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Spillikins #109. Will Apple dominate the tablet market?

The main event of the last week was, of course, the announcement of iPad2 that reminded us who and why dominates the tablet market. I believe it is worth outlining the positions of the companies on this market to set this issue aside for good.

The Tablet Market – The Role of Apple and the Other Companies

I think no one questions the fact that Apple has created the tablet market. Let us consider whether Google Android is a threat to Apple or why it is not.

Before iPad there have been other tablets but none has become popular. In 2010 iPad became one of the most desired consumer products. Within the year 14.7 millions of units were sold amounting to 75-80% of the entire tablet market (wholesales). Nonetheless, most of buyers did not understand why they needed this device or what it was capable of. Most peopled bought iPad to get an item of fashion that was talked about. They made up applications for it while already using it. The great number of applications that became available for this device in just a few months assisted this process.

A multitude of companies followed Apple. There are now a few dozens of tablets by different companies on the market now – most of them are based on Android. But there are also more exotic products like Windows based tablets. In the Q4 2010 the shipments of tablets reached 8.7 million units (data by Strategy Analytics). The iPad's share amounted to 7.3 million units, all Android tablets – 2.1 million, the other platforms – 300 thousand units. On the tablet market that is yet being born we observe a rather loose interpretation of numbers. Many companies like Samsung are trying to demonstrate high sales at any cost and declare not actual retail sales (as well as Apple) but wholesales. It distorts the general picture and understanding of the market because wholesale analysis does not really describe the situation in the retail. The availability of tablets in stores does not equal their sales or consumer interest.

There are several criteria to assess sales of tablets but everyone agrees that Apple iPad's share amounts to at least 80%. this is due to the growing quarterly sales and the fact that this tablet is still in short supply in most countries. The Android tablets sales are different and amount to 30-40% from all the shipments depending on the country. And as the number of models grows this figure remains or even declines. So by saying that Apple dominates this market we understand that the actual sales are much higher for Apple than the wholesale figures show.

Will Apple's domination cease in this market segment in the near future? I think not. Though the share of the company will decrease following the market's growth. But in cash equivalent Apple will be still cornering this market for at least a few next years. And the number of units sold is unlikely to drop below 60-65% at worst scenario for Apple.

I often hear the opinion that Android tablets mean the end of the Apple hegemony on this market. People believe that Google is capable of competing with Apple as an equal – and this is true in theory. But in practice the strategies of the companies are com

pletely different. For example, Google has never manufactured hardware – it only develops software. And even in this domain the company has a history of failures demonstrating that Google is not almighty as many believe. You may remember the project Google Wave – it was never popular and was eventually closed.

Moreover, the development of a device is based not only on the software but hardware too. A company that controls all the process from the blueprints, parts, assembly to the design and software has a number of perks before any other company that controls only a part of the process. At the same cost a full cycle company can create more interesting products, save money on this or that production stage if necessary. That is why the initial stance of Google is much weaker against Apple on the tablet market – Google creates only software. As well as Samsung that creates hardware but leaves software for Google. This is one of the secret advantages of Apple that will not diminish with the growth of the tablet market. So far there are no companies capable to single-handedly compete with Apple.

But even in terms of software Google Android 3.0 seriously falls behind iOS 4.2. I make a not here, after the release of the first iPad Google shifted the release of tablets for almost a year – it was clear that Android 1.6 devices would be ignominiously outclassed. There were a lot of devices scheduled to be released in December 2009 but none was actually out. For example, I still have a rarity called HTC Halo – a tablet dropped on Google's request.

Google understood their weakness against Apple's product and even went so far as to create a separate Android version – Honeycomb, a branch of Android development that fragments the OS even more and gives headaches to developers. Apparently, it was a forced measure and according to Google top-managers – a temporary measure. In 2012 there will be once again a single OS both for smartphones and for tablets. In the race against Apple Android needed a weapon, it was necessary to step into the growing market. And here Google plays second fiddle.

In January in Las Vegas every showroom was bountiful with Android tablets – there was a myriad of them. But the quantity did not stand for quality. By February Honeycomb became operable and one could try Motorola Xoom in hands, by the end of the month the month the tablet went on sale. There is only one problem for Android tablets – Apple has raised the bar not only for quality (metal body, large screen) but also for price. The Apple tablets are affordable and all the competitors fall behind this advantage. Of course, under close examination we find that similar products have a bit more functions like, for example, you can make calls from them, there are no limitations on certain applications and so on. But these are details that usually do not interest the buyers. The comparison takes place on the level of brands and their values in the eye of the consumer.

