tell me if or when they may stock new units.
- BlackBerry had to cancel its 3G/4G PlayBook because no carrier wanted to carry it.
- Apple's nearest tablet competitor has decided to literally give away Samsung Galaxy Tabs this week — anyone who buys a 46- or 55-inch LED-lit 3D HDTV priced $1,500 or up gets a free, 16 GB Wi-Fi 10.1 Galaxy Tab.
None of these are good signs for the Android tablet world — just like Apple no doubt planned.
As Criswell challenged, can you prove it didn't happen?