Why Android will win the tablet wars

http://www.h-online.com/open/features/Why-Android-will-win-the-tablet-wars-1176652.html?view=print

by sasvari • 15 years ago

27 34 15 years ago

archgrove3• 15 years ago

Define "win", please. I'm quite sure Android will eventually dominate in terms of market share, much like Windows does to OS X. However, if you look in terms of customer satisfaction and profits generated in the markets they compete in, Apple tend to be so far in front, they subsume the rest of the competition put together.

I'd wager that every company out there would love to "lose" the way Apple is/will.

Kylekramer• 15 years ago

Does anyone think Apple is actually satisfied with OS X's market share? Apple has competing interests in that it wants high margins and market share, but they did it before with the iPod. And I'd argue the iPad is an even better contender for iPod like dominance than the iPhone/OS X. Apple values control highly, but pretending it doesn't infuriate them that Windows is the leader (and Android is posed to be the phone leader) is a bit much.

ams6110• 15 years ago

Their Desktop/Laptop market share is higher now than it's been in decades. While I'm sure they would like it to be higher, I would doubt they're disappointed. They are selling plenty at margins that Dell and HP could only dream about.

archgrove3• 15 years ago

Oh, I'm sure they'd love to hold 100% of every market. The point of my comment is they don't need to do this to be considered a big "winner". Unlike e.g. Dell which only makes money on huge amounts of shipments due to low margins, Apple can ship comparatively few units and make large profits.

They must know that their dominance in the smartphone area was always a temporary thing - they were never going to persuade the entire world to buy one of two iPhone models available at any time. Their lack of any attempt to create an entire iPhone ecosystem to cater for the spread of users (i.e. the "free, just about adequate phone" that dominates most peoples choice) shows this. This is entirely separate to their iPod strategy, which scales from those with only a handful of dollars (the shuffle), all the way up to the "Smartphone without a radio" iPod Touch. In the phone space, they seem to have chosen the same battle as their computing space - the high end, high margin, "people willing to pay for the experience" market share which contains vast profits. If no serious competitor had appeared (as, bizarrely, happened in the MP3 space), then they might have eventually released an iPhone Nano etc. But given that other players are now in that space, they've just surrendered it, rather than fight a battle they can't win. Were they to open up iOS or release a spate of iPhones covering enough of the usage/price spectrum to compete, they'd lose a large amount of the Apple "experience", damage their premium brand, and risk losing the entire game.

Their battle is to maintain enough market share to ensure development for iOS, and to ensure that Android devices end up being (mostly) the choice for mass market, race to the bottom, cheap at any cost devices. If Android starts to seriously infringe on their premium space, then they should be worried and can be considered to be losing. Until then, as far as I can see, they're winning the battle they're fighting.

tjogin2• 15 years ago

Apple knows that most people buy computers in the budget segment. Apple doesn't sell computers in that segment.

They know what they'd have to do to gain significant marketshare: enter the budget segment, the "race to the bottom", and they won't even try. OS market share simply isn't as important to them as shipping quality products and making money is.

Pewpewarrows3• 15 years ago

On that note, customer satisfaction is inherently easier to keep high when you completely control the closed ecosystem. When you only have a select few devices your software can run on, it's much easier to test any changes or a new version you have against them. When you have to deal with thousand, possibly millions of hardware configurations that you need to support, that becomes nearly impossible. Things are destined to fall through the cracks, which reduces average customer satisfaction.

That said, I still think OSX is a better overall OS. But you have to take all the variables into consideration when you discuss things like customer happiness.

andyzaharia3• 15 years ago

Yep, thats a good one

loewenskind• 15 years ago

You've just described exactly why I switched to OSX from windows. Less useless choices to make and better likelihood that I wont have to deal with stupid hardware issues.

archgrove3• 15 years ago

Indeed. This is exactly why they're unlikely go as "open" as, e.g. Windows with OS X, or Android with iOS. Once they start damaging the "premium" experience they're selling, they lose a key differentiator and will, eventually, slide off into nothing.

tjogin2• 15 years ago

Yeah, I expect it to be very weak consolation to (for instance) Dell that, although Apple is kicking their asses, at least Windows is installed on more computers than OS X is. If Dell is "winning" they'd rather be "losing".

andyzaharia3• 15 years ago

Haha, another Android win :D Where is the truth that android won over apple's iphone, hey, apple has 4 iPhones so far, but how many phones are running Android, another comparison between apples and eggs.

