Android has proven in the marketplace that they can overcome Apple’s 1st mover advantage as their OS outsold Apple’s for the first time last quarter in smartphones as I had earlier predicted. The Android platform is not at a material disadvantage in applications with over 60,000. Therefore, the Android competitors for both ipads & ipods can hit the ground running with enough content.
I see a future for tablets and iPod like products replicating the history in the smartphone space in which the Android OS eventually outsells Apple’s iOS.
I am having multiple conversations on this topic spread across several threads, so please forgive the duplication.
DawnTreader has put me onto the idea that the distribution of tablets is going to be fundamentally different from the distribution of phones. iOS devices are sold through both Apple Retail Stores and their carriers. Similarly, Android phones are sold, for the most part, via their respective carriers. But who will distribute the anticipated Android tablets?
Right now Apple, and only Apple is distributing the iPad. Why isn’t AT&T selling the iPad? Apple is selling a WiFi only version and a WiFi/3G version of the iPad without a contract. AT&T gains no benefit from the WiFi only version and little benefit from the month-to-month contracts garnered from the WiFi/3G version of the iPad. The fundamental difference between the sales of phones and the sales of the tablets is that the carriers do not benefit from the sales of the tablet. Without the carriers active participation in marketing, carrying and selling the tablets, can Android hope to be successful in the tablet market?
Android hardware manufacturers do not have the retail presence necessary to sell tablets on their own. I would think that this would force all Android tablet makers to include 3G contracts with their tablets so that they can enlist the assistance of the carriers in their sales efforts. So now the question becomes: Will a subsidized tablet with a contract be more appealing than an unsubsidized WiFi only iPad or an unsubsidized 3G iPad with a month-to-month contract?
Still thinking this through. Any thoughts you (all) can add would be gratefully welcomed.
Right now Apple, and only Apple is distributing the iPad. Why isn’t AT&T selling the iPad? Apple is selling a WiFi only version and a WiFi/3G version of the iPad without a contract. AT&T gains no benefit from the WiFi only version and little benefit from the month-to-month contracts garnered from the WiFi/3G version of the iPad. The fundamental difference between the sales of phones and the sales of the tablets is that the carriers do not benefit from the sales of the tablet. Without the carriers active participation in marketing, carrying and selling the tablets, can Android hope to be successful in the tablet market?
I think the reason ATT is not selling them is because Apple did not allow it. Apple took the tablet idea to the carriers and said what data plans will you offer. I would argue that the amount ATT gets today may be small but a nice side business with about zero risk. No dropped calls issue and they are a provider on a very satisfying device which will improve their customer satisfaction. As far as Android since it is not a single manufacture trying to bring a tablet to market I doubt that their will be just a single approach. Each company will use their existing channels for sales. For example Cisco using it enterprise accounts, Samsung could probably use an combination carriers and big box retailers, and Nokia could team with Intel to bring a viable product to market, but the list of folks that can pull off launching a new product category worldwide and get it to stick are pretty small. The whitebox makers could do a carrier branding but that will probably die on the vine. Most people don’t want another separate monthly data contract. The idea of a short term data contract when traveling is much more appealing IMO, but WIFI is available at most destinations in the US. The global market and subsidies might shake out different. Google is targeting Chrome for the tablet space so I doubt they will put alot of coding effort behind making Android a great tablet OS but I guess someone else could.
Android has proven in the marketplace that they can overcome Apple’s 1st mover advantage as their OS outsold Apple’s for the first time last quarter in smartphones as I had earlier predicted. The Android platform is not at a material disadvantage in applications with over 60,000. Therefore, the Android competitors for both ipads & ipods can hit the ground running with enough content.
Last quarter Apple’s iPhone 4 was leaked at the beginning of the quarter, thus killing iPhone 3GS sales for the entire quarter. At the same time, Android phones were a new phenomenon in the market place and had an advantage due to their novelty status.
jeffi - 16 August 2010 04:30 PM
I see a future for tablets and iPod like products replicating the history in the smartphone space in which the Android OS eventually outsells Apple’s iOS. Apple can certainly thrive with this competition because I do not believe this is a winner take all market as was the case in the PC space.
