More than the iPad 2 I think the price cut on the iPad 1 Hurts the xoom. Because while the specs might be better on the Xoom you can't deny that the cheapest iPad is now half the price of the cheapest xoom.
I think we're now to the point where other hardware manufactures have to decide whether they want to cede this market to Apple. If they don't they're going to have to take some short-term losses to keep up. That means cutting the hardware price to the point where you're not making a profit but where your prices are at least competitive with Apple.
If they aren't willing to do that their only strategy is to wait and hope Apple slips up.
You might have said the same thing about the Altair or, ironically, the Apple II a few decades ago.
This is still early days in the market, nobody has a lock on it. How old was the mobile MP3 player industry when Apple introduced the iPod?
the iPad is a good device, for now. But it's not the end-all-be-all of tablets, it's just generation 1.5. In 5 years the iPad2 will look as limited and outdated as a flip-phone does today. Apple will need to continue innovating in order to maintain the advantage they have right now. They may very well do so, but it's silly to imagine that this horse race is won, it's only just started.
> This is still early days in the market, nobody has a lock on it. How old was the mobile MP3 player industry when Apple introduced the iPod?
And now that there is an iPod, how many credible challengers have we seen? None, really. So Apple is able to lock down a market. The question is whether or not the competition is catching up or falling farther behind. Android is a great platform in principle, but the high price of hardware may be a barrier to entry for mainstream buyers.
You make the mistake of thinking that the iPad is the iPod of tablet computers. While MP3 players require only a minimal featureset this is not the case for tablet computers, there is still a lot of room left and a lot of market left. Apple could lock down this market, but the market has not even fully developed yet so it's silly to imagine that they have done so yet.
The portable media player industry was a still a relatively small market when Apple introduced the iPod, and the iPod itself was in its third iteration or so before it really became a runaway hit.
It's not the early days of the tablet market at all. Tablets have been around for a very long time—Microsoft, Archos, et al—it's a much older market than the portable media player was when the iPod was introduced. There just hadn't been any hit tablet products until the iPad.
We're still in the early days of the iPad-style tablet market, true. But the key advantage for Android in the mobile phone market is/was carrier lock-in, and that's not a factor with the iPad. They have to compete on product and price. And Apple is extremely competitive in both those areas.
It's also worth mentioning that, in this market anyway, Apple has a major advantage in its excellent retail channel.
1. A crappier product (in terms of what iPad customers value); which targets non-iPad consumers; and that is better in other ways (that iPad customers don't value). e.g. kindle; or can run any apps; or any language is allowed; or is open; or is completely customizable; etc etc etc.
2. Over time, it gets better (read: slightly less crappy).
3. If it becomes good enough for iPad customers and also retains those other features which the iPad lacks, they will switch.
The big questions are: "Is there a limit to how good this crappy product can become?"; "Will it ever become good enough for the iPad customers?"; and "Is it somehow difficult/impossible for the iPad to suddenly acquire those other features?"
NB: it doesn't need to become better than, or even as good as the future iPad - just good enough. Microprocessors, screens, memory etc usually become faster, cheaper, use less energy. So, competitors will get better in these respects. In terms of user experience, they will also get better (even Windows improved). It might take a while.
People think of the iPad itself as a disruptor (which it is); but it can be disrupted in turn. Unfortunately, the competitors are presently confronting it head-on... and they will lose, because the iPad is an incredibly great product in every respect that matters to its customers.
"That means cutting the hardware price to the point where you're not making a profit but where your prices are at least competitive with Apple."
Microsoft has the funds to take a loss for a while (like the 360) and push Windows/Xbox Live Marketplace in place of the App Store. Since I doubt they'll release hardware on their own, I could see them subsidizing hardware partners when they try to enter the market.
The problem for Microsoft is that when they do that the third generation of iPads and the second generation of Android tablets will probably already be shipping or shipping soon. It at least doesn’t look like there will be a tablet with a Microsoft OS in the first half of 2011 and I’m highly doubtful that there will be one in the second half — early 2012 seems more realistic.
Microsoft has demonstrated that it can deliver a very competitive touch OS with Windows Phone 7 but it’s at this point still doubtful whether Windows phones will capture any meaningful slice of the smartphone market. A tablet OS from Microsoft would be similarly late to the game.
I think we're now to the point where other hardware manufactures have to decide whether they want to cede this market to Apple. If they don't they're going to have to take some short-term losses to keep up. That means cutting the hardware price to the point where you're not making a profit but where your prices are at least competitive with Apple.
If they aren't willing to do that their only strategy is to wait and hope Apple slips up.