There might be more Android phones out there, definitely are more, but whats their customer satisfaction ?

Pewpewarrows3• 15 years ago

In the reports I've seen the satisfaction levels are nearly identical, within the margin of error of the survey done.

andyzaharia3• 15 years ago

Even if thats true, it depends what they compared the OS vs OS, or the iPhone hardware to Andriod OS, or the other way around, these reports are by far complete, there are a dozen of android device, and they all do work great or less than than, so ... its hard to compare them .

matwood• 15 years ago

Given how most cell phone contracts are structured I wonder how many users have really used both. I'm not talking about phone geeks and the typical person on HN, but the average user. If a person hasn't used both extensively then whatever one they are using now probably satisfies them (most people are only on their first maybe second 'smart phone').

I have an iPhone and while it has some quirks, overall it works great for me. I've only played with some different droid phones in stores and my impression was that the touch didn't work as well as on the iPhone. Is my impression reality or am I just used to how the iPhone responds so another type of phone doesn't seem right?

BvS• 15 years ago

I bought a Motorola Droid (Milestone) last year because it was only a little more than half the price of an Iphone (unsubsidized in europe spring of 2010 around 400€ vs. around 700€).

Now the price of the Xoom is rumored to be around 800€...

If there is no decent Android tablet that will be noteworthy cheaper than the Ipad it will be pretty hard to catch up any time soon.

protomyth• 15 years ago

This is my big problem with this whole class of analysis. It keeps coming back to the Mac example and not the more relevant iPod. The conference call gave a hint, Apple is spending $3B to prepay for supply of some new components. Which Android manufacturer can do that? Samsung probably has the best chance since they source a lot of components themselves (heck, they build some for Apple).

The current Android tablets are not significantly cheaper than the iPad (especially considering the smaller screens). Apple with the iPod started at a high rate and kept moving the price point down to make life very difficult for competitors. If Apple keeps the current iPad and makes it the new entry model at a lower price point (much like the iPhone), then the problems for other manufactures will be increased.

At this point, I really think HP will surprise a lot of people, but I don't seen the Android tablets (or Blackberry with its bizarre connectivity requirements) being major competitors until they resolve their pricing issues.

cletus2• 15 years ago

Not a great article belabouring a pretty tired argument.

> That's just in the US, of course, but it's likely that the rest of the world will f

Except that the iPhone is on only one of four major US carriers (it hasn't shipped a single unit on Verizon yet).

Also the economics are different elsewhere. In the US there isn't actually much handset subsidizatino. Most handsets, iPhone included, are $199. Some are $99. But given the typical bill likely be $70/month+ for 2 years, $100 difference on ~$2000 total is likely not a huge difference. If anything, I would argue that US consumers are largely basing their decision on carrier first, then handset.

What would be an interesting and insightful stat is to see what AT&T's handset breakdown is because you can expect that Verizon will follow a similar trend.

> ... it also has a major downside. It means that users have only a limited choice of handsets

For most consumers, lack of often confusing and sometimes meaningless decisions (eg what is the practical difference, for the user, between an Evo and a DroidX?) is a plus not a minus.

Price matters in developing countries, sure. But the iPhone is a premium product. No news there.

As for pricing outside the US, let me give an example from Australia. I bought an iPHone 4 ~2 weeks after launch on Telstra, the nation's largest (and best) carrier.

For the 32GB model I paid $299 upfront and then $49/month for 2 years, totalling $1500 over 2 years. The retail price of the handset is $1000 so for $500 I get 2 years of service.

What does that $49/month buy? 2GB of data and $400 of "credit". Basically unlimited SMS, that credit can be used for data overages (at a pretty exorbitant rate mind you) and of course calls (at about 60c/minute).

Also, in Australia, like pretty much all of the developed world outside North America, you only pay for MAKING phone calls and SENDING text messages. You pay nothing for receiving either.

But the economics mean that my phone service, after you factor out the handset, only costs me ~$20/month. The HTC Desire, a similar handset, is priced at about exactly the same.

> The rise of Android in the smartphone sector nullifies Cook's arguments against Android in the tablet world because precisely the same dynamics are at play

Uh... no they don't and no they aren't. For one, many if not most iPad users use the iPad on wifi only, typically only at home. I would also argue that many who own 3G models (like myself) don't even have a 3G service attached to the device. What's the point? The nearest Starbuck's with it's free wifi is never far away.

