It took the announcement from HP that it would be stopping the manufacture of the TouchPad tablet device for sales of the company’s would-be rival to the iPad to finally take off in a meaningful way.
Late last month, hundreds of thousands of the devices were sold within days following the news that the product was being discontinued. “All this clamouring for the TouchPad, kind of bittersweet,” HP’s social media manager Bryna Corcoran wrote on Twitter, as the last versions of the device began to fly off the shelves.
However, this dramatic spike in sales at the end of the product’s life was due more to the considerable discounts being offered in retail outlets, rather than because the TouchPad suddenly became more desirable overnight.
Tablet Segment Dominated By Apple
Right now, the tablet market is very much dominated by Apple, with the iPad outselling rival tablets running the Android operating system, such as those produced by Motorola and Samsung, by over eight to one.
One important reason why users prefer the iPad is that there are fewer applications available for Android tablets. The problem is that this leads to a vicious circle: app developers do not invest in the Android platform because there are fewer users, so users buy an iPad because there are more apps, and as a result the user base becomes even smaller over time.
Competing On Price
Clearly, there are lessons to be learned from the demise of the TouchPad. The Daily Telegraph reports that, according to analysts, the device would have cost at least £180 (approximately $288) to build, and yet it was being sold off during its final days for as little as £89. This is a considerable reduction on its original selling price of £399, which is on par with that of an iPad and most other tablets.
While selling at a loss is obviously not a viable long-term strategy, it does show that people can be tempted to buy tablets produced by manufacturers other than Apple when the price is right. The TouchPad may have looked fairly basic compared to the iPad, but it was good enough for web browsing, email, messaging and calendar activities. For many users, that is more than sufficient.
One company that will have been following the final days of the TouchPad with interest is Amazon. The online retailer already dominates the e-Book reader market with its Kindle device, and is now on the verge of launching a tablet of its own. If Amazon can produce a simpler device that does the basics well, and – crucially – if it can do so at a more competitive price point, the iPad could finally have a serious competitor on its hands.
Key Statistics – Global Tablet Market (source: DigiTimes Research)
- Manufacturers will deliver over 65 million tablets to key brand vendors in 2011.
- Tablet shipments are expected to rise through to the end of 2011, with analysts predicting a 150% increase from 2010.
- The tablet market leader is Apple, holding a 61% share with 40 million iPads shipped.
- To end off 2011, shipments for all other tablet devices combined should reach close to 16 million units, up 65% compared to the first half of the year and accounting for 39% of total shipments.
- Android is expected to secure a 30% tablet market penetration rate before 2012.