There are close to 90 different tablets announced for 2011 delivery. Some of the hottest models, like the Motorola XOOM, are weeks away from availability. Meanwhile, hype continues as fervently as ever about iPad 2. In such a competitive market, with overwhelming number of choices, there are going to be losers — and lots of them. Is there a formula for success?
Earlier today, I asked Stephen Baker, NPD’s vice president of industry analysis, three things tablet manufacturers/retailers need do to be successful. One of the three I most expected didn’t make the list (more on that later). Baker is unusual among industry analysts for his no-nonsense common sense about retail. Tablets aren’t just tactile in how they’re used. People will want to touch and hold them before buying them, which means retail distribution. Besides something new needs to be seen before purchasing; it’s retail marketing 101 stuff.
I asked Baker: Are there three things you would recommend that tablet manufacturers/retailers should or should not do to be successful? He chose to answer about what they should do. His responses are organized 1, 2, 3 with additional perspective from me.
1. “Focus on distribution. As more and more companies get in you are going to need shelf space and presence to survive.”
In late January post “Why is iPad successful?” I explained how Apple’s massive manufacturing and distribution channel — the ecosystem — was foundational to the tablet’s success. Apple launched iPad with huge marketing, manufacturing and distribution systems established for iPod and iPhone. This advantage is often overlooked in analyses of iPad’s success. The tablet was available in 46 countries during calendar fourth quarter, when Apple shipped 7.33 million units.
For anyone trying to pick other winners and losers, look first at the manufacturers with best distribution logistics. Samsung is in best strategic competitive position because of its massive distribution and retail reach and because it’s a major supplier of components used in tablets. LG has presence on the order of Samsung, meaning both manufacturers sell hundreds of consumer electronics products through tens of thousands of retailers. Research in Motion looks good — that is if it ever ships PlayBook. HTC is another manufacturer with reach.
2. “Integration. I think integrating more completely with other household devices, phones, TVs and PCs for data, personal information management, entertainment and content management will be crucial.”
Apple already is doing some of this with content streaming and synchronization options for iPad with personal computers and Apple TV. But Samsung and LG sell TVs and smartphones and other consumer electronics devices around which tablets could integrate.
3. “Apps. Obviously [tablets] now need a wide and varied array of easy to use and buy applications. That also means a much better app store experience and one more widely available. It can’t just be an OS thing. I think retailers, who have a core competency there, have a role to play in promoting in dsitributing apps more easily and widely.”
Perhaps that latter point explains why Amazon is developing an app store competing with the Android Marketplace. There’s a presumption among the Apple and Android fan clubs of bloggers and journalists that one, perhaps two, app stores will rule the market. But based on music and video distribution, even with iTunes overwhelming dominance, there are many distributors, some of the more successful from retailers like Amazon.
On February 15th, during his Mobile World Congress keynote, AT&T CEO Randall Stephenson bit the hand that feeds the carrier so many subscribers — iPhone. He expressed seemingly sour grapes about Apple’s App Store success: “You purchase an app for one operating system, and if you want it on another device or platform, you have to buy it again.” Hell, he’s right about that. However, I’ve spoken with some journalists who see the statement as sour grapes — app stores taking away carriers’ efforts to sell (and profit from) applications over their networks. Perhaps, that’s true a little, but Stephenson is right about the consumer experience. It makes sense that with the proliferation of connected mobile devices that apps should run on many of them — like digitally downloadable music is today.
There’s One More
Baker didn’t mention price, something I harped on earlier in the week. So I asked: What about price? Competing tablets look high to me compared to [iPad], mainly because of carrier contracts? He responded: “Well, I didn’t want to get into the WiFi vs. carrier debate.” But he also left out price because it’s “a given. Price will be there, otherwise you die. What I get for what price and how I get to the right price is the trick.”
What is the right price? Competition will answer that question. On February 16th, Motorola revealed that its drool-worthy XOOM tablet will be available in a WiFi-only version for $600. So I asked Betanews readers if they would pay 600 bucks for XOOM? Reaction was mixed, with even the most tech-savvy of you wanting a price about half as much — for any tablet, not just XOOM.
By the way, regarding tablets, Baker believes the “vast majority will be [sold] with no contract” from wireless carriers.