Will Windows 8 and Android Tablets take down iPad and iPad Mini?

Well, on a long enough timeline, there is definitely some Tablet or some device that will take down iPad and iPad Mini. So, for the purposes of this post, let’s restrict our question to a 5 year timeline.

Do we see something happening in the next 5 years that will take down iPad and iPad Mini?

Here are my thoughts and some rough strategy.

I. Yes, iPad and iPad Mini are going to fall to being the #2 or #3 Tablet Device within 5 Years

This is an easy one.

If we’re talking about market share, then iPad and iPad Mini will definitely get overtaken. We’ve seen it with how iPhone lost market share due to its stubbornness to give users what they wanted (larger screens, availability on more networks, a lower priced model). We’ll see it again with iPad and iPad Mini.

It might take 2 to 3 years. iPad would still have the ‘high profit’ upper end of the Tablet Market. However, we will definitely see iPad Mini and iPad become the 2nd or 3rd bestselling Tablet Brand.

Note: No hedging of bets here. No ‘This will happen IF X and Y happen.’. The decline of the iPad just seems very, very inevitable. It wouldn’t be Apple if it didn’t cede market share to focus on profit.

II. Windows 8 Tablets have a strong strategy (Entertainment + Productivity) but it might not work

The fundamental problem with Windows 8 is that it’s sacrificing what users are used to (desktops and laptops), to create something that may or may not be the future (mobile and Tablets).

A Tablet that can be used for BOTH Productivity and Entertainment is a strong, strong thing. An exceptionally strong product that cannot be beaten if done right. However, morphing the Desktop OS to be more like a Tablet OS is the wrong direction.

You don’t meddle with the product that’s absolutely dominant in its market to try to give a leg up to a product that’s a distant #5 in its market.

Microsoft would have been better off saying -

  1. We have Desktops and Laptops and let’s make them better – for Desktop and Laptop users.
  2. Let’s keep fighting with our Mobile products.
  3. Let’s figure out the Next Wave – Wearable computing? Motion and Gesture Based Computing? Let’s focus on that and use that to beat smartphones and Tablets. To be fair, Kinect is a big step in this direction.

So the Windows 8 Tablet strategy is strong. Use Entertainment + Productivity Tablets to go up against Entertainment Tablets. Just not sure the methods/tools used to implement the strategy are the right ones. In fact, they are probably the completely wrong tools.

III. Android Tablets have a strong strategy too (Cheap + Free Software) and it probably will work

Google is doing a lot right with Android. That is what has helped it get huge market share in smartphones.

With Tablets it may very well repeat its success. We can already see how Google (and Amazon) have scared Apple into releasing iPad Mini. Over the next few years we might see one of two realities play out -

  1. Apple transforms into a company focused on market share and keeps cutting its profitability. Note: This is why there is such a big sell-off in Apple stock (in addition to capital gains issues). People see Apple make a fundamental shift in its profitability focus.
  2. Apple decides it’s better to have 70% of the Profits and just 10% of the Market Share.

In either case Android will beat iPad and iPad Mini in market share. In the second case because Apple chooses profits over market share. In the first case because Apple doesn’t really know how to win this war.

That’s Apple’s biggest problem. It can choose the known (high profits, low market share) or it can choose the unknown. The unknown promises the dream scenario of high profits and high market share. However, the unknown might also lead to other scenarios that would be more nightmare than dream.

IV. The Dark Horse is going to be a company like Vizio or Razr or Jawbone or GoPro

We need a hungry company.

Not a $50 billion cash in the bank company. Not a company where there are 20,000 people who all feel like special cogs in a special machine – but deep down they know they are still just a replaceable, meaningless cog.

The way the Internet and Technology is going it’s setting up a lot of ‘Platform takes all the Value’ ecosystems. It’s hard for the next big company to rise from software because the Platforms control too much.

Look at all the ‘big’ new software technology companies from the last 3-4 years and a few things are missing – profits, control of their destiny, their own channel to customers.

However, all of that changes when you look at the device side.

That’s where REAL companies are being formed. Companies that sell to users. Companies that control their destiny.

$50 billion cash in the bank means nothing if a (relatively) small company like Vizio or Jawbone comes out with a product that is better, easier to use, prettier, cooler.

My money is on a company like this coming out of left field and just decimating the cash cows Apple has. This isn’t painfully apparent yet but Apple’s cool is GONE. It might never come back.

A company like Vizio or GoPro or Razr is going to do to Apple what Apple did to RIMM and Nokia. Tyrannosaurus Rex should watch out for the harmless looking mammals.

V. iPad Mini is going to finish off iPad before anything else does

Perhaps the most delicious aspect of all of this is that Apple got so worried of someone hurting the iPad that it decided to beat them to it.

