Competitors to Apple's iPad risk issues with excess inventory
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.
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.
Comments
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.....
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.
Would you buy a Xoom for US$9.99?
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.
Hey, if they have an inventory clearout sale, I'd try a Xoom for $299.
You and me both...
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.
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.
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."
. . 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.
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.
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.
I was under the impression that cannibalizing for parts is a very costly undertaking.
Hard on the teeth, as well.
Oh, and there was no line!