The entry point for the iPad is $500. The competition seems to start at $700 (Xoom) with everything thrown in. Thing is, not everyone wants that extra stuff.

And let's not forget--and this is important--that Apple's competitors are always chasing last year's model. Comparing these new releases to the iPad are pretty meaningless since the iPad is about to be replaced and those products (excluding the Samsung Galaxy Tab) aren't even shipping yet.

Lastly, Samsung claims to have sold >2 million Tabs. I'm still scratching my head trying to figure out where and to whom because I've yet to see one in the wild. Korea? I'd love to know how many they've sold by country and also a qualification saying they mean sold and not just shipped.

ergo982• 15 years ago

What would be an interesting and insightful stat is to see what AT&T's handset breakdown is because you can expect that Verizon will follow a similar trend.

Why would you expect that?

AT&T not only was late to the Android party, they sacrificed the few meager offerings they had because the iPhone was their smartphone of choice.

If you were drawn to an Android device, it was unlikely it was at AT&T because even once they started carrying them, they carried the dregs like the Backflip. Instead you were choosing from every other carrier. If you wanted an iPhone, on the other hand, you were going to AT&T (hence why AT&T paid big dollars for the exclusivity, and it showed in their subscribership numbers).

Verizon's breakdown will be nothing like AT&T's.

Further, AT&T is suddenly in the Android game in a big, big way. I hear there's something like 20 top-flight 4G Android devices hitting AT&T in the next few months, including the leader of the pack Motorola Atrix. So from being the iPhone place, AT&T is almost switching to be an Android-dominated carrier.

I think this whole "iPhone was only on a single carrier, let's see how things change now!" thing is going to turn out quite unlike how many so desperately hope.

cletus2• 15 years ago

AT&T was not in the Android game because they had the iPhone. Verizon was in the Android game because they didn't have the iPhone. The carriers will go where the consumer goes. If Verizon's customers stop buying Android in favor of the iPhone it's of no consequence to Verizon's.

IMHO the reasons Android sells are:

1. It's not the iPhone. A minority of Apple haters rail against the notion of a walled garden;

2. US specifically: their chosen carrier didn't have it. One thing about the US I haven't seen elsewhere is that family plans are fairly common;

3. Android competes in markets the iPhone doesn't, specifically low end.

You'll note that I didn't mention cost as a factor, other than buying lower end phones (which is obviously a significant market). To reiterate this point: all the top end phones in the US have $199 up front and this isn't a significant factor over 2 years of service so, if this is a factor, it ranks far below carrier choice (IMHO).

Personally I think the Verizon iPhone will probably add a net 10M iPhone users in the first half at least.

Derbasti2• 15 years ago

You make some very valid claims about different pricing models. I live in Germany. My iPhone 4 cost me 200$ up front and 35$ per month for two years. Phone calls are something like 10 ct/minute and SMS are single-digit ct, too.

Hence, lifetime cost of an iPhone 4 in Germany is probably equivalent to some cheap-o feature phone in the US. Talking about any kind of similarities between US phone markets and foreign markets only shows that one has no idea about non-US markets.

phlux• 15 years ago

$49 per month?

WTF plan do you have? I have had an iphone since day one (gone through 9 handsets since they are such fragile POS) and I have paid $120/month the entire time I have had an iphone.

Derbasti2• 15 years ago

To many people, the choice between Android is dead simple: If they own apps from the Apple App Store, they will buy Apple products, if only to continue using their investments. If they own apps from the Android Market, they will stick with Android for the same reason.

While this sounds great, an even stronger effect is simply customers being accustomed to one operating system or another. Only the most neophile or disgruntled amongst us have the stomach to switch operating systems. As long as neither Android nor iOS have severe shortcomings, the most important fight is the fight for new users, not switchers.

So let's not talk about one market 'taking over' another market. That is simply not happening.

kenjackson• 15 years ago

Android tablets were up to 22% of the market last quarter... on what? Galaxy Tab? That's an absolutely incredible number with really no great product on the market.

Unless Apple has a trick up their sleeve for iPad2, Q2-Q4 of 2011 will likely split 75/25 for Android in the tablet space.

