Competitors to Apple's iPad risk issues with excess inventory

Posted:
in iPad edited January 2014
A large number of companies hope to take on Apple's iPad with their own tablets later this year, but the sheer number of options and limited consumer interest may lead to excess inventory.



Market watchers told Taiwanese industry publication DigiTimes that Apple's competitors face a "high risk" in the tablet PC market, as demand scale is only estimated to be around 20 million units. Those customers will be able to choose from over 10 major players that are expected to release their own take on the touchscreen tablet in the second half of 2011.



Both first-tier smartphone makers and second-tier companies are hoping to get in on the fledgling market, where Apple found success right off the bat with the launch of the first-generation iPad in 2010.



Samsung launched its Galaxy Tab late last year, and the Motorola Xoom debuted earlier this year, but both devices saw weaker-than-expected sales. Market watchers are said to be concerned that other players, including Acer and Asustek, will find themselves in the same situation.



In addition to competing with the market-leading iPad, major players like Samsung, Motorola, Acer and Asustek must also compete with smaller companies like Micro-Star International, ViewSonic and Gigabyte Technology in the enterprise market.



"Since there are already many tablet PC models with different specifications causing a mess in the tablet PC ecosystem, the market watchers (are) concerned that the market will soon enter fierce competition with many players to start phasing out of the segment in the fourth quarter," the report said.



On Tuesday, details of another major player's entrance in the tablet market emerged, with a new report claiming that retailer Amazon plans to launch a touchscreen tablet with an LCD touchscreen in the second half of 2011. Such a device would allow users to watch movies and listen to music, offering greater functionality than the e-ink-based Kindle reader.







Weak sales of the Xoom, the first tablet running the tablet-oriented version of Google's Android operating system, prompted device manufacturers to delay the release of their own Android 3.0-powered tablets last month. And Motorola is said to already be working on a successor to the Xoom, which is expected to launch in the second half of 2011.



Apple meanwhile, sold 15 million iPads in 2010, earning $9.5 billion in revenue. In the last quarter alone, Apple sold 4.7 million iPads, a number that was even lower than expected due to supply constraints following the launch of the iPad 2.
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Comments

  • Reply 1 of 60
    anantksundaramanantksundaram Posts: 18,903member
    Quote:
    Originally Posted by AppleInsider View Post


    A large number of companies hope to take on Apple's iPad with their own tablets later this year, but the sheer number of options and limited consumer interest may lead to excess inventory.



    Talk about an understatement.....
  • Reply 2 of 60
    island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by anantksundaram View Post


    Talk about an understatement.....



    I was thinking the same thing when I read this:



    Samsung launched its Galaxy Tab late last year, and the Motorola Xoom debuted earlier this year, but both devices saw weaker-than-expected sales.
  • Reply 3 of 60
    twelvetwelve Posts: 49member
    This tends to force prices down. If you have 100K extra units, you need to sell them eventually. The price keeps dropping until somebody buys them or a deal is made to give them away for a tax deduction. Only in the very worst cases will they become landfill.



    Would you buy a Xoom for US$9.99?
  • Reply 4 of 60
    gqbgqb Posts: 1,934member
    Quote:
    Originally Posted by anantksundaram View Post


    Talk about an understatement.....



    Euphemism, not understatement. "Excess inventory" makes it sound like they were over-efficient in production instead of what they were... crappy sales with a glut left on the shelves and in the channels.
  • Reply 5 of 60
    Hey, if they have an inventory clearout sale, I'd try a Xoom for $299.
  • Reply 6 of 60
    dave k.dave k. Posts: 1,306member
    Quote:
    Originally Posted by Urinal Mint View Post


    Hey, if they have an inventory clearout sale, I'd try a Xoom for $299.



    You and me both...
  • Reply 7 of 60
    anantksundaramanantksundaram Posts: 18,903member
    Quote:
    Originally Posted by Twelve View Post


    This tends to force prices down. If you have 100K extra units, you need to sell them eventually. The price keeps dropping until somebody buys them or a deal is made to give them away for a tax deduction. Only in the very worst cases will they become landfill.



    Would you buy a Xoom for US$9.99?



    $9.99? Most certainly yes. It could be useful for the kids to watch movies in the back seat of the car. In all fairness, I'd probably be willing to pay as much as I would for a good-quality portable DVD player, perhaps even a few bucks more.
  • Reply 8 of 60
    chabigchabig Posts: 622member
    For $9.99 they would make great coasters.
  • Reply 9 of 60
    cvaldes1831cvaldes1831 Posts: 1,832member
    Quote:
    Originally Posted by Twelve View Post


    This tends to force prices down. If you have 100K extra units, you need to sell them eventually. The price keeps dropping until somebody buys them or a deal is made to give them away for a tax deduction. Only in the very worst cases will they become landfill.



    Would you buy a Xoom for US$9.99?



    Nah, it wouldn't play out that way. At some point, the manufacturer would halt retail sales, then attempt to sell the remaining inventory to enterprise buyers with volume sales discounts.



