TouchPad & iPad: the secret tablet backstories

Posted by Rob Enderle

With the TouchPad selling out and folks focused this week on the likely arrival of the iPhone on Sprint, I figured it would be fun to write about some of the tablet backstories that aren’t being talked about.   

The TouchPad and Apple’s Secret Study

The TouchPad hadn’t been selling at all until HP dropped the price to $100 at which point they almost instantly sold out. And wouldn't you know it? An internal Apple survey actually predicted that would happen.

Yes, Apple does conduct price analyses to pick the market sweet spot - and Cupertino researchers recommended a $499 price tag for its production levels and target margins.

However, the study also projected - and as the HP tablet sales proved - that at $100 consumers can't help but go purchase crazy and start buying the devices for every room in the house and as gifts. In other words, they went from buying one unit to nearly snapping up an entire case of tablets.  

Of course, a number of folks doubted this very outcome. But because it seemed like it would take years - if not a decade or more - to actually get prices down to $99, the debate was effectively shelved. However, it was resurrected last week (with an obvious resolution) when HP’s pricing move proved the study correct. 

In addition, a number of retailers told me that while they were overstocked before the radical price change, the massive reduction would have allowed them to easily sell at least 10x of what they had at the new price.

Now, if Google can just figure out how to subsidize their tablet and get to $100 first, well, they could actually steal the market from Apple. Remember, Mountain View does the ad supported model better than anyone else at the moment so, although unlikely, it really isn’t impossible.  

Galaxy Tab and Xoom Secret Success

We have all been focused on the fact that the tablet market is actually little more than an iPad market. However, since Netflix finally showed up on Android tablets the iPad status quo is quietly changing.

Current numbers indicate that the Galaxy Tab is trending to near 20% of the market, while the Motorola Xoom is hovering at approximately 10%, at least in terms of sales to customers. This effectively drops the iPad from around 95% of sales to 70% - if these mostly unofficial numbers hold up. Nevertheless, Apple still dominates the lucrative space and continues to be favored over 2 to 1.

However, Ice Cream Sandwich, the next version of Android, is expected to be a vast improvement over Honeycomb. As such, if Google continues to improve at the current rate, it could achieve parity with Apple by the end of this year (in terms of tablet sales ) and even pass Cupertino - much like it did with phones - by 2012. 

The numbers, although anecdotal at this point, indicate that Android has a pretty good shot at overtaking iOS on tablets.   

Wrapping Up: What This Means

Most of us (meaning analysts) eventually expect Apple to drop from first place in tablets when a real market emerges, simply because Cupertino likes margins more than they like revenue (I’m with Steve on this one).   

While there was some doubt about there ever actually being a diveres tablet market, it seems as if by this time next year the lucrative space will resemble the early PC market. Of course, whoever manages to reach a $100 price point first will likely rock the market to its very core - and Google currently has the inside track to this route.

Remember, Windows eventually "exploded" the PC market and since tablets are eroding the PC market at the moment, any real detonation could cause a shift in fortunes - obviously putting a lot more pressure on Windows 8.   

This suggests we have some really interesting events to look forward to in the near future that will forever change the tablet/PC market, along with the number of vendors fiercely competing for a piece of the pie.

Now excuse me as I try to run down someone that still has stock (here is a link to get notified on anyone that has stock) on the $100 TouchPad, because my bedroom needs four of them.