I think it’s premature to extrapolate what is arguably a statistical fluke into other areas. People have proven that they appreciate quality and ease of use more than a cost savings. Android will suffer from the same problems as Windows, a mishmash of hardware, lack of standards, and lack of security.
jeffi - 16 August 2010 04:30 PM
The PC OS space was originally won by MSFT because programs were written primarily for the OS that had the largest footprint. There are a number of reasons why this is no longer critical. 1. The internet has enabled cloud computing, leveling the OS field. 2. Todays mobile applications are more easily ported to multiple OS’s and are usually less complex than computer programs (I’m not so sure about this). 3. If I’m wrong about #2, the total current footprint of all of the Apple iOS’s (iPods, ipads, & iPhones) is much larger than Androids and will ultimately be too large for programmers to ignore. 4. If the MAC can thrive today at 4-6% worldwide market share then footprint size is not as important as it once was. This may be the most important point.
The PC war has not been won by MSFT. MSFT is dying a slow death and will collapse completely in the next 5 to 10 years. Their temporary dominance has nothing to do with applications. It has everything to do with corporate timidity and ignorance in purchasing. Nobody ever got fired for purchasing Microsoft because “everybody knew” it was the business standard.
jeffi - 16 August 2010 04:30 PM
Unfortunately, the street will likely restrain AAPL’s PE multiple out of fear of a repeat of the PC OS war in which Apple lost.
The present P/E of about 20 is far below the P/E of 40 that Apple enjoyed just a couple of years ago. That it’s not still at 40 is the result of ignorance on the part of the investment community. Apple these days is pretty much pinned to the DOW. What kind of sense does that make? It doesn’t.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
If there is one lesson to be learned from the Apple/Dell story it is that market share is irrelevant.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
Forgive me for borrowing a Macdailynews take to respond to your general line of thought which I believe carries many false premises. (not the least of which is the premise that Android is an equivalent to iOS4)
The hope some of these analysts have that other companies will match the level of user experiences that Apple routinely delivers to their customers borders on the delusional. For they’ve never been able to match the Mac (despite decades of trying), or the iPod (despite nearly a decade of trying), or the iPhone - but, for some unknown reason, flying in the face of reality and facts, deluded hope springs eternal. Whatever iPad knockoff they come up with, one thing’s for sure, it’ll pale beside the real thing. Just like Windows, the upside-down and backwards Mac wannabe. Just like Zunes and all of the other fake iPods. Just like Android and the rest of the pretend iPhones.
Apples stock price has been exhibiting this kind of behavior for as long as I’ve owned it. (2001) It will be running up soon if past tendencies are repeated.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
@ Jeffi
On what criteria do you use to come to the conclusion that the solutions are comparable. Give me some objective criteria for the non-geek. If we look at the end to end experience for Apps on Android vs iOS there are huge differences. Discovery, synchronization, updating, user reviews availability of quality applications. The web based version of android market is a joke IMO compared to iTunes and they provide no PC based management tools for content. Step me through the process of getting my apps back after I have to restore my phone on iOS vs Google Android. Googles solution is a start and I’m sure they will continue to improve the experience but it lacks alot of refinements.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
@ Jeffi
On what criteria do you use to come to the conclusion that the solutions are comparable. Give me some objective criteria for the non-geek. If we look at the end to end experience for Apps on Android vs iOS there are huge differences. Discovery, synchronization, updating, user reviews availability of quality applications. The web based version of android market is a joke IMO compared to iTunes and they provide no PC based management tools for content. Step me through the process of getting my apps back after I have to restore my phone on iOS vs Google Android. Googles solution is a start and I’m sure they will continue to improve the experience but it lacks alot of refinements.