For all the grief I give Google, their dev model around Chrome and Android have been lessons to the industry. Why is no one paying attention?

enjo• 15 years ago

To be fair, Android is really just a better implementation of the Symbian model (which was/is also crazy successful).

gamble• 15 years ago

Android tablet sales are nowhere near what has been claimed. The 22% figure is derived from Galaxy Tab sales to retail. Even Samsung is admitting now that far fewer have been sold through to consumers:

http://www.electronista.com/articles/11/01/31/samsung.admits...

siglesias• 15 years ago

"Apple simply cannot compete in these markets: its business model is based on charging a premium price for a premium product."

Apple purchases in large volume which allows it to have lower component pricing than almost all other manufacturers. That's why you haven't seen an Android based iPod touch-like device. That's why you haven't seen anybody do a tablet comparable to iPad in terms of hardware at the $499 pice point.

Apple's iPod is an integrated platform--arguably with less hardware variety--and it has 76% market share. Why hasn't this platform ceded control to Android yet, or "open" options? It isn't for lack of variety or other choices. Putting aside superior user interface, nobody can do a cheaper iPod. Let's see it.

If we're talking about a market for unlocked mobile, sub-$500 devices, then Apple hasn't been beaten in the last decade.

ZeroGravitas3• 15 years ago

You haven't seen those devices because Apple's brand-name competitors are choosing to enter the high value markets first. Anything with a recurring data contract brings in far more money.

And Google itself would rather make the devices and the contracts cheaper, so that the users can spend more time online using Google products. They'd rather replace a kids iPod (inc. Touch) with an always net-enabled "phone" if possible.

But away from the headlines there's been generic, wifi-only Tegra2 tablets on the market for a couple of months now at half the iPad price. Not only does the Tegra2 beat iPad hardware, it's in line with the rumours for iPad 2 hardware. So the magical Apple hardware efficiency and price competitiveness doesn't really add up.

Note these generic tablets have plastic bodies, screens with poor viewing angles and non-tablet Android often without market access or official Tegra2-optimised Flash out of the box, so they're a tinkerer's delight rather than an iPad killer right now, but that's a separate issue from the power and cost of the hardware.

podperson• 15 years ago

I despise people who prognosticate with certainty. (I was going to say "love" but sarcasm is cheap. So I'll go with honesty.)

First of all, who cares? More Hyundais sell than Ferraris. Obviously Hyundai is better. Hyundai wins!

Second, let's see how Android does in the US after the Verizon launch -- if Android does as well relative to Apple on Verizon as it has done on AT&T well, that would be sad for Android, wouldn't it? (I'd _guess_ things will be less one-sided on both carriers -- but I wouldn't claim certainty.)

I'd love for Android to "win" in the sense of becoming as good or better than iOS and sustaining the lead, but if Apple gets eaten alive by competitors, all the "victors" will do is race to the bottom on price, quality, and user satisfaction.

saturdaysaint• 15 years ago

I think his argument can be fairly summarized as -

(1) The tablet platform war is like the smartphone platform war.

(2) In the smartphone platform war, Google has more marketshare than Apple because their operating system is on a greater variety of devices.

Both premises are invalid in that they naively omit the central role that carriers and subsidies play. In the phone world, Apple is playing a complex game where they squeeze as much money as possible from carriers. The iPhone isn't even available to millions of customers on dozens of large global carriers and is almost always (sometimes hidden by subsidies) much more expensive than a comparable Android device.

The tablet market may be much more like the mp3 market, where Apple was more sensitive to competitive pricing (they lowered pricing year after year), enabling them to maintain an overwhelming lead in market share which they leveraged to corner the market on many critical components.

ZeroGravitas3• 15 years ago

Has anyone noticed that almost all the Android tablets will hardware accelerate Flash? I admire Apple's stance on this issue, but think it might come back to bite them.

In particular they need to keep selling a big chunk of all tablets in order for people to see Flash as non-viable for tablet experiences. How low does their share have to get before people think "We'll do this tablet optimised site in Flash and work out a plan for iOS later"?

xcvd• 15 years ago

Yes. Have fun playing with the open source code to the Google Maps app. Or the Mail app. Or the source code to the Market. Or removing all the vendor spamware.

Really. This article overlooks things.

Also.... and this is a big one...... owning a smart phone does not mean you use it as a smart phone...... it is meaningless to "win" this battle just by numbers...... some people own a washing machine just to store bottles in it.

ZeroGravitas3• 15 years ago

Actually the Mail app is open source:

http://android.git.kernel.org/?p=platform/packages/apps/Emai...

Why Android will win the tablet wars

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