Friday, January 27, 2012

Tablet Wars Heat Up

Tablet PCs are becoming more and more popular with consumers. The research firm NPD DisplaySearch last week estimated that the tablet PC market grew 250% in 2011 versus 2010 to 73 million units.

This heady growth not surprisingly has led to a heated battle for turf in this market between Apple (Nasdaq: AAPL) and its global rivals.

Last year tablet PC manufacturers from all over the world charged into battle against the preeminent tablet PC, the iPad from Apple. They all boasted they had the device which would knock the king off the throne.

None succeeded. Apple's iPad still retained a two-third market share.

In fact, some iPad rivals failed miserably...most notably the Touch Pad from Hewlett-Packard (NYSE: HPQ) and Research in Motion's PlayBook (Nasdaq: RIMM) But that does not mean the others have given up trying.

Apple's rivals this year are counting on a new Android operating system from Google (Nasdaq: GOOG) and the arrival of Microsoft's (Nasdaq: MSFT) Windows 8 to cut into Apple's market share. The addition of improved content from the likes Samsung and Sony ADR (NYSE: SNE) will be another weapon in the battle with Apple.

The release in 2011 of the Android 3.0 version, called Honeycomb, was not a success. It was designed specifically for tablets so it, in effect, split the Android operating system into two. It therefore did not get much developer support, ending up with a small base of Honeycomb tablets that offered very few applications.

This situation should change in 2012 with the introduction of the Android 4.0 version, called Ice Cream Sandwich. It is a unified operating system which already appeared in November operating Samsung's Galaxy Nexus smartphone. Since it is a unified system, the assumption is that developers will come up with lots of apps for it.

Microsoft's Windows 8 will come out sometime in the second half of this year. The excitement here will be its touch-optimized 'Metro' interface offering a bold alternative to the traditional Windows desktop. Tablet makers like Toshiba say “we're very excited about Windows 8 and we think it will grow the market for tablets in 2012.”

Also entering the fray are the makers of ereaders like Amazon (Nasdaq: AMZN) which have hit hard with their versions of tablet PCs selling for under $250. Amazon's Fire led its Kindle tablet to sales of more than 1 million a week in December.

One important aspect to Amazon's success so far has been its ability to sell its content and services, offering consumers a quality experience.

The ereader companies, with their low prices, will likely put the squeeze on Apple's other competitors who are trying to sell their tablets at somewhere near the $500 iPad level. A survey by the consumer electronics site Retrevo last month showed that consumers are unwilling to pay more than $250 for a non-iPad tablet.

But the survey showed consumers are willing to pay $500 for the iPad thanks to its apps and content.

The launch of iPad 3 in the spring may give consumers even more reasons to stick with Apple. It will be hard to dethrone this king.

This article was originally written for the Motley Fool Blog Network. Please check out my daily articles for the Motley Fool at