Honeycomb Arrives - What Happens Next?

Today is the day – the first Honeycomb tablet officially hits the market today, arriving at Verizon stores and Best Buys across the United States. And on the 2^nd we will finally hear from Apple about their new iteration of the iPad. The year of the tablet is officially underway and that means there will soon be more tablets than we know what to do with crowding shelf space at your local electronics store. What role will Android play in the new market and how will the platform develop in 2011? Right now we are still guessing, but there are quite a few possibilities.

Full Android Functionality

For those that wanted a full scale PC experience on a tablet computer, the early Android releases like the Galaxy Tab were a little disappointing. Samsung’s first foray into the tablet market was impressive, but it was pared down quite a bit due to the use of Android 2.2, an OS designed for mobile phones.

With Honeycomb finally here, we will likely start to see new apps and possibly even new tablets that can do exciting things. It will still be a bit of time though before the apps roll in as the final Honeycomb SDK was just released on Tuesday. But, with new tablets coming from the likes of LG and Toshiba, plus Motorola throwing quite a bit of marketing weight into their first slate, Android is getting a strong push in 2011.

The Enterprise

An area we should keep a close eye is the enterprise. Companies are clamoring right now to adopt and integrate tablet PCs into their technology plans. But, thus far only the iPad has made an impact in the enterprise community, mostly because there were so few competitors in 2010. Even though Apple claims 80% of Fortune 500 companies are exploring enterprise use of the iPad, I imagine many will take a closer look at Honeycomb tablets as a potential alternative in 2011.

The iPad is not built for enterprise use, and while Apple has produced a handful of features and is expanding support for enterprise on the platform, the open nature of Android is friendlier for IT departments that must contend with support tickets and content control on a mobile scale. Third party companies are already arriving with solutions for Android like push app installation, remote support and rebooting, remote content control, and lost or stolen device detection.

And while BlackBerry Playbook will surely be a factor in the enterprise discussion this year, until it is released, there is no way to know if it will be the device to fill the gaping hole in enterprise mobility or if Honeycomb can make headway in that market.

What Happens Next?

Everyone wants to know what happens next – will Apple slide in market share to Android as it did in the smart phone market? Or will Apple’s commanding lead be bolstered by the iPad 2, likely arriving sometime between April and June? It is impossible to know for sure, but one thing is for certain – the arrival of Honeycomb is going to have a big impact on the tablet market and we will all be watching very closely.

What Should a Tablet Really Cost?

I remember early 2010 before the iPad turned into something more than a longstanding rumor. A lot of people were interested to see what Apple could do to jumpstart a tablet PC industry that to date had only drawn interest from a handful of tech enthusiasts. Sleek design, intuitive features and mass market appeal went a long way, but what blew away a lot of people was the $499 price point.

Of course, there are more expensive iPads. The top end model with 64GB of storage and a 3G antenna costs $829, on par with the projected sale price of the new Motorola Xoom, but if you ask someone how much an iPad costs, most would say “$500”.

What about the New Guys?

With that in mind, can new devices compete with Apple when their starting price points are so much higher? A lot of the excitement surrounding the Xoom was tempered when we found out it would ship at $799 with a WiFi only model available for $600. The Galaxy Tab only gets under that magic $500 price point with a contract through a mobile carrier.

And it’s not as if Apple takes a hit on profits. I believe Apple likely makes the same amount of profit on their devices, regardless of a $500 price point, as Motorola, Samsung, RIM, HP and LG are likely to make with their new tablets. The difference is in the economics of scale. Apple produces significantly more devices when they launch a new product – they have a worldwide brand they can mobilize to sell those products. And now that Apple has taken such a commanding lead in the early tablet market, they can afford to keep their price points low going forward.

The cost of components are such that, unless a manufacturer plans well in advance, shoring up stockpiles of key components (especially those screen materials), they cannot afford to compete on certain levels. Apple’s moves in January to invest $3.9 billion in long term contracts for certain components show what a company with so much cash and an existing market so large can afford to do in shoring up its competitive advantage.

Remaining Profitable

The cost of components is always shifting and so too will profit margins for these companies. I’m hopeful that pricing will not harm companies that aim for innovation in the tablet market. Companies like Motorola and Samsung need to make a profit to stay in business. They cannot afford to cut their margins too thin just to compete with lower priced devices.

And as consumers, we need to remain supportive of higher priced devices with advanced technologies, especially if we ever want their prices to drop. Because unless they develop a stronger following, these other companies will never have the leverage needed to make the same investments as Apple.

