Does anyone expect monster sales of Android tablets?

  • Posted: 05 August 2010 08:06 AM

    In another thread we’ve been discussing how quickly the iPad has become instrumental to the daily routine of those of us who own one. The relative number of apps that we are buying for the iPad may make the iPad relatively more important to developers over time, and hence to the Apple ecosystem, and AAPL.

    So, while everyone is currently fixated on the number of Android smartphones that are being sold relative to iPhones, the battle that is going to matter more in the next several years will be the number of Android (and ChromeOS) tablets and other computing devices that will be sold relative to iPads and future iOS computing devices.  The winner of that battle will likely win the overall platform wars that have only recently become an entirely new multi-front world war. 

    Android has sold well on smartphones only because of the telcom carriers.  The carriers are pushing them out the door, and there are millions of folks each month eligible for a new phone who don’t want to switch to AT&T for the iPhone, who are grabbing an Android phone but are barely interested in the Android platform they are now part of.  They don’t buy that many Android apps, and they don’t use the smartphone much differently than they use a non-smartphone.

    Android and ChromeOS tablets won’t enjoy the same sales dynamic as smartphones when the tablets go on sale.  They are going to have to sell mostly on their own merits, in retail stores, head-to-head against the tsunami of the iPad.  IMHO, there’s only one way Android tablets will sell in large numbers, and that is if the entry price point is $349 or less. I don’t think a $399 Android tablet is going to do well against a $499 iPad. 

    And I don’t see how Android tablets can sell as low as $349 given component costs, and a margin that both the manufacturer and retailer are going to need.  I’m not even sure they can match the iPad’s $499 price.  They can perhaps sell a smaller screen size device for $349, but that won’t sell well against the 10” iPad at $499.

    My money is still on AAPL for the future.  The carriers can sell gazillions of Android smartphones this year, it’s not going to matter.

         
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    Posted: 05 August 2010 09:17 AM #1

    Certainly $349 will sell well, but it would have to retain the same thinness, battery life, and key content browsers (books, movies, Internet, email, Docs and PDF. My guess is android tablets would be able to get everything but the battery life. Schools buying whole classrooms full will be very disappointed when they must hire a babysitter to keep them charged up.

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  • Posted: 05 August 2010 09:32 AM #2

    There are plenty of people that want to buy something that is “not Apple” and cheap. They don’t care about battery life, price, features, compatibility, functionality. The only thing they care about is that it is NOT Apple. They will scream “open” and crap like “no walled gardens” but what they mean is that it is not Apple.

    Apple did send everyone back to the drawing board with that price point. Apple also tied up a huge chunk of components from their suppliers making it difficult for anyone to deliver a competing product at any price, at least for the foreseeable future. Didn’t LG say that they were going to have difficulty in getting the screens promised? (I am wondering if LG are trying to get into the end game as well - they can chuck Android on it and make more money). I would be interested in seeing the contracts Apple have with these companies if they FAIL to deliver as promised.

    I am also wondering if the rumors of new, different sized, tablets that appeared yesterday are in some way Apple’s response to just NOT being able to make enough iPads to satisfy demand. If there are component shortages for any reason this could be a way around it.

    Either way don’t underestimate the competition from stuff that does similar things albeit badly. This will have an effect on market share, not on Apple’s bottom line of course but I expect that Android tablets will also outsell Apple tablets when everyone and their dog gets to stick a me too OS for free in a plastic box with a shitty battery life. Yes, it will be an Apples to Oranges comparison but there are plenty of people who don’t care.

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    Posted: 05 August 2010 10:47 AM #3

    Like in the phone space, Android is an attractive option to OEMs who are currently uncompetitive with the platforms available on the market.  That giant sucking sound you hear is the gap between Apple and all the other phone/PC makers who are caught with either Windows Mobile or Windows 7 to light up their commodity hardware. Since neither actually works, Google’s solution is irresistible.  These vendors will release vast landfills-worth of products to fill the vacuum.  Certainly Apple can’t meet demand so they’ll step in and plop down whatever comes out of their outsourced engineering teams.

    [ Edited: 05 August 2010 10:51 AM by asymco ]

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  • Posted: 05 August 2010 10:52 AM #4

    rattyuk - 05 August 2010 12:32 PM

    There are plenty of people that want to buy something that is “not Apple” and cheap. They don’t care about battery life, price, features, compatibility, functionality. The only thing they care about is that it is NOT Apple. They will scream “open” and crap like “no walled gardens” but what they mean is that it is not Apple.

    I am not sure that the contingent of anti-Apple people you describe is as large as you think it is. True, you and I see them on the blogs every day. But I think they may be consigned to the ranks of the technorati and to only a small portion of the technorati at that.

    The main gripes against Apple seem to be that they are monolithic, closed and arrogant. Do you really think the average person gives a whit about any of those things? Apple appeals to people who don?t want to take a lot of time customizing, managing, and learning to use their electronic devices and who never want to think about security at all. That?s not the technorati. But that?s most people.

