Tuesday, November 08, 2011

Tablet Wars

Predictions that the IPad was unstoppable were premature. It has not been available for a year and a half. Granted the first responses were insufficient but the same thing happened with the first generation of touch phones after the original IPhone was released. Now, four years later, Android is the dominant operating system.

The same thing will happen in the tablet market. No one can build the perfect product. Every design is a trade-off. In order to have a large screen, the IPad had to be bigger, heavier, and more expensive.

Amazon and Barnes & Noble see an opening. Both companies have introduced 7" tablets that are significantly lighter and cheaper than an IPad.

The Amazon Kindle Fire is a low-end tablet that tries to lock the owner into the Amazon ecosystem the way that the IPad locks into Apple. It uses cloud computing to make up for some of its shortcomings. It has little storage and is not expandable. It also has a last-generation CPU. Amazon gets around these drawbacks by allowing cloud-based storage and by off-loading some browser tasks to Amazon servers. The main drawback is that the user is tethered to WiFi. That doesn't make much difference for web browsing but it cuts you off from some of your content when traveling. The $199 price is enough to make people overlook a lot of deficiencies.

B&N has offered the Color Nook for some time. It is a color ebook reader with some tablet capabilities. The price on this has been reduced to $199 and a new software update is coming which may put it on par with the Kindle Fire. B&N also introduced a new tablet, the Nook Tablet. This is an upgrade from the Color Nook and the Kindle Fire. For and extra $50 ($250 total) you get more storage, a faster CPU, a more visible display, and a slot for an SD card. B&N has less of an infrastructure so buyers are not as locked-in. This is another trade-off since Amazon's app store is larger than B&N's and B&N's music and video streaming services are through 3rd parties.

Many analysts dismissed the Nook Tablet because it didn't make the magic $199 price point. Others point out that, at $250, the Nook Color is still half the price of the IPad. They also dismiss the Nook Color which is at the $199 price point.

Apple dismisses Amazon's and B&N's offerings as examples of Android fragmentation. This is short-sighted. While there are drawbacks to Android code forks, it also allows manufacturers to tailor devices to their market. Amazon's and B&N's strengths are book-sellers first and foremost. Both have established lines of ereaders. These new tablets build on their established markets and undercut the IPad on price and portability. They cannot be used for everything that an IPad is used for but that misses the point. The IPad cannot do many things that a full PC does but it found a huge market, anyway.

Some analysts are trying to predict a winner between Amazon and B&N. This also misses the point. The question is not which product will win, it is if the market is big enough to support both products as well as the IPad. I expect to see all three succeed.

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