How much should a tablet cost? I feel that functionality dictates a lot of the cost. An entertainment focused device like the iPad or Galaxy Tab should cost what a reasonable consumer can afford to pay - $500 seems to be the magic number. But, larger, more powerful tablets can and should be able to sell for slightly higher price points. What that number ends up being remains to be seen, but as long as consumer interest is there, hopefully it will remain low enough to be affordable. And for those companies that can afford it, WiFi only models and smaller screen sizes will be effective ways to provide a reduced cost lineup for entry level tablet users.z 

Honeycomb Gets Close and New Devices Start Teasing

There is a lot of news to talk about this week, though on many sites you must sort through page after page of notes on the Verizon iPhone. For those not in the United States, the battle between iPhone users and AT&T isn’t that big of a deal, though it is interesting from the standpoint of market share since, as the largest consumer base for smartphones in the world, when something changes in the US it has resounding effects around the world.

That said, I’m intrigued by the slew of recent release dates, rumours and new content additions that have appeared on the radar of late. To start with, no one can quite figure out when the new wave of tablets will arrive this spring. An errant Best Buy Facebook Page accidentally said that the Xoom would be available on February 24 in the US. While this hasn’t been confirmed or denied, it seems more and more likely considering how long Motorola’s been sitting on this device.

Of course, since Honeycomb officially debuted three days ago, the floodgates are starting to slide further open as more people prepare to launch their first Android 3.0 devices. Our first official look at the OS was nice – the same slick interface we’ve come to know and love from Android but optimized for a bigger screen.

At the same time, news is swirling around the perceived announcement of an iPad 2. No one really knows when Apple will officially announce it, but Darrell Etherington at GigaOm doesn’t think it will be in the next week (at the 4.3 unveiling), if only because it’s too far from the likely launch date and Apple needs to be more careful with their announcements now that they have real competitors. To me, if the Xoom really does hit soon, I see Apple laying out their plans shortly afterwards to cut off the likely sales of Motorola’s new device, but it remains to be seen if that will happen. The price point for the Xoom will have an impact as well.

In other news, The Daily was officially announced this week and along with it a handful of competitors like New York Times’ News.me. I’m interested to see if this surge to provide an iPad newspaper will cross over to other tablets. It’s obvious that the news media and print industry are playing catch up right now, but at some point, they have to start to thinking ahead – whether for new devices or their admittedly weak subscription plans.

I suppose the message from this week is that we’re in a bit of a limbo phase. While there are some new devices hitting the market (the Dell Streak 7 arrived with a slightly disappointing screen and the first Asus Eee tablet with Windows is finally available), the big boys are still on hold – soon enough though we’ll get our hands on the Playbook, Xoom and iPad 2 and can start really arguing over which is best for 2011. 

Possible Component Issues in 2011?

This year is shaping up to be a banner year for tablet makers with estimates pegged between 30 and 60 million devices being shipped this year. That’s a lot of tablets – almost 15% of the total PC market right now and growing rapidly, but as we all know, these devices don’t necessarily use the same components as a lot of traditional devices. Along with bloggers and pundits weighing in, many market analysts have added their opinion to the fray – some even downgrading shipment expectations due to potential shortages.

We already saw shortages to some degree in 2010 with some areas not getting iPad access nearly as quickly or in as great a number as the demand might signal. Other gadgets contributed to this shortage as Asian supplies of the components in LED backlights were stretched to the limit. So, it’s no surprise to anyone involved with the market that there may be a squeeze in 2011 as dozens of new manufacturers enter the market and attempt to shore up components.

Apple probably won’t hurt. This is a company notorious for measuring and quickly responding to demand for their products. Even when shortages have hit the Cupertino based tech giant, they have responded quickly. What really remains to be seen is how the other companies can respond to the heightened demand. Many companies need to buy components and that means getting orders in early without taking on too much financial burden before a product goes to market.

What this probably means is that most of the companies out there with big names and sure demand like Samsung with their Galaxy Tab and Motorola with their forthcoming Xoom will be fine. However, smaller companies who want to get into the market without over investing will likely produce a limited amount of initial stock. That could mean that if a device breaks through and becomes extremely popular that it will be faced with inevitable supply problems.

It will be interesting to see what all of these means for an industry that is already in upheaval mode right now. Will we see new players who were smart about their component orders and big companies fail because they didn’t think ahead? Or will everyone simply have trouble finding their next device this year? 

And the Numbers Are In...