    On the other hand, if you?re suggesting that there?s a certain contingent of people who will never buy Apple because they know the price of everything and the value of nothing, then I?m with you. Apple will never get those people. But if you?ve ever been in sales, you?ll know that that?s a good thing. I read once that Best Buy actually started a program of actively distancing themselves from those kinds of people by not sending them promos, not extending them credit and not otherwise soliciting their business. Why? Because they spend 10% of the money and take up 90% of managements’ time. No, Apple will never reach those bottom-feeders. And that?s a good thing.

    [ Edited: 05 August 2010 10:55 AM by FalKirk ]      
  • Posted: 05 August 2010 11:09 AM #5

    Couple of things.

    Firstly I have noticed that in my local Best Buy the prominent end of aisle area that was once the domain of the iPhone has now been occupied by Evo and the iPhone is in with all the others on a display table.

    Secondly can anyone explain what the metric “Activation” means? Google are chucking this metric around and it is growing week on week and are implying that it is sales - but if it IS sales then why aren’t they using the term? I thought I had read somewhere that an activation takes place when you register the phone for the first time, reassign the ownership of the phone or even reset it. Can anyone offer any insights?

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  • Posted: 05 August 2010 11:40 AM #6

    From my daily slogging through the blogging I notice that a lot of Android phone users did not wait for tablets running the same Os. They have iPads and love them. The big complaint against the iPhone from these folks is ATT. They would have had iPhones long ago if they could have them on Verizon. So Android is doing as well as it is due to a dent in Apple’s game plan, and that dent is being stuck with the same carrier till 2012.

         
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    Posted: 05 August 2010 11:59 AM #7

    rattyuk - 05 August 2010 12:32 PM

    There are plenty of people that want to buy something that is “not Apple” and cheap. They don’t care about battery life, price, features, compatibility, functionality. The only thing they care about is that it is NOT Apple. They will scream “open” and crap like “no walled gardens” but what they mean is that it is not Apple.

    I appreciate how that plays to the Apple myth. But it’s not accurate. Android can augment a myriad of devices that consumers are already familiar with, especially at the “low end”.  It’s a no brainer for picture frames. 10” Picture frame + resistive touch screen + 801.11g + USB = perfect $150 Christmas gift this year.

    I’ve been saying for more than a year that if Apple didn’t open up, someone else would. Apple will end up suffering even more because even the most ardent Apple fan will have an Android powered thermostat on their wall or whiteboard on their fridge. Android will own the low end and those funky single-purpose devices because there’s no way Apple can compete in that space without licensing and letting go. “Free” isn’t even the issue. So in a home where you have 20 Android devices, are you really going to use iOS products to tie them together? I don’t see it.

         
  • Posted: 05 August 2010 12:13 PM #8

    Bosco (Brad Hutchings) - 05 August 2010 02:59 PM

    I’ve been saying for more than a year that if Apple didn’t open up, someone else would. Apple will end up suffering even more because even the most ardent Apple fan will have an Android powered thermostat on their wall or whiteboard on their fridge. Android will own the low end and those funky single-purpose devices because there’s no way Apple can compete in that space without licensing and letting go. “Free” isn’t even the issue. So in a home where you have 20 Android devices, are you really going to use iOS products to tie them together? I don’t see it.

    Welcome back Brad, how is the software development coming on? I assume that your software runs on Android - I think you said flash - so that means you must be doing extremely well on the android platform. Congratulations. But you didn’t actually answer the question I posited. So nothing much added to the conversation then.

    I don’t think it matters that Android “will own those funky single-purpose devices” it still won’t be making any money for Google and do you really want a weather device that serves up ads?

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  • Posted: 05 August 2010 12:29 PM #9

    I think the one who will dominate the market is the first one to come out with a tablet that doesn’t need a computer.  A small wifi box to plug into whatever internet provider you have and a tablet is all many people want.

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  • Posted: 05 August 2010 12:31 PM #10

    In answer to the question regarding “monster sales” of an Android tablet: who knows. When one is shipping and in stores I guess we’ll find out. I do agree that no one should underestimate the power of something cheap and “good enough.” That got everyone wet for netbooks which were in actuality just really cheap smaller laptops. Laptops couldn’t get any cheaper so the manufacturers decided to make them smaller to save money and the marketing gurus invented the term netbook. People bought lots of those.
    I do still question the business reasons for Google spending a ton of money on Android development when they make no money off of it. I’m sure most people buying a phone with the Android OS on it, may not even know that Google makes it (or even what an OS is). I could see them dumping Android into open source if their revenue takes a hit and things need to get chopped, in which case you’d get the Linux mess with Android: enthusiasts love it, but it’ll never be mainstream, and mainstream means big $$$.
    Apple has a big headstart, so it’ll be interesting to see what happens.
    It’s a tough question to answer because we are discussing it as enthusiasts, but the answer will come from the non-enthusiast public at large.