Fo most consumers, which have never had an Apple product or smartphone, the Android phones are a huge leap and appear to provide a similar experience to the Apple iphone. These Android phones are also available on non ATT providers of which some consumers refuse to use. Respected WSJ writer Walt Mossberg, whom some consider an Apple fanboy has given Android smartphones (and the new Blackberry Torch) good reviews. For the average consumer, this is proof that Android phones offer a comparable solution. Of course, the marketplace sales results have proven that consumers consider Android a comparable value proposition. I have bet big on Apple as an investment and believe they will continue to thrive and make more profits in the smartphone space than any other vendor. But, it is clear that Android is winning the market share race. Android has more momentum than any other platform. Expect their pace to increase faster than Apple’s. Refusal to admit that is just denial. Apple is still THE stock to own.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
@ Jeffi
On what criteria do you use to come to the conclusion that the solutions are comparable. Give me some objective criteria for the non-geek. If we look at the end to end experience for Apps on Android vs iOS there are huge differences. Discovery, synchronization, updating, user reviews availability of quality applications. The web based version of android market is a joke IMO compared to iTunes and they provide no PC based management tools for content. Step me through the process of getting my apps back after I have to restore my phone on iOS vs Google Android. Googles solution is a start and I’m sure they will continue to improve the experience but it lacks alot of refinements.
Fo most consumers, which have never had an Apple product or smartphone, the Android phones are a huge leap and appear to provide a similar experience to the Apple iphone. These Android phones are also available on non ATT providers of which some consumers refuse to use. Respected WSJ writer Walt Mossberg, whom some consider an Apple fanboy has given Android smartphones (and the new Blackberry Torch) good reviews. For the average consumer, this is proof that Android phones offer a comparable solution. Of course, the marketplace sales results have proven that consumers consider Android a comparable value proposition. I have bet big on Apple as an investment and believe they will continue to thrive and make more profits in the smartphone space than any other vendor. But, it is clear that Android is winning the market share race. Android has more momentum than any other platform. Expect their pace to increase faster than Apple’s. Refusal to admit that is just denial. Apple is still THE stock to own.
I’m not arguing about Android having good enough phones. I agree that for folks going to purchase a new phone the Verizon salesmen can convince them that a Android phone is a match for iPhone which doesn’t exist on Verizon. The real question IMO is head to head competition. You mention the Torch which is an ATT exclusive. What were the first week sales from RIM’s flagship phone on ATT vs iPhone 4. Everyone likes to compare a single iPhone model to every other Android phone combined, and IMO they may be good enough but at the same price point they are not better. If you are concerned about Android OS market, you need to look at who is paying the bill for OS development and how that bill changes as market share for the handset providers changes. Let say the OS development requires 2000 engineers at 100K per year. Wether it is built by Apple or Google. If Apple sells iPhone, iPad & iPod Touch, they all share the development cost of iOS. If we sell 50M iOS devices in 2010 the cost per is like 4$ per device and going down with each sale. Apple is building their own SOC which probably saves them $5-10 per device once they amortize the design cost, so my point Android handset makers don’t gain some huge pricing advantage over Apple just because they get a free OS funded by Google. They accept lower margins to gain market share. Apple can chose to do the same. You make it sound like Apple won’t compete down the road at different price points while I think Apple is comfortable with their growth rates and will adjust pricing if growth slows.
Due to Apple’s 1st mover advantage in their iOS, I strongly believe that Apple’s earnings will be approximately double last quarter’s in one year. That aside, it appears that there will be Android competitors for BOTH the iPad and the iPod.
In so far as competition goes and from what I’m overhearing, nobody wants to use Intel’s Atom CPU because it is a power hog. As such, at least for Win 7 powered tablets, Apple gets a free Christmas pass until next year’s CES. However, from what I understand the new devices are promising. I would think that Apple needs to release an OSX tablet next year in spring in order to counter the coming threat to laptops if it is going to continue to expand/maintain its market share in that space.
Apple needs to release an OSX tablet next year in spring in order to counter the coming threat to laptops if it is going to continue to expand/maintain its market share in that space.
I don’t know if Apple needs to release an OS X tablet per se, although iOS is an OS X variant.
The vulnerabilities that competitors will use to attack the iPad, IMHO, are printing and file management. I expect those vulnerabilities will be addressed next spring. Perhaps the strategy will be to keep iOS distinct from Mac OS X but to add desktop-type capabilities incrementally to counter competitive advances by others.
Disagree. Market share and VALUE usually go hand-in-hand. For an example, think back on the MP3 wars. The Apple iPod was never the low cost solution.
