By Jason Cross, Incentivated
It looks like size does matter as tablet sales are set to
rise dramatically this Christmas. Microsoft, Google, and Amazon have all
released tablets in the last couple of months; models that are smaller, cheaper
and catching up to Apple in the features, services and content ecosystems they
provide.
Reviews for the Google Nexus 10 praise its design and
hardware, suggesting that Apple ‘finds itself with serious competition at
last.’ Kindle Fire, the first Amazon tablet available in the UK, has been
praised for its 1200x800 HD display – ‘it’s a corker’ - and its ‘tempting price.’
So, how does the new iPad mini stack up? It’s still good,
but in areas such as display quality, it ‘falls short of Android rivals’ Google
and Amazon. Windows Surface’s ease of use is a big plus, with one reviewer
arguing that ‘No other tablet makes it as easy to get to work straight out of
the box. No other tablet has its broad compatibility with a range of
peripherals.’

The big question of course is how does this translate to
tablet sales? iPad 4 and mini still currently dominate with a reported 3
million sold (globally, it should be noted) on opening weekend, although from
there it gets a bit confusing. Apple have yet to announce how many of these
units are iPad 4 units and how many are iPad mini, or even whether this figure
may include iPad and iPad 2 tablets, leading some to question just how
successful the smaller product’s launch had been. The much shorter Apple store
queues post-launch were also noticed.
The Kindle Fire has also reported record sales, not on its
own launch date, but on the day after the iPad mini’s launch event. So it seems
buyers waited to see what Apple had in store, and that the price was a
deal-breaker, giving us a large clue about the contents are most likely to be
for the boxes inside the wrapping paper on Christmas morning.
Google and Samsung Galaxy devices are Apple’s biggest
competitor, with sales causing Apple to drop to 50% of market dominance in the
US already. Nexus 7 is probably the biggest competitor and when comparing iPad
mini directly to other 7 inch tablets, it has better specs, a lower price,
gorgeous displays, and can be used one handed.
The success of the Windows Surface debut is less obvious, as
Microsoft refuse to reveal sales figures. What is clear however is the
company’s decision to adopt the same strategy as Apple – with a 53% higher
profit margin than Apple makes on the iPad. This is opposed to Amazon and
Google’s 13% and 16% margins respectively, effectively selling at cost with the
aim of making money in the long run through sales of apps and content. The fact
that these companies have been able to release sales figures more quickly and
in a clearer fashion would suggest that this is the approach winning over
customers in the current economic climate.
Increased competition means that Apple’s approach will need
to change if they want the iPad to remain the dominant tablet in the market –
the difference between tablets and MP3 players is that the competitors this
time around are selling not just the plastic but the content environment to go
with the device. Dominating a marketplace with the more expensive device will
be a much harder ask than it was for the iPod, as competitor’s have learnt
Apple’s lesson well.
The number of smaller, cheaper alternatives is increasing
and will prove the more attractive purchase in the run-up to Christmas. As the
capabilities between tablets become increasingly narrow, customer focus will
become less about the hardware itself and more about the individual services,
apps and convenience that they can provide.
ComScore and OFCOM have shown that tablets were owned by
about 11% of the UK population in the middle of this year. It is entirely
likely that this will break through the 20% barrier by January 1st – assuming
the various manufacturers can maintain supplies in the next few weeks. To a
degree that may well depend upon how many markets these various devices are
currently available in. Which again, may play into the smaller, Android devices
hands which have a more concentrated geographical spread relative to Apple this
year.