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    Posted: 05 August 2010 12:45 PM #11

    @rattyuk, Your signature is pure irony. You can follow my links and see most of what I’m to. Yes, we have some unannounced Android stuff brewing. But it’s funny to just watch you make shit up to pretend to look authoritative grin.

    To your question above… When I was a wee lad growing up in the slums of Danville, CA, I never imagined that people would tolerate 12 minutes of commercials per hour on those tubes connected to the cable. But I think the thing you are really missing is how an ad model that supports a freemium product works in practice. “Free” gets you reach, as it lowers barriers to people being receptive to your message. But it does not obligate them to listen. Some media moguls lamented the DVR because viewers were, gods forbid, skipping the commercials, stealing their shows!!! There is a very deep reason why that thinking is wrong, but it’s illustrated easily by the implication that taking a bathroom break or going to the kitchen during a commercial would be “stealing” too.

    Apple has made a very strong push into mobile advertising, and effectively shut other ad platforms out of its iOS devices. My bet is that Apple gets its about reach and attention, because it would be a phenomenal blunder if they didn’t. If, for example, they ever complained that users were freeloading off their ad system, it would be the death knell for the platform. I really don’t think they will surprise me. But you ought to brush up on how these business models actually work, rattyuk. Openness reduces friction. It allows a product or service to spread as wide as it will, as wide as it is accepted. There is tremendous friction in getting iOS onto a picture frame, for example. Price isn’t even an issue. Apple won’t license it. They won’t flow with the go.

         
  • Posted: 05 August 2010 01:05 PM #12

    And your’s my dear Bosco is pure advertising.

    “But it?s funny to just watch you make shit up to pretend to look authoritative.”
    Why thank you.

    So your argument is that computers will be free and advertisements are the answer?

    Hmm. When I was growing up in the UK we had virtually advertisement-free television so perhaps our experience of the way things should be going is… er… different.

    But anyway. My original question is What does activation actually mean? Does it actually mean that Google are adding 200,000 new devices a day or does it mean something else?

    You have an enormous brain, please answer the question.

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  • Posted: 05 August 2010 01:12 PM #13

    “There is tremendous friction in getting iOS onto a picture frame, for example. Price isn?t even an issue. Apple won?t license it. They won?t flow with the go.”

    But there is no reason for Apple to do this. They will however put iOS into a revamped Apple TV of that I am certain. I think the problem Bosco is that you are trying to change the subject to move it to somewhere where it is completely irrelevant. You might want Apple to produce a picture frame or other such nonsense - you are basically saying that we should forget the concept of apps and release a load of shitty devices that have a single function. Hmmm. yay, way to rule the world.

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  • Posted: 05 August 2010 01:13 PM #14

    I’m thinking that ultimately, PCs will continue to disappear and losing to laptops, and that laptops will start morphing into the tablet market, so it’ll be all tablets and small gadgets of one sort or another soon enough.

    With functions taken care of on the net more and more, the gear we carry around can become smaller and smaller - or tabletish.  And we could just walk up to any larger monitor and it’ll show what our tablet was doing, when we need a bigger screen. Same with wireless keyboards when we need them. 

    There’s money in controlling the OS on those tablets because of their control on the search engines and by extension on the ad revenue.  And if this becomes the platform of choice for most computing soon (next 4 years), then Google will need to make sure they are up there.

    Apple will have a large enough user base that as Android has its inevitable rise in the tablet market next year we’ll find a lot of the rest of the world ensuring compatibility with both OS4 and Android or the gear they run on, instead of the Windows-dominated world we have now for desktops. So, there’ll be lots of choice!

    (P.S. @Rattyuk - What’s the point in my setting the system to ignore Bosco’s disinformative posts if you go quoting him? Think of folk like me next time).

         
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    Posted: 05 August 2010 01:42 PM #15

    Guys,

    I cannot speak for you but I don’t want my household stuff to go digital. Let me tell you why:

    1) My uber-digital programmable thermostat that looks awesome in all of its backlit LCD glory and displays the current humidity in different zones forgets all of its programming when a fellow family member would turn the thing off because it is “too hot” or it is “too cold.” Frustrated, I replaced the thing last weekend with a $20.00 non-programable Honeywell thermostat that just displays the temperature.

    2) The upstairs kitchen has an uber-cool digitally controlled range. Its awesome. Except the digital button pad messes up if it is kept in a humid environment like in my house where the automatic humidifier that is part of the HVAC keeps the house perfectly controlled at 55% relative humidity. In that kind of “extreme humidity,” then the range shells a $500.00 part every year or so. I’ve replaced the part four times.

    3) The built in Nu-Tone mp3 CD player that pumps muzac throughout this house shelled its brain box. My mind reeled when I learned it is $2K to replace.

    When I owned my VAR selling business to business, my experience was that one out of five, fully 20% of everything I sold and parked out in the field would fail within the first six months. Since nothing seems to have changed, I ask myself why I would want to subject myself to more household hassle?

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