    If a total enterprise sell through isn't achievable, then the leftover units would be cannibalized for parts.
  • Reply 10 of 60
    boogabooga Posts: 1,077member
    I'm actually starting to see an increasing number of non-iPad tablets on my morning commute. Still way less than half, but until a month ago I'd seen almost none. I've seen a couple of the small form factor ones which fit nicely in women's purses. And I've seen what I think is a Xoom (some sort of Android tablet). It's becoming a little more normal to buy something other than an iPad, especially with inventory-clearing sales. Apple has to be careful that they can compete if a dozen competitors try-and-fail-and-lowball their prices for clearances, one after another.
  • Reply 11 of 60
    swingerjswingerj Posts: 21member
    Anytime your 2nd biggest selling point has an asterisk you know the thing is going to suck. I mean, come on people! Releasing a half-baked tablet will not help you to win this category. You need a better product as a whole. Not just a bunch of crappy tech specs that mean nothing. I have seen OSs running on low power chips far out run bloated OSs running on chips 2x as fast. It is the WHOLE SYSTEM that is important. </rant>
  • Reply 12 of 60
    cvaldes1831cvaldes1831 Posts: 1,832member
    Quote:
    Originally Posted by Booga View Post


    I'm actually starting to see an increasing number of non-iPad tablets on my morning commute. Still way less than half, but until a month ago I'd seen almost none. I've seen a couple of the small form factor ones which fit nicely in women's purses. And I've seen what I think is a Xoom (some sort of Android tablet). It's becoming a little more normal to buy something other than an iPad, especially with inventory-clearing sales. Apple has to be careful that they can compete if a dozen competitors try-and-fail-and-lowball their prices for clearances, one after another.



    A company has to commit to that kind of behavior. You can't just go on releasing crapware hoping to eventually get it right some day. The brand will pick up a bad reputation; even today many people won't touch anything from Real Networks.



    Acer chased unit sales rather than profit margins by selling lots and lots of cheap, low-margin hardware. Recently they came to the conclusion that they were doing it wrong.



    The Acer CEO resigned and the founder basically said, "Sorry, we effed up our business model. We built a bunch of cheap crap and even though we sold a bunch of it, at the end of the day we're not very proud of what we've done. Sorry, shareholders."
  • Reply 13 of 60
    mhiklmhikl Posts: 471member
    Quote:
    Originally Posted by Booga View Post


    . . Apple has to be careful that they can compete if a dozen competitors try-and-fail-and-lowball their prices for clearances, one after another.



    I don't think so Booga. Clearance is just that. Once they are gone, they are gone. The company may try to introduce another pad of some sort but Apple doesn't have to compete with any poor quality orphaned product that loses money for a competitor. Such companies can take only so many hits before the bottom line and research pockets tank. The more the other pads fail, the better Apple and the iPad look.



    The only thing Apple has to compete with is itself. It will continue to update, improve and expand the iOS experience and refresh its pad product line annually. It seems to be a slam-dunk by Apple, this iPad of theirs. Apple's in the fortunate position of not being in a hurry to get to the race. It is there, running on the track well into the second lap and the rest keep stumbling at the starting gate.
  • Reply 14 of 60
    neo42neo42 Posts: 287member
    What about the $399 Asus Transformer, which sold out within minutes on release and is impossible to find in stock since? It is pretty competitive to the iPad 2 in specification. It is a tiny bit heavier and thicker, but otherwise has twice the ram and equivalent storage (along with all of the expansion ports everyone hates Apple for not including like MicroSD, HDMI, USB with host support, etc). There is even a keyboard dock for it that has an extra battery and turns it into a netbook-like-thing. Doesn't look like Asus is having an excess inventory issue in this case. Ok, ok, I will go ahead and address the first knee jerk response "they only shipped [some relatively small number] units". Even so, there's a pretty clear demand for them, no?
  • Reply 15 of 60
    I haven't bought an iPad nor any tablet, however if I was in the market for one (I still feel like I will buy one soon) then my first choice is an iPad 2. Because I believe these other manufacturers not only need to make their tablets better then the iPad 2 but cheaper as well for it to stand a chance. Matching apples 499 price in my humble opinion is not enough. Consumers understand that no tablet to date can replace a laptop completely, not the iPad or any other tablet. So in that regard specs don't sell tablets. And when these manufacturers try to compete with apple on the user experience level they're shooting themselves in the foot. Because even if their tablets user experience is better then apples, they have an uphill battle trying to undo the mindset of consumers that apples ecosystem is not the best. Again in my very inexperienced opinion that's almost impossible to do at this stage. People don't want tablets, they want ipads. And it's getting more and more noticable as time goes on.
  • Reply 16 of 60
    tundraboytundraboy Posts: 1,598member
    Quote:
    Originally Posted by cvaldes1831 View Post


    If a total enterprise sell through isn't achievable, then the leftover units would be cannibalized for parts.



    I was under the impression that cannibalizing for parts is a very costly undertaking.
  • Reply 17 of 60
    ronboronbo Posts: 669member
    Quote:
    Originally Posted by AppleInsider View Post


    Both first-tier smartphone makers and second-tier companies are hoping to get in on the fledgling market, where Apple found success right off the bat with the launch of the first-generation iPad in 2010.



    Fledgling my butt. The tablet market had been around over a decade by the time Apple entered with its iPad. Newtons, Palm Pilots, the Go platform, and Windows Tablet... remember those? Everybody keeps wanting to dismiss Apple's innovation by making out that there hadn't been competitors when it entered the market ? just because its entry made those previous products irrelevant. But we shouldn't be in the business of piling on, too.



    Both first-tier smartphone makers and second-tier companies are scrambling to copy Apple's solution so that they can find success in the ancient but previously stagnant market. That would be a better way to put it.
  • Reply 18 of 60
    ronboronbo Posts: 669member
    Quote:
    Originally Posted by tundraboy View Post


    I was under the impression that cannibalizing for parts is a very costly undertaking.



    Hard on the teeth, as well.
  • Reply 19 of 60
    wingswings Posts: 261member
    The salesperson at the cellular kiosk at CostCo here said they got 9 Xooms when they came out, and have sold 4 of them.



    Oh, and there was no line!
  • Reply 20 of 60
    tubbyteetubbytee Posts: 68member
    eventually means good deals on Woot! Looking forward to it.
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