In Apple’s mind the iPad Mini would affect smaller Tablets and not the iPad. In reality we will see Apple refuse to break out iPad and iPad Mini sales numbers in 2013.

In theory it seems a good idea to cannibalize your product before someone else does. However, the reality is that iPad Mini makes a LOT less profit than iPad. So Apple would have to probably sell 2 to 2.5 iPad Minis for every lost iPad sale. That’s just not feasible. We don’t know whether the ‘Will buy Apple Tablets’ market is that big. In fact, the entire Tablet Market might not be that big. Furthermore, we don’t know if iPad Mini can completely decimate 7″ Tablets.

VI. iPad Mini represents a fundamental shift for Apple, and one that goes against its core strengths

Apple was already losing some of its ‘status signalling’ qualities. The iPad Mini takes it down to a new level of commonness.

It might sell better in China and India because more people who want to show how much disposable income they have will be able to afford it. However, what about the people above them. If you reach 20 million new users, the 5 million above them aren’t too happy to lose the status signalling abilities.

They will search for something else. If Apple loses them then it would have exchanged customers who buy $2,000 products for customers who buy $300 products.

If we think of it as bands of people with different amounts of disposable income – Apple is trying to capture the next lower band while keeping its current one. The current band, however, will soon realize that it suddenly shares ‘status’ with a lot of people it has never shared ‘status’ with. If you own a Porsche would you want to be clubbed with people driving Yugos?

VII. Where does that leave us?

Apple has now opened itself up to attacks in two areas -

  1. Its premium band of customers are vulnerable. If companies like Jawbone and Razr can bring out ‘exclusive’ products, that let these premium customers signal to others that they can afford stuff the unwashed masses carrying iPad Minis can’t, then Apple loses these premium customers. Why settle for something 100 million people own when you can have something only 5 million people can afford?
  2. It is appealing to a new band of customers who already have lots and lots of people vying for their attention. People who might be better served by Google and Amazon and Vizio.

So now Apple has to fight the war on two fronts.

VIII. Amazon

Why mention Amazon last?

Because Amazon is both the most dangerous enemy and the least dangerous enemy.

  1. It’s the most dangerous because it has the customer trust, relationships, buying patterns information, credit card numbers, and deep pockets to challenge Apple for a long, long time. It has Jeff Bezos while Apple no longer has Steve Jobs.
  2. It’s the least dangerous because Amazon wants ALL bands of customers. It’s not going to be happy until iPad customers and Google customers and Microsoft customers and ChinaTablet customers all become Amazon customers. There are a lot of markets to pick off first before it focuses fully on the iPad.

Amazon is not very dangerous in our 5-year discussion. If this were a discussion of the next 20 years then you could bet your house that Jeff Bezos would completely decimate Apple. It isn’t. So we might not see Amazon take over the Tablet market any time soon. However, the things Amazon is doing are worth noting. It is building Tablets that are selling channels right from the start. When we get into things like recurring revenue and revenue per user, Amazon is going to simply destroy other Tablet Makers. I can’t explain this fully – After having worked for two companies that made the shift to recurring revenues it is hard to fully explain just how huge of a shift it is and how far behind Amazon will leave everyone if it can pull off what it is trying to do.

Kindle vs iPad Mini

There had been rumors of a 7″ iPad Mini to take on the Kindle in April. It’s mid-July and Kindle vs iPad Mini rumors are heating up again.

Kindle vs iPad Mini – 7″ and 5.6″ iPad Minis by end 2010?

At that time we had heard -

… a smaller 5- to 7-inch version of the iPad that is expected to launch as soon as the first quarter of 2011 …

… priced below US$400 and will target the highly portable mobile device market and consumers that focus mainly on reading.

Now we are hearing (iPad Mini hints courtesy DigiTimes) -

… second-generation iPad, using 5.6-inch and 7-inch OLED panels, as soon as in the fourth quarter of 2010 …

The sources noted that Apple has recently placed new iPad orders to Taiwan-based component makers for the fourth quarter of 2010 and the first quarter of 2011 with 9.7-inch, 5.6-inch and 7-inch models all included.

The new 5.6- and 7-inch iPads will mainly target the e-book reader market, separating them from the 9.7-inch model, which mainly targets multimedia entertainment, the sources stated.

It’s basically the exact same rumors – expect this time there’s talk of contracts having already been signed and OLED displays being used on the iPad Mini 7″ and iPad Mini 5.6″.

Is this about Kindle vs iPad Mini or about gaming?

While both in April and now in July the rumors have claimed that the 5.6″ and 7″ iPad Minis will target readers it’s hard to believe Apple would be building OLED screen reading devices.

