Only Two Companies Can Compete with iPad: Amazon & Microsoft

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I’ve been saying for months that Apple will dominate the media tablet market with the iPad the same way it dominated the digital media device market with the iPod. In fact, I believe that Apple will maintain 66% of this market, or more, for the foreseeable future (I’m hedging there — I really think it will be more than 70%, but don’t tell anyone).

This projection on my part is a direct reaction to Fandroids (and many Wall Street analysts who don’t qualify as Fandroids) who have been eagerly anticipating and predicting that Android tablets will quickly catch up and pass Apple’s iPad in unit sells the same way that they have passed iPhone in the smartphone market. For instance, Mike Abramsky of RBC said in early March of this year that this would happen by 2014.

At that time, I made the case that he was wrong — read that for details, but the short version is that I said that apps matter more on tablets than on smartphones, and that while accessing the Internet (something iPhone and Android devices do comparatively well) is the killer app for all smartphones, the experience is the killer app for tablets.

Hmmm…I don’t think I said it quite so elegantly at the time, but that’s how I think about it today. I also wrote a passage about Apple being the price leader in tablets, but in this piece I’m focusing on the experience part of the equation because it’s the experience the iPad offers that sells the device, not the need for a media tablet per se. Indeed the need for a media tablet doesn’t exist at all, only the desire for one.

To really hammer in this point, that desire has so far been defined and created by the experience the iPad offers, and the extension of that thought is that Android tablets don’t have an experience to offer, and I don’t think they ever will.

There are two companies that might be able to bring an experience to their media tablet, however, and if they are really, really lucky, it might even be a compelling enough experience to get people to want one. Those two companies are Amazon and Microsoft.

Android & Microsoft vs. iPad

If you’re like me, you’ll find that suggestion at least a little surprising. After all, Amazon isn’t a hardware company (Kindle notwithstanding), and Microsoft has systematically failed at just about everything it has tried in the last several years, especially when it comes to the company’s mobile strategy; but, and this is a but big enough to earn the Sir Mixalot Seal of Approval™, these two companies have some assets and weapons to bring to the media tablet fight that no one else has, not even Hewlett-Packard (more on HP at the end).

Amazon

As I wrote in our coverage of a rumor coming out of Taiwan that Amazon had already put in an order for their own tablets, Amazon has content relationships in place for music, TV shows, movies, and ebooks. With a little backend work, Amazon can readily deliver this sort of content directly to a tablet almost the same as Apple.

No, not as well as Apple, because Amazon doesn’t have Apple’s expertise in software and UI, and Amazon won’t have control over the whole widget. Amazon will, however, have more of the widget than any other competitor. They’ll control the hardware and the content stream, and that’s a foundation for an experience. Amazon even has a cloud-based music player in the wild, something Apple is rumored to be working on, and such a product further narrows the gap between the two companies.

Amazon also has its own mobile app store (with apologies to Apple) in the form of the Amazon Android Appstore. More importantly, Amazon has a relationship with a few hundred million customers around the world who are used to coming to its Web site to — get this — buy stuff. Who else can say that? Samsung? (No) HTC? (Who?) Generic Chinese Electronics Company Flying In To CES To Show Off Vaporware? (Please).

Not even Google has customers who see its site as a destination for making purchases, but Amazon does. Amazon can push a media tablet the same way it pushes the Kindle to its customers, and it can then deliver apps and content to those tablets. It’s also very important to remember that most of that large customer pool will no doubt be comfy using their Amazon accounts to buy those apps and that content just like iPad owners use their iTunes account to buy apps and content.

This is the single closest thing to Apple’s iTunes ecosystem as exists anywhere in the world, and because of that Amazon has a vague chance of being able to sell tablets when every other Android tablet maker has so far spelled tablet as F A I L.

Now, will Amazon sell the 700,000-800,000 tablets a month DigiTimes said it might order? Not unless Apple is selling five times that many, and I don’t see that happening this year. There are a lot of things that have to come together for Amazon to pull this off, but the company has a better foundation than anyone else for being able to try.

Microsoft

Microsoft has a different set of unique abilities that the company can bring to bear against the iPad, and for the Windows maker it starts (and probably ends) with the living room. Microsoft has the Xbox and Xbox Live. And Kinect. In the grand scheme of thing, Microsoft has the single strongest footprint in the living room of all iPad competitors and would-be iPad competitors. Microsoft has a much bigger footprint in the living room than Apple itself.

I believe that Big Redmond’s biggest opportunity for creating an experience for a Microsoft tablet is to integrate its tablet with the Xbox. Make it a game controller, make it a means of accessing the Internet and browsing Internet content through your TV, make it a way to chat with your opponents while you are playing, to see additional game content like maps, scores, bonus rewards, whatever. These kinds of things make for an experience that many consumers would find attractive.

