Apple’s revolutionary iPad causes collateral damage to would-be rivals

“Global laptop sales, which had been rising by double-digit rates before the iPad, collapsed; they grew just 1 percent in the first quarter of 2011. The post-PC era began last year, and Taiwan got blindsided,” Bruce Einhorn reports for Businessweek.

“Companies there are only now coming out with tablets of their own. Acer says it will launch several tablets soon, and Asustek has begun accepting orders for its Eee Pad Transformer tablet,” Einhorn reports. “Both contenders are more than a year behind Apple.”

MacDailyNews Take: Truth be told, everyone in the world is more than several years behind Apple. They may never approach the depth and ease-of-use of Apple’s ecosystem.

“Demand for plain-old computers is hardly disappearing. Gartner expects sales to rebound and grow by 10.5 percent this year,” Einhorn reports. “That’s comfort only in the short term, though. The tablet market is growing far faster: Research firm eMarketer estimates tablet sales will climb 178 percent in 2011, and Apple, with its head start, will maintain a 74 percent market share even in the face of increased competition.”

Einhorn reports, “To make up for lost time, Acer and Asustek may fall back on the strategy that worked so well with personal computers: Undermine the competition with lower prices. Yet Apple, never known for inexpensive products, has priced the iPad so aggressively that the tablet has actually become a low-cost option. ‘Apple wants to gain share as quickly as they can so nobody else can come in and make money,’ says Kirk Yang, managing director with Barclays Capital (BCS) in Hong Kong. ‘That’s just killed everybody.’ As the Taiwanese are learning, in the iPad era, the old price-cutting playbook needs an update.”

Read more in the full article here.

30 Comments

  1. If Apple was in this game just to gain market share they would have priced the iPad a lot cheaper than it is. Apple just makes a great product, then prices it where it needs to be and lets the market share fall where it may.

    1. Remember what Jobs said. The iPad incorporates everything Apple