What happens in Barcelona on the world mobile congress? The number of Android tablets goes over any reasonable figures. Every major company presented own products, some openly and some, like Sony, behind closed doors. By the way, Sony's top model with an 8.9" screen is very remarkable and is truly a Sony Style. But I will keep silence until the product is announced.

Now about the disappointments of Android tablets: they are all based on the regular Honeycomb version, there are no differences between the devices – only a few superficial ones. But, most importantly, the price tags remained pretty high. The price for Motorola Xoom for the US starts from $600 for the Wi-Fi version and it still looked very cheap as compared to other manufacturers' products for Europe. For example, the LG tablet will cost about $1500, Samsung Tab 10.1 is expected to cost in May around $1100-1200. almost twice as expensive as the cheapest Apple tablet, and still more than the Apple's top models. Some said that the absense of a camera, another architecture and Android give advantages to these devices. But I think these advantages are imaginary and delusive.

The announcement of iPad2 was a bombshell. Many have expected this announcement in the previous Spillikins and I wrote that Motorola took an unprecedented measure and launched Xoom before it is ready, so you will have to sent the device to a service center for 6 days to upgrade it to the LTE version. Not the most pleasant user experience.

Why was the market shocked? Everyone expected that the update would not be revolutionary and it was not – it is an evolutionary development of the first iPad – there are now camera, a dual core processor, the body has got smaller, and there are now some interesting accessories and applications. All this for the same price as before. More on iPad2 you can read in our article, later this week we will also release a review of this device (on the week-end or on Monday).

iPad 2: Announcement

But most importantly the sales start was scheduled on March the 11th for the US and later in other countries. The gap between the announcement and the sales is less than 10 days – this is phenomenal. And all the Android February announcements with shipments in March were immediately depreciated not only by their price but also their availability.

In the US Motorola online store the top XOOM model has been discounted for $100 - $699 instead of $799. A Samsung top manager in an interview to a Korean newspaper said that after the announcement of iPad2 the price for the companies new tablets must be revised. And these are serious arguments to say that Apple once more played the lead and went beyond the competition. And the next iPad is also coming soon, and it will carry much more improvements and may be even a smaller version of itself.

I will leave aside the number of applications for iPad and other platforms – the lead of Apple is so obvious it requires no comments. As of today, iPad is a full-grown gaming platform, and there are a multitude of applications to any taste and for any task.

Android today cannot compete as an equal with Apple (it has less applications, the price is higher, basic functionality is poorer). And, unfortunately, even the number of manufacturers cannot change the situation. Google's ecosystem has some serious drawbacks (incomplete production cycle, the development lag) that would not be amended in the next few years. This is where we may ask: can anyone wedge into this market? Microsoft has plans for it – Windows 8 for tablets is going to be released by the end of this year. And I assure you the task for Microsoft is to eliminate any associations with the current OS – it must be a brand new solution.

This week I will release two reviews of tablets - Asus Iconia W500 on Windows 7 and Samsung Galaxy Tab 10.1 on Android 3.0. I think they are going to be interesting, meanwhile you can watch a video on these devices.

Nokia is Getting Rid of Qt: First Steps

After the announcement that Windows Phone development will be carried out exclusively with tools promoted by Microsoft it was clear that Qt would go soon. At least the future of Qt associated with Nokia looks unclear now. This tools unit was interesting to create apps for MeeGo and Symbian. Nokia officially confirmed that MeeGo was shut down and we will see only one product, while Symbian models will be on the market for 1.5-2 years before they disappear as well. It is logical to cut down on multi million investment in platforms, which are going to be discontinued. Despite the remarks from Nokia managers it was the question of time when Qt will be closed down.

The first step has been made as Nokia announced the sale of all commercial licenses and services to Digia from Finland (around 3500 licenses of Qt in different areas). The amount of money involved in the deal has not been disclosed, but Nokia promises to support the development of Qt.

This translates into the following. It is impossible to fire all employees involved in the development of Qt and tools immediately, so this process will take a long time. So far we sell what we can do away with. Unfortunately, we will have to keep the employees until the very end, but sooner or later they will have to go. There are no other options left.

This is the message concealed in the latest news about Qt. It does not make people happy as the union with Microsoft leads to exceedingly more questions with every coming week. We will return to the topic in future.

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Different Platforms in Similar Devices: the Strategy of Samsung

The fear of putting all eggs in one basket became a mantra for Samsung. It is the only manufacturer, which ships models in all OS and also offers their own platform Bada (they had experiments with LiMo and its add-ons before). Versatile solutions increase development costs, but at the same time developers get unique experience. In 2011 the company decided to make another step forward and implement a similar strategy in the training of engineers.