Imagine being able to start off a Kinect video chat on your TV and be able to pick up your Microsoft tablet and take the conversation into the kitchen using a camera on the device without having to change anything? That would rock.

Heck, being able to choose games and enter player names without using a damned handheld controller — that alone would make it compelling to me, but then I’m all old and stuff. I hate game console controllers.

This is a strength that only Microsoft has. Sony could try to work this angle with its PlayStation platform, but it won’t. That once-great company is too busy dropping balls to successfully create a proper tablet experience. Dropping balls is hard work and just too-damned time consuming.

Getting back to Microsoft, the company’s living room foothold offers Microsoft a shot at building a tablet experience. Not only is it a unique asset for the company, it also offers Microsoft the chance to not copy the iPad, just as Windows Phone 7 is the only post-iPhone smartphone OS that doesn’t try to copy the iPhone.

While Google busily follows in Apple’s footsteps with the look and feel of Android, and Android hardware makers have mostly worked in the iPhone’s hardware image, Microsoft had the guts to offer a completely different approach with Windows Phone 7. I prefer iOS, but I really think Big Redmond deserves a lot of credit for trying to offer something different. Doing so with a Microsoft tablet could be part of creating a compelling experience with the product.

At this point, however, I should acknowledge the elephant in the room, and that’s the minor fact that Microsoft isn’t currently a competitor in the media tablet space. The company still provides Windows 7 for tablet PCs, but hasn’t made a play for media tablets at all. I’d like to think that’s because someone at the company figured they should take the time to do it right, but we’ll have to wait and see.

I also want to stipulate that I don’t necessarily think Microsoft will do all this stuff right, I’m just saying they have a better opportunity to be successful in this market than anyone besides Amazon.

Poor Ol’ HP

In times past, I’ve said that I was excited about what HP might bring to the media tablet market. This is entirely because HP is the only other company besides Apple to control the software (WebOS) and the hardware. Because of that, I think that HP might be able to make an excellent WebOS tablet.

I still believe that on its face, but I am not including them as a third major contender for bona fide iPad competitor because I don’t think the company can put together the right content and app assets to offer the experience I’ve been talking about.

HP might be able to offer WebOS tablets that will do well in vertical enterprise applications (presentation, remote access to the enterprise-in-the-cloud, inventory management, etc.), but I don’t see the company being a contender in the consumer space, Jon Rubinstein and the other former Apple-employees he’s collected notwithstanding.

I also hope very much that they prove me wrong.

One More Thing

There’s one last point I should make: If Amazon is successful with its own Android tablet, it could legitimize the entire Android tablet market, assuming Amazon was willing to sell all that content and those apps to any all Android devices, which it will. If so, Apple will have a real competitor in the Android platform, but I still see Apple maintaining its lead, it just won’t be as big a lead as it would have otherwise been.

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Comments

James Cude

I’d say only Amazon has a real shot and that’s a long one.

cb50dc

Thanks for a refreshingly candid report. It offers a contrast to too many other news items, even on TMO, that boil down to little more than extolling Apple and pooh-poohing everything else. I’m as much a MacHead as just about anyone here, but sometimes the theme starts sounding old (no matter how valid the content).

Not so old that I get tired of seeing my cute little handful of APL shares going up and up and up?but you get the idea.

Whatever else arises, I’m sure I’ll manage to keep my slightly smug Cupertino smirk when I consider most of the lesser efforts. But we need some decent competition, if only to keep Apple on its toes, still coming up with the stuff that makes almost everyone else give themselves well-deserved dope-slaps.

b0wz3r

Since when was Monoposoft competent at anything other than bullying, intimidating, and threatening businesses into partnering with them and ‘buying’ their substandard POS products?

mhikl

Most anyone who tries to predict electronic placement a year or more ahead of the times is a carnie fortuneteller. I don?t care what platform they are predicting on. The future is on steroids and there are no brakes on any snowboard that is involved in this techno race. Not only that, the hill is clouded in fog and the terrain is skewed with wormhole drop offs for insane shoots to Neverland and shortcuts to the real future. There?s even a flush toilet wormhole ready to send the stumbler to oblivion. It?s a movie where the projector is in fast mode, a roller coaster crazy ride where presence is ahead of reality and time seems to be in slowmo yet the foot can?t quite find the brake. For myopic companies the eight ball seems to move just before the cue can be steadied for that quick shot. It?s a crap shoot and everyone?s betting the shop.

Apple could be danced from the scene in the blink of an eye. Microsoft might again reign supreme. Amazon is suddenly selling timeshares to Pluto and by the next day, all this might seem normal.

Bryan, in a time of hectic news, what an inspiration is this post of yours. I hope you?re on a roll bud, for we do like to be challenged and enchanted by the dudes and dudess who write at TMO.

