This may be overly pessimistic. Apple still has huge “network” effect advantage over Android. After all, what type of connector is in your car or hotel room clock radio? Android? Does Android even have a standard adaptor? No it has an iPhone connector.
As one who is in the digital publishing industry, I constantly think about the dynamics and future market share of the iPad versus other tablet platforms in particular Android and at some point in the future Windows 8. So what were the factors that lead to Android’s success in the smartphone market and will that success lead to the same share in Tablets.
When Apple launched the iPhone, they picked an exclusive carrier in each of the major markets. In the US AT&T was the exclusive partner. This led the other smartphone vendors and wireless carriers to scramble to find a competitive solution. Google who was concerned that iOS, RIM and other platrofrm could be a block for Google services, smartly developed their Android platform and provided it under an “open source” model. The initial version of Android was hardly competitive to iOS but it was a good start. Google also smartly created Android Market as market for app developers to deploy their applications. A little now fact, is that Google shares most of the revenue received in Android market with the carrier who has deployed the Android device. Thus helping the carriers to have additional incentive to get behind the Android platform. This set of market forces created a virtual alliance between the smartphone vendors and the non Apple exclusive carriers. As we all know, there are significant switching costs with changing wireless carriers. If I walk into a carrier’s store and see a device which is close to the functions of the iPhone, has the reliable network and billing I’m accustomed to, I may just stick with it. Yes I want an iPhone, but these other factors are enough to get me to stick with my current carrier and onto the Android ecosystem.
Will this dynamic persist with Tablets? My argument is no. Tablets are sold much more through retail channels with WiFi only or even if it has 3G or 4G functions, these services are often not activated. Most people who purchase a Tablet do not want another monthly data bill. You are almost always near a WiFi zone, and if not you can usually use the existing smartphone you have as a mobile hot spot. Adding this all up, the carrier channel and subsidies do not appear to be playing a significant role in promoting and selling the tablets. Therefore the tablet will need to compete on the merits of its ease of use, price ecosystem brand etc. As of now, these factors have favored Apple. I believe over time, this will equalize, but it is going to be a harder path than the predictions of 50% market share the analysis were predicting when Android tablets first entered the market. I don’t think they correctly factored the distribution prowess of the carriers in their projections.
I’ve written prior about Amazon’s approach to the tablet market and I think this is a potentially successful strategy to outflank Apple http://digital.limberis.com/2011/10/amazon-kindle-fire.html but this should be thought if differently than a generic Android Tablet.