Now Samsung employs not only different OS, but hardware platforms too. The move is quite surprising, especially because Samsung manufactures processors and memory independently to use them in its models. Samsung Galaxy S II is a prime example of the trend. This flagship model will soon get a continuation in the shape of i9103. Instead of Orion we will see Tegra2 from Nvidia here. This approach seems crazy. Why come up with a copy of your own product with the rival hardware inside. It is not logical in general, but if you view Samsung as a global company the decision is not that crazy.

Tablets and phones from Apple feature Samsung components inside (memory and processors).In fact Samsung has a guaranteed market for its components. They should not necessarily be used in own solutions. The emergence of Nvidia Tegra2 gave a unique selling point to LG (the same applies to Motorola). What is next for Samsung? They unveil the flagship with its own processor boasting comparable parameters. At the same time apps created by Nvidia and its partners will not be available for the model in Android Market, which makes Motorola and LG extremely happy. This idyllic worldview is shattered when Samsung announces Nvidia Tegra2 to be used not only in tablets, but in phones too. Clones will cost less and appear on the market a little bit later.

A good move. New solutions are not only comparable, but have a more attractive price into the bargain. These models will have different screens, because Samsung suffers from the shortage of SuperAMOLED matrices and the situation will not change in the near future. Carbon copies will have SuperClear TFT displays, which beat rivals nonetheless. Samsung kills many birds with this stone. They offer the same model in different price ranges to add versatility to its product range.

Samsung Galaxy S illustrates the strategy well. i9003 will come equipped with SuperClear TFT screen and TI OMAP 3630 platform offering characteristics similar to those of Hummingbird from Samsung. Even the performance levels (from the box) are close. The advantage of i9003 is a much lower price (470€), while i9000 costs around 530€ (the amount of memory is different too – 4GB and 8GB respectively).

Is it bad for consumers? I think we will win, because now we get similar models in different price ranges. It is especially advantageous if we are serious about the selection of a model. Samsung is the only company, which can afford the related expenses. The Korean manufacturer decided to test how important the hardware for consumers is. This approach is unique and deserves attention as such.

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Android Market: Harmful Apps and How They are Uninstalled

Several dozens of apps gathering personal data of users were found in Android Market. We do not know what kind of sensitive information was in danger, but as soon as the news began to circulate Google reacted to it. As always all applications from companies caught in data gathering were taken out of the store. All installed software was uninstalled remotely, which caused quite a stir. Is it legal and why Google needs such capabilities?

The remote uninstallation of software is not a unique feature of Android. It is also found in all Apple products, Blackberry and Symbian models. Companies are wary of harmful applications and use this approach to fight against the danger. A store, which sells an app, can easily uninstall it. Everything is legal here.

All users of Android devices agree with Android Market Terms of Service during the first run of the Market. Clause 2.4 reads as follows: "Google may find that the Product distributed in Android Market may violate the Developer Agreement or other agreements, laws, decrees and rules. You agree that in this case Google reserves the right to uninstall such applications from your Device remotely at its own discretion"

Similar points are included in license agreements of other stores. Many users became angry, because according to them nobody could uninstall an app from their phone as it was their decision to install it in first place.

Unfortunately, this reaction is quite emotional and superficial. By agreeing with the Terms of Service you have to follow your obligations and cannot ignore what you have signed up for. That is why Google acted this way.

You can always install an application on your Android device independently even if it is dangerous and Google will not uninstall it. If you take a risk the company has nothing to do with it, but when you use the Google service the company can have the rights you have conferred onto it. Users' rights were not violated in the case as you have agreed with the Terms of Service. If you are not happy with the Terms you can always install software independently from other sources. If the number of such users increases dramatically Google may revise the terms. Developments are influenced by market tendencies here.

Somehow nobody mentioned another aspect of the event. Not a single Android antivirus app detected the harmful code, which underlines the useless nature of this software at the current level. Antivirus apps bring no harm, but use system resources. It is only a placebo to pacify the users as the real protection is ineffective.

Do you want to talk about this? Please, go to our Forum and let your opinion to be known to the author and everybody else.

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Spillikins #109. Will Apple dominate the tablet market?

Contents:

The Tablet Market – The Role of Apple and the Other Companies

Nokia is Getting Rid of Qt: First Steps

Different Platforms in Similar Devices: the Strategy of Samsung

Android Market: Harmful Apps and How They are Uninstalled

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