With the announcement of the iPad 2, Apple is poised to maintain its dominance in the tablet market, even as competitors are streaming in.
The tablet landscape in 2011 is drastically different from the environment Apple's first iPad entered a year ago. Before the iPad, tablets were few and far between, but now a slew of manufacturers are racing to release their iPad rivals. This crop of new tablets from key players like Motorola and Samsung seem to match Apple's version when it comes to the hardware and functionality, but they are missing the key elements that propelled the iPad to success--and are likely to ensure Apple maintains its spot at the top of the pack.
The iPad's first year has been a big one: Apple boasted of the iPad's dominance in 2010 by highlighting several key figures at Wednesday's unveiling of the iPad 2. According to Apple, 15 million iPads were sold between April and December 2010, amounting to $9.5 billion in revenue, and leading to Apple's control of over 90 percent market share. Forrester analyst Sarah Rotman Epps predicts that in 2011, Apple's share will slip slightly, but stay high, to approximately 80 percent of the U.S. tablet market.
Part of what will ensure Apple's ongoing success is their unmatched brand recognition coupled with the iPad’s competitive features and price.
The iPad 2 was a gadget “celebrity” even before it launched, with each new rumor afforded the kind of front-page attention genuine product launches seldom get. This is the kind of publicity you can't pay for, and which Apple can wield to its advantage. Though competitors may try to raise their products' profiles, Apple's superstardom is hard to match.
"It's in many ways the obvious option,” said Soumen Ganguly, a media and mobile device expert of Altman Vilandrie & Company. "They're best in class--you could give it to a 5-year-old or a 75-year-old and they'd figure it out."
The additional challenge many other tablet manufacturers face is differentiating their tablets from the crowd of others running Google's Android operating system. Though not all non-Apple slates are powered by Android software, those that are, such as the Samsung Galaxy Tab and Motorola Xoom, will have to persuade buyers not only to forego the iPad, but to choose their Android tablet over the many others that exist.
"What I think is going to be difficult is a single vendor gaining the kind of market share Apple has and will have in 2011," said Carolina Milanese, VP of research with Gartner. "If you look at it, especially in the Android marketplace, you're competing with other vendors on the same platform."
Apple was not only the first to market a new generation of tablet, but set the standard for what consumers now expect tablets to be. Rivals have the same general size, shape, and functionality of the iPad, but have yet to introduce major innovations, aside from 4G and Flash compatibility, that drastically distinguish their offerings from the iPad. At the same time, the iPad’s pricetag is in line with other tablets' and has not yet been dramatically undercut.
Though some complain that the iPad 2 isn't much of an improvement over the original iPad, to beat the competition, it doesn't really have to be. Some analysts say the original iPad was a strong enough product that at this point, other tablets are still trying to catch up to Apple's first iteration.
"They don't need a revolution with every version," said Ganguly. "They already have a gamechanging product."
Apple also has relationships and established distribution channels that it can leverage to drive sales. Outreach begins at the megachain of Apple stores, where devices are sold--which may provide a leg up in the tablet race. Business Insider predicted that tablet sales would be mainly driven by retail stores, not carriers--and 51 percent of their readers said they would buy a tablet from an Apple Store (compared to 24 percent who said they'd buy from another retail location). And users also have the option to buy the iPad online, or through AT&T or Verizon--Apple's designated carriers. At these places, customers come into contact with the sleek, aesthetically appealing hardware that is Apple's calling card. Then, when the iPad is out of the box, easy-to-use pre-installed software syncs seamlessly with Apple's family of devices including the iPhone and iPod. Once users are inside the Apple ecosystem, they can use the same login to buy music, apps, and more.
Still, the iPad is not in every respects the “magical” device Steve Jobs claims. Detractors of the iPad 2 will note that the device does not run on a 4G network, lacks a USB drive, and will not run Adobe Flash. So far, these omissions have not hindered the iPad. Yet the tablet landscape, which has been drastically reconfigured over the past year, could be revolutionized yet again with the right competitor.
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