  1. OLEDs consume more power than even LCDs. How are they going to compete with eInk? 
  2. OLEDs are pretty expensive – DigiTimes says Samsung and LG Display are reducing prices and you still have to wonder what prices they can get OLEDs down to.
  3. The choice of OLEDs hints at a desire to bring the prettier Retina Display to iPads rather than to create a more readable display.
  4. OLEDs aren’t readable in sunlight.
  5. How will OLED powered do-everything devices for $400 compete with $189 Kindles and $109 refurbished Kindles?

Perhaps Apple hits $300 – However, the device would still not be ideal for reading. Whether it’s lower battery life due to use of OLEDs, not being readable in sunlight, or more eye-strain than eInk you get the same set of problems the iPad currently has.

The only dimension Apple would improve on is price. Perhaps they think Retina Display ads will be enough to convince people the iPad Mini is better for reading than Kindle eInk.

Sub $400 7″ iPad Mini vs $189 6″ Kindle 3 – What would readers choose?

People who want a device that does more than just read are already picking an iPhone or an iPad. So we really aren’t talking about that demographic. This is about people who want a device for reading books.

Let’s consider some of the most important qualities related to reading -

  1. Readable screen. The Kindle wins due to eInk. There will, however, be people who are seduced by the Retina display and color and touch capabilities of the iPad Mini.  
  2. Easy to get books. A tie as both devices are good.
  3. Good value for money. This is a difficult one as for readers the Kindle is better – However, it’s hard to claim the iPad Mini won’t offer as good or even better value for money if you start factoring in non-reading uses.
  4. Low Total Cost of Ownership. Kindle wins as wireless browsing and downloads are free. This is never really considered when people discuss the iPad. 
  5. Doesn’t tire the eyes. Kindle wins for people who aren’t LCD compatible. LCD compatible people find no difference.
  6. Lots of available books. Tie due to the Kindle for iPad app.
  7. Low book prices. Tie due to the Kindle for iPad app.   
  8. Readable in sunlight. Kindle wins.
  9. Readable in the dark. iPad wins if you can’t (or don’t want to) turn on a reading light. It might affect your sleep and cause insomnia – However, if you’re LCD compatible you’re probably immune to this.
  10. Apps that add to reading. Depends on what the Kindle App Store looks like and when it releases. iPad wins at the moment. 
  11. Light Weight. This was a major iPad disadvantage and this will now be a tie.
  12. Portable form factor. Another major iPad disadvantage that will be a tie.

We arrive at a rather interesting realization – The iPad was losing out to the Kindle in a few key areas including total cost of ownership, intial price, weight, portability, readability in sunlight, and readable screen.

Due to the lower price and smaller size the 5.6″ and 7″ iPads would counter some of those Kindle advantages – initial price (to an extent), weight, portability.

The gap between iPad Mini and Kindle for readers would be smaller. There will be a few groups of readers who’ll obviously stick with the Kindle – people who aren’t LCD compatible, people who want a device focused on reading and don’t want distractions, people who consider total cost of ownership. There will also be a few groups of readers who will leave – those who want one device that does everything, those who are LCD compatible, people who aspire to own an Apple product but couldn’t afford one until the $300 iPad.

Smaller, cheaper iPads would make Kindle vs iPad Mini a very close fight

Amazon still has a strong price, portability, and readability advantage over the iPad. However, when Apple introduces cheaper iPads Amazon will have to either create new advantages or match Apple advantages.

The possibilities include a better eInk screen, even lower prices, a really good Kindle App Store, more focus on reading, a multi-tasking Kindle that attacks Apple, Kindle subsidies, more focus on Kindle Apps, and creating a new killer feature Apple can’t match.

The iPad is not a huge threat because it’s still too untailored for reading and too expensive (particularly if you consider total cost of ownership). However, Apple are clearly indicating that they intend to go after readers – even if it is with a multi-purpose device. If Amazon doesn’t create a few big advantages for the Kindle by the end of 2010 Kindle vs iPad Mini might turn out very bad for the Kindle.

iPad Mini vs Kindle? 5″ to 7″ $350 iPad Mini in Q1, 2011

We might see a new battle, iPad Mini vs Kindle, early next year. Digitimes senior analyst Mingchi Kuo says Apple is working on a 5″ to 7″ iPad, the iPad Mini, that will launch as early as Q1, 2011 -

Apple is reportedly scheduling a smaller 5- to 7-inch version of the iPad that is expected to launch as soon as the first quarter of 2011, according to Digitimes Research senior analyst Mingchi Kuo.

