Why iPad to Grab 80% of Tablet Market: Analyst

The iPad 2 does not offer anything jaw-dropping in terms of enhanced features, but due to a mix of marketing moxie and timing, it will cement Apple's position as market leader for some time to come, with iPad sales comprising 80 percent of the U.S. tablet market share for the year, according to analysts.

Steve Jobs yesterday at a press event unveiled the iPad 2, which provides just enough improvements to keep Apple in the lead in the hotly contested tablet wars. Also vaunting Apple further ahead is the newly reduced price of the old 16GB Wi-Fi iPad by $100 to $399.

Key upgrades in the iPad 2 include a dual core processor, two cameras for video conferencing and a lighter, thinner design. Missing in the list are USB ports, Flash support, 4G connectivity and a new display, but it appears that won't matter much in terms of future success, say analysts.

How the iPad 2 compares to the competitors

Just as important as the specs is Apple's ecosystem, branding and sale date of March 11, says Avi Greengart, analyst at CurrentAnalysis. Apple is beating its rivals to retail by a long shot, as most of their devices are still not on sale yet, with the exception of the Motorola Xoom.

Additionally, Greengart and Forrester analyst Sarah Rotman Epps say once competitors' products are available, they may not be compelling enough to trump the iPad in the mind of consumers.

"The competing products we’ve seen announced so far from Motorola, RIM, HP, and others, while impressive, have fatally flawed price and distribution strategies, which leads us to our call that of the 24.1 million tablets that will sell to U.S. consumers in 2011, at least 20 million will be iPads," writes Forrester analyst Sarah Rotman Epps, in a blog post on the iPad 2.

Here's the update on where the challengers stand:

Motorola Xoom: While this Android 3.0 tablet is being called the first Android device to genuinely compete with the iPad and the Xoom did garner positive reviews, has a 4G support upgrade on tap for the second half of the year, and is actually already available, the $799 (without contract, $599 with new two-year contract) price tag may be a tough hurdle.

BlackBerry PlayBook: This is expected to come out in early April, but no price has been set. In addition to a lack of mobile apps, the PlayBook requires bridge software connected to a BlackBerry to access email and other PIM data, limiting its appeal.

Cisco Cius: This tablet is also squarely aimed at the enterprise, and has impressive features, but, where is it? We've yet to hear much from the networking giant since announcing the Cius in June of 2010, saying that it would launch by "early 2011."

Samsung Galaxy Tab, ViewSonic ViewPad, Dell Streak and other Android tablets: These Android tablets are likely to nibble at Apple's market share, and will surely realize some success, but it remains to be seen if they can compete with Apple at retail, as cited by Rotman Epps.

Forrester's surveys show that consumers expect to pay only $257 for a tablet as of January 2011, down from $504 in June 2010. "Tablets are expensive to build, but consumers expect them to be cheap. And, our data shows that they don't want to be tied in to a fixed data contract, and they don't want to buy from a carrier--meaning that pricing strategies that work for mobile phones won't work for tablets," says Rotman Epps.

So, why will people pay more for Apple tablets, but not for, say the Xoom? Because Apple's product strategy extends beyond the hardware and software.

Apple nurtures emotional connection beyond the device itself

Despite the improved features, the real factors that will keep the iPad 2 ahead of competitors -- mobile app content and Apple's retail channel -- have more to do with Apple's strategy of cultivating an emotional connection with consumers beyond the device itself, says Rotman Epps.

It's no surprise that Apple's 65,000 iPad apps give it a huge edge over the competition. Twenty-three percent of consumers considering buying a tablet rank "number of available apps" in their top-three important features, according to a Forrester survey conducted in January 2011.

The Apple Store also comes into play in the equation. "Competing tablets will all rely on Best Buy, Wal-Mart, Target, and carriers to sell their devices among many other products. At the Apple Store, the iPad is featured front and center, and consumers can try it out and have knowledgeable sales staff teach them how to use it and discover new content," says Rotman Epps.

Additionally, buyers believe they will receive service from knowledgeable staff at any Apple Store and therefore are willing to pay more for Apple products, according to a Forrester study conducted last year," says Rotman Epps. "This means Apple doesn't have to cut prices significantly to remain competitive."

TAGS:

mobile, iPad, Apple, research, tablet

Comment and Contribute



    (Maximum characters: 1200). You have 1200 characters left.