Just yesterday, IDC released numbers for Q3 sales of tablets around the globe. As expected, those numbers were very good and as expected, a good percentage of them were iPads. Specifically, the numbers show that Apple made up nearly 90% of all tablets sold in the quarter with 4.2 million sales (of 4.8 million total shipments).

Of course, that’s the not the number I’m most interested in. The final numbers for total shipments in 2010 is expected to be roughly 17 million (once Q4 numbers are finalized) and a lot of those will be iPads for sure (though the Galaxy Tab made a nice run at the end of last year). But, it’s the prognostication for 2011 and 2012 that really draws my attention. IDC has pegged the 2011 market to be somewhere in the vicinity of 44 million tablets with 2012 expected to sell more than 70 million.

Of course, no one company could maintain numbers like that alone. Just like with the smartphone market which saw a huge surge in popularity with the iPhone, but ultimately gained most after Android was released, the tablet market looks ready to explode on the precipice of a widespread Android 3.0 rush.

It’s not just Android and manufacturers like Motorola and Asus that are pushing the market, however. Yes, Apple will have a new iPad available soon – probably in April – and it will likely sport at least 80% of the upgrades that Apple’s customer base has been driving for (the usual almost everything upgrade). But, there are also newcomers slated to hit the market soon, including RIM with their Playbook, HP with WebOS, and the newest versions of MeeGo. Windows tablets are still a tossup with third party extension being absolutely necessary at this point to drive any kind of innovation in those devices, but even so, by the time 2012 rolls around, we might be looking at the first Windows 8 tablets.

It’s amazing to see the growth we’ve seen in only the last 9 months. A year ago we were prognosticating that the tablet market might take off any time and Apple’s new device seemed like a tossup – it could be popular…or it could be a flop. And yet, with the iPad wedging open a new market and millions of consumers turning their attention to this burgeoning market, we are getting ready to enter a completely new era in mobile technology and personal devices.

I’m interested to see where it leads us – not just in sales numbers (these companies could sell anything), but in the actual real world uses of those products. How will they impact our lives in the two or three years to come and how will they affect the way business gets done? Those are the questions I am most excited to have answered.

Tablet Overview from CES 2011

Another edition of CES is out of the way and it looks like we have a second straight “Year of the Tablet” on our hands. Where last year saw the breakout of the tablet market starting with some seemingly lacklustre announcements at CES and driven home by the mega success of the iPad and Galaxy Tab, this year we have quite a few new devices to look forward to, some with interesting features and others with a boat load of unknowns.

Right now, there is no way to know what will come of the surge of new technology. People like to make bold claims as early as possible so that they can say they saw it coming first. I won’t do that, because in a business like this you just never know what will happen. But, at the moment we are seeing dozens of potential “iPad Killers” shaping up with at least one or two of them looking really good.

Another major storyline that I touched on in my last post is the advent of 4G in many of these devices. With Verizon’s LTE network doing so well and Sprint’s 4G network online for the better part of 6 months now, tablets are now aiming for high speed mobile access, which is fantastic because it means a lot more functionality that should be available on a tablet, like video chat outside of Wireless.

The Big Android Question

Of course, most of the new devices on the cusp of being released are waiting for Google to drop their 3.0 Honeycomb Android OS, something that doesn’t have a firm release date (and likely won’t). Beyond merely waiting on Honeycomb to hit the market, we must hope that it works as advertised, without any major hiccups or shortcomings that will give Apple another major opening going into their second generation of iPads.

Assuming Honeycomb does land in good time, we’ll see a huge surge of new tablets hit the market in the next few months including the headliner of CES, the Motorola Xoom. And while Motorola made a great showing in Las Vegas, other companies will have their sights set on a larger cut of this market too including the Notion Ink Adam, the T Mobile G-Slate and the next generation of the Galaxy Tab, promising to have 4G connectivity.

I’ll be honest in saying I was a little disappointed with Microsoft’s showing. The big reveal we’d been hoping for to solve the Windows 7 issues on tablets didn’t come, but there was a lot of good news about how the Windows platform will develop into the next iteration and hopefully how hybrid devices like the Sliding PC 7 from Samsung or the Asus Eee Slate will operate. It’s not for everyone, but the hybrid option is intriguing to me.

Of course, it all comes down to a big guessing game. With three big time Asus tablet releases coming, the new Playbook, Apple’s second iPad, and many others hitting the market in the next six months, there will be a lot of discussion of the “next big thing” and where this market is going. What do you think? Which of these tablets, if any of them, stands a chance of rising to the top (or simply succeeding on a decent scale) in 2011?