Kuo, citing talks with upstream component sources, said Apple’s smaller-size iPad will be priced below US$400 and will target the highly portable mobile device market and consumers that focus mainly on reading and do not have a high demand for text input.

The next time Steve Jobs says a market doesn’t exist or that Apple is not interested you can pretty much assume it’s code for ‘We have a 5 year plan to try to take it over’.

iPad Mini vs Kindle – What impact would it have?

Well, it seems like it’s an attempt to -

  1. Fill the gap in screen size between the iPhone and the iPad. Of course, we don’t know if it’s a gap that needs to be filled.
  2. Make something that is more portable than the iPad and still has decent screen size.
  3. Take on the 6″ dedicated eReaders.
  4. Take on the 5″ and 6″ tablets like the Dell Streak (it’s 5″).

Most of all, though, it seems to be an attempt to go after reading. If Mr. Mingchi Kuo is right, and he probably is, then Apple is making the iPad Mini more focused on reading and that would certainly indicate it’s going after the eReader market.

Do check out Mingchi Kuo’s estimates on eReader sales for 2010 and beyond.

In terms of the impact of the iPad Mini, there would be positives -

  1. The competition would push eReader companies and hopefully we would finally get color eInk devices. 
  2. The pace of innovation required to compete would go up – it would kill some companies and others would become much more nimble and innovative. 
  3. eReader Prices would come down.
  4. There is a slight chance that Kindle etc. become more open. At the minimum you could read books across one more device.
  5. There is a slight chance ebook prices would come down as companies might decide to go back to competing on ebook prices.

There would also be negatives -

  1. Actual reading will probably go down if the winner is a device you can do a billion things on. 
  2. There will be a lot of false press on benefits of the iPad Mini pretending that its features are ideal for reading even when they’re not (LCD > eInk, multitasking > unitasking) and that might confuse users. 
  3. There would be a proliferation of different formats.

Do think that the positives outweight the negatives.

iPad Mini vs Kindle – Would a sub $400 iPad Mini hurt Kindle Sales?

For all the talk of the iPad killing Kindle sales we have a huge price difference i.e. the iPad starts at $499 and the Kindle is just $259 including a free 3G connection to the Kindle Store and the Internet (very basic browser) and Wikipedia.

With a sub $400 iPad – perhaps one at $350 or even $300 – Apple would certainly have a very competitive offering.

Areas the $259 Kindle would be better

These are just some of the obvious advantages Kindle would have in iPad Mini vs Kindle –  

  1. Price – Kindle would still be cheaper.
  2. Free Internet.
  3. eInk screen is better for reading (to be more accurate – for people who don’t get tired reading on LCD screens).
  4. Readable in sunlight.
  5. It would probably be lighter.
  6. Kindle App Store and hopefully some killer apps.
  7. Better range of books. Better Prices. This is actually negated since the iPad Mini would have Kindle for iPad.

By Q1, 2011 we should definitely see the Kindle 3 so we might see more features like a touchscreen, perhaps a color eInk screen, and perhaps an unbreakable screen.

iPad Mini vs Kindle – Areas the $350 iPad Mini might win

Some of the iPad Mini’s advantages –  

  1. iPad Mini would have a color screen.
  2. You could do more than just read – if you are so inclined.
  3. There would be some killer apps based on all the work being done for the current iPad.
  4. Apple would have had a chance to work on feedback and the iPad Mini would be better than the iPad. 
  5. Users would be using WiFi or getting a 3G plan so there would not be bandwidth restrictions on Apps.
  6. There would be a full-blown browser.
  7. iPhone Apps might look quite alright on a 5″ to 7″ screen and might be quite usable.
  8. Apple is probably going to figure out some devilishly smart way to sell the iPad Mini – though hopefully it isn’t anything like the overplayed ‘I’m a Mac’ series of ads.

Kindle and the iPad Mini might end up being the top 2 reading devices

Not necessarily in that order. 

The iPad is still too heavy and awkward and expensive to compete to be the top eReader. A $350 or $300 iPad Mini would be portable enough and light enough and cheap enough to take on the $259 eReaders. It’ll definitely be a compelling proposition – a device on which you can do everything.

That also highlights the downside – How much would people actually read on it?

However, no one factors that in during the purchase. When the purchase decision is being made users think about value for money and appeal and fit with what they intend to use the device for. The Kindle and dedicated eReaders might be the best fit for reading but they would lose badly on value for money (or perceived value for money) and on sex appeal (we can be sure Apple will figure out a way to paint the iPad Mini as the new future of computing).

Evolution at its best – The Kindle and dedicated eReaders have a year to get color and cut prices and amp up their sex appeal. If not, the iPad Mini vs Kindle battle will be a massacre.

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