Ion_Quest

I’m rooting for at least 3 more companies (hopefully more) to succeed in tablets—perhaps even HP and RIM.  I think competition is needed for app/game developers.  I’m hoping the overhead for selling apps/games/books/magazines/etc. will be reduced to a more reasonable level (15% ?) through competition.

Bryan Chaffin

Thanks for the nice comments, mhikl and cbsofla.

b0ws3r, I agree with and noted in my MS section that Microsoft has failed at most of the things it has tried in the last several years.  I don’t expect them to succeed here, either, but they do at last have the assets to try and get it right.

Dorje Sylas

Apple could be danced from the scene in the blink of an eye. Microsoft might again reign supreme. Amazon is suddenly selling timeshares to Pluto and by the next day, all this might seem normal

I don’t agree. There are something’s you can see through the “fog”. #1 Apple will continue to iterate on its hardware and software, maybe not at the pace us tech heads want, but as fast as they are stable. This steady ponding pace is like a tempo for the tablet market.

What’s happened is no one has got their instruments in tune for this performance, they were all keyed to a higher pitch (phones). But like some kind of bad improve jazz techno, the drummer (Apple) keeps on pounding while we get screeching and random tooting from the other players. Now Amazon (likey) or Microsoft (less likely IMO) could get on tempo and key and start laying down a sweet riff for consumers to move to… but they won’t become the carriers of the beat, and they won’t ever have a solo.

To cap the bad analogy, the drummer is drowing out everyone else so all we hear in the Tablet song, is Apple Percussion. Which is why it sounds odd to most tech analyzists and they don’t seem to “get it”.

Nemo

Bryan:  I don’t whether the future will prove you right, because, as Apple’s iOS devices have demonstrated, the business of smart mobile devices is so volatile, but you present a cogent analysis. 

With Amazon, I wonder whether it will use an orthodox version of Android, accepting all of Google’s licensing restrictions (e.g.,  the requirements to use Google’s services to have access to the Android MarketPlace, trademarks, etc.), or whether Amazon will fork Android, as many of the large Chinese companies have done for their domestic market.  If Amazon forks Android and develops its own ecosystem of its app store and media content, that would be a bitter blow to Google, which could be faced with a huge domestic Android business from which it makes not a cent.

TechGuyChris

This is a strength that only Microsoft has. Sony could try to work this angle with its PlayStation platform, but it won?t. That once-great company is too busy dropping balls to successfully create a proper tablet experience. Dropping balls is hard work and just too-damned time consuming.

I do not agree with you on this point. Sony has already taken steps to push its Playstation Brand to its upcoming and tablets and its new Xperia Play phone.


Not only that, but Sony has the worlds second largest music studio and owns its own movie studio. It can cross deals with movie and music providers.

Sony has its own architecture (The Playstation Network) and is recognized as a leading electronics company. It has a strong brand just like Apple (Something Microsoft cant match in elecronics and hardware) The Playstation Network is on its way to being universal and you will be able to access PSN content on a variety of upcoming Sony devices.

If they wanted to, Sony could make their tablets be remote controls for its Bravia televisions.

Sony has a great chance at tackling apple and I see them as the best competitor. They just need to do a better job at marketing.

TechGuyChris

This is a strength that only Microsoft has. Sony could try to work this angle with its PlayStation platform, but it won?t. That once-great company is too busy dropping balls to successfully create a proper tablet experience. Dropping balls is hard work and just too-damned time consuming.

I do not agree with you on this point. Sony has already taken steps to push its Playstation Brand to its upcoming and tablets and its new Xperia Play phone.


Not only that, but Sony has the worlds second largest music studio and owns its own movie studio. It can cross deals with movie and music providers.

Sony has its own architecture (The Playstation Network) and is recognized as a leading electronics company. It has a strong brand just like Apple (Something Microsoft cant match in elecronics and hardware) The Playstation Network is on its way to being universal and you will be able to access PSN content on a variety of upcoming Sony devices.

If they wanted to, Sony could make their tablets be remote controls for its Bravia televisions.

Sony has a great chance at tackling apple and I see them as the best competitor. They just need to do a better job at marketing.

wab95

Bryan:

Well-reasoned analysis and argument. Your points about MS in particular are sound. I also appreciate your argument about Amazon, which I really hadn’t considered in quite that light before.

Regarding Microsoft, I take your point that these are things that they could do, not that they necessarily will. Theirs has been a puzzling, if not consistent, response of belated reaction to industry and market changes, and not proactively assessing their strengths and building around those ahead of the industry. Curious.

but, and this is a but big enough to earn the Sir Mixalot Seal of Approval?, these two companies have some assets

I’m sure that part about the companies having some assets was unintentional…

Bryan Chaffin

I?m sure that part about the companies having some assets was unintentional?

Well played, sir. smile

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