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Thursday, February 24, 2011

Do Not Buy a Tablet Now

The iPad has remained the dominant tablet for almost a year now. There had been tablets in past years, but the iPad's user interface made it the cool product of 2010. Personally, I think the iPad holds little benefit over a netbook, and has the big negative of not having a keyboard. But I can certainly see why the large screen like a computer, combined with the highly nimble and responsive screen of a smart phone, has captured the imagination of the masses.

That said, I still think the iPad is doomed to fall to a niche portion of the tablet market over the next few years, much like the Mac computer did in an earlier generation. The number one reason for this is Apple's greed. Apple has near total market share right now because it is the only game in town. The company is to be commended for bringing a great program to market that had no equal. But that cannot last. As dozens of competitors seek to take on Apple in the Tablet arena, there are plenty of weak spots for them to attack.

Number one is the price: at around $500-800 depending on the model, the iPad can cost twice what a decent low end netbook costs. This is probably justified given the cool OS and new features. But competitors will soon match those features and sell a similar product for half the price. Apple could engage in a price war, but if past practice is any guide, it will not. Apple will come out with cool new features and offer an iPad 2 at a similar cost. Competitors will offer better deals and pick up more market share, much like Microsoft did in the PC market of the 1980's.

Apple is going to keep its prices for the device high, meaning that many people will not want to go in that direction. In addition, Apple is proving equally greedy in its App Store. It's 30% commission is far higher than the market will bear for very long. It if it wants to make its money on Apps, it should sell the iPad for half the price as a loss leader. If it did that now, it would gut the competition and make itself the market leader for years to come. But trying to make so much money on both the front end and back end is simply not sustainable over the long term. Eventually, other App stores will take a majority of the market, offer better terms to developers, and win the sales war.

Similarly, Apple refuses to share the wealth with other companies. Its refusal to support Flash, or to provide ports on the iPad to let third parties add their own creativity and imagination to the product will stifle its uses. Many users will find the iPad limiting. Apple tries to control how its device is used, rather than leaving that up to the user. That is a major mistake.

So who will emerge the winner? Probably not other players like Blackberry or HP with its WebOS. They are late arriving to the market, unwilling to make serious price concessions, and unable to develop the large App selection needed to build critical mass. They may be very nice products, but that is not enough. Anyone remember the Amiga PC of the 1980's? It was an amazing computer for its time, with many very cool features far ahead of anything else available at the time. But its high price and the inability to build sufficient market share to encourage software developers to build a large stable of programs sealed its fate. Instead, the far less evolved but cheaper and more widely available MS-DOS took over the PC world.

So who will be in the position to be the next Microsoft? Certainly not Microsoft, which has not developed a truly ground breaking program since it introduced MS-Office a couple of decades ago. To me, the winnner appears to be Google. The Android OS, with the Honeycomb version being developed for tablets, looks to be the favorite. Just like MS-DOS in the PC world of the 1980's, Android is a widely available and cheap OS for developers of phones and tablets. It is a high quality OS with enough flexibility to let third parties develop and create new and innovative ways to use it. It is available to a wide number of hardware developers, meaning it will much more easily push its way into a large market share, thus encouraging more App developers, which only continues the cycle up to market domination. The fact that App developers are not shaken down for as much money as possible will also earn Android good will and devoted supporters in the developer community.

This leads me to the title of this piece. Do not by any tablet now. If you wanted to be an early adopter of the iPad, you should have bought six months ago. At this point, you should wait for the iPad 2 to be released in April. Even if the iPad original is all you need, the prices on that will drop considerably as soon as the iPad 2 hits the market.

If you are considering any other tablet, there is not much out there. Google's Honeycomb, Blackberry's Playbook and HP's WebOS are all still months away from release. When they are first released, you will likely see more bugs in first releases than we saw with the iPad. Apple is one of the best in beta testing and getting rid of glitches before going to market, despite its other faults. I would say Christmas 2011 is probably the earliest to consider such a purchase.

If you are concerned about getting value, you will probably have to wait until well into 2012 or even 2013 before the "bleeding edge" pricing goes away and competition forces tablets down into the sub $300 or even $200 level.

If you want something right now that is cheap, reliable and that is small and easy to carry around, buy a netbook. You can get a pretty good one for around $250. It will have a screen as big as the iPad, an OS as good as any PC, and it will even have a keyboard to make writing much easier.

Ten years from now, we will look at an $800 tablet the way we look at the $5000 PCs or $1000 CD players that were sold in the 1980's. A device made in 2021 will be much cheaper (probably under $150 in today's dollars) and will do much more. Sure, most of us won't wait until then since life is short and we want to enjoy the latest technologies now. But the next two years will see the largest decreases in price and the highest growth in improvements. Patience is well worth it.

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