The critical difference is that the competitors did not offer an Itunes store. Now, Android offers a comparable solution which can compete with Itunes. Competing on price can win market share if the product is perceived as offering a similar value proposition.
@ Jeffi
On what criteria do you use to come to the conclusion that the solutions are comparable. Give me some objective criteria for the non-geek. If we look at the end to end experience for Apps on Android vs iOS there are huge differences. Discovery, synchronization, updating, user reviews availability of quality applications. The web based version of android market is a joke IMO compared to iTunes and they provide no PC based management tools for content. Step me through the process of getting my apps back after I have to restore my phone on iOS vs Google Android. Googles solution is a start and I’m sure they will continue to improve the experience but it lacks alot of refinements.
Fo most consumers, which have never had an Apple product or smartphone, the Android phones are a huge leap and appear to provide a similar experience to the Apple iphone. These Android phones are also available on non ATT providers of which some consumers refuse to use. Respected WSJ writer Walt Mossberg, whom some consider an Apple fanboy has given Android smartphones (and the new Blackberry Torch) good reviews. For the average consumer, this is proof that Android phones offer a comparable solution. Of course, the marketplace sales results have proven that consumers consider Android a comparable value proposition. I have bet big on Apple as an investment and believe they will continue to thrive and make more profits in the smartphone space than any other vendor. But, it is clear that Android is winning the market share race. Android has more momentum than any other platform. Expect their pace to increase faster than Apple’s. Refusal to admit that is just denial. Apple is still THE stock to own.
I’m not arguing about Android having good enough phones. I agree that for folks going to purchase a new phone the Verizon salesmen can convince them that a Android phone is a match for iPhone which doesn’t exist on Verizon. The real question IMO is head to head competition. You mention the Torch which is an ATT exclusive. What were the first week sales from RIM’s flagship phone on ATT vs iPhone 4. Everyone likes to compare a single iPhone model to every other Android phone combined, and IMO they may be good enough but at the same price point they are not better. If you are concerned about Android OS market, you need to look at who is paying the bill for OS development and how that bill changes as market share for the handset providers changes. Let say the OS development requires 2000 engineers at 100K per year. Wether it is built by Apple or Google. If Apple sells iPhone, iPad & iPod Touch, they all share the development cost of iOS. If we sell 50M iOS devices in 2010 the cost per is like 4$ per device and going down with each sale. Apple is building their own SOC which probably saves them $5-10 per device once they amortize the design cost, so my point Android handset makers don’t gain some huge pricing advantage over Apple just because they get a free OS funded by Google. They accept lower margins to gain market share. Apple can chose to do the same. You make it sound like Apple won’t compete down the road at different price points while I think Apple is comfortable with their growth rates and will adjust pricing if growth slows.
It’s not that Apple won’t compete on price, it’s that they usually don’t. And it’s intentional as it preserves margins and desirability. Presently, Apple couldn’t compete on price if they wanted to because the are still constrained by production limits (I know, this is due to demand). In the mean time, Android gains market share. Smartphone customers are stickier than regular cell phone customers because of the application investment and lock in created by the GUI. The problem is that Apple is losing the opportunity to lock these customers into the Apple ecosystem. If Android customers are satisfied they will be more likely to buy an Android tablet than an Ipad. Apple is doing great but we want them to better, if possible.
Due to Apple’s 1st mover advantage in their iOS, I strongly believe that Apple’s earnings will be approximately double last quarter’s in one year. That aside, it appears that there will be Android competitors for BOTH the iPad and the iPod.
In so far as competition goes and from what I’m overhearing, nobody wants to use Intel’s Atom CPU because it is a power hog. As such, at least for Win 7 powered tablets, Apple gets a free Christmas pass until next year’s CES. However, from what I understand the new devices are promising. I would think that Apple needs to release an OSX tablet next year in spring in order to counter the coming threat to laptops if it is going to continue to expand/maintain its market share in that space.
Qualcomm’s low power Snapdragon processor is available now for Android tablets…
iOS 3.2 was unique to the iPad, and it’s very likely that the iOS4 variant for the iPad will offer features not available on the iPhone OS. Printing and access to a file system may be available before another hardware update next spring. Something like Gutenprint may be necessary since device drivers for all the printers out there are not likely.
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