Why Apple Still Rules the Tablet Market

The buzz at Mobile World Congress was all about tablets, everyone and their dog was rushing to jump on Apple’s bandwagon with a slew of Android tablets and a few alternative systems from RIM and Microsoft.

Did any of them do anything that’s likely to worry Apple? In a word, no.

One reason I don’t own an iPad is the price, or more specifically the price-vs-usefulness ratio; it doesn’t do enough of the things I want to justify the cost. If it did more I would buy one, if it was cheaper I would buy one.

I was hoping that some Android tablets would be announced that closed the gap, either more¬†functionality at the same price or the same features for less. All we’ve seen so far is pale imitations of the iPad, which would be fine if they were significantly cheaper but they’re not. Sure, there are cheap and cheerful android tablets Running 2.1 on small screens with low end components but there’s nothing that should worry Apple.

The big noise in the tablet announcements came from Motorola with it’s Xoom, a fine looking device but one that will be priced at a “premium” according to Motorola.

The first Android tablet – the Samsung Galaxy Tab – was also fantastically expensive at launch.

To differentiate from the competition, basic pricing theory says that you need to do one of the following, supermarkets have known this for years;

More for less – ASDA

More for more – M&S

Less for less – Lidl

So far, all of the tablet manufacturers have done is launch “the same for more” devices.

This is odd, considering that these guys don’t have the R&D costs of developing an OS like Apple do and that the supply chain knew that this shift towards tablets was coming, you’d have thought someone would be able to come up with an iPad worrying device that didn’t cost a fortune.

So why can’t they? I don’t know, but I doubt the reason is production costs.

Although Apple do sell iPads through third parties, they also have their own retail stores accross the world which they make very good margins through. They also take a sizeable chunk of the revenue from any apps or content that iPad users buy which means that making a profit on the device itself is less of an issue.

By contrast, the likes of Motorola have no such additional revenue streams and need to make their profits on the device. Not only that but they need to allow room in their prices for the distributors and retailers to make a profit too. The net result is that even if they were able to make a device for less than Apple can they probably couldn’t sell it for less.

Tablets like the Motorola Xoom that were announced at Mobile World Congress have another hurdle too, the iPad 2 is due to be announced this week. Lanching their first generation of products mere weeks before the market leader launches their second generation product puts the competition firmly on the back foot.

So it seems that Apple are likely to maintain their position at the top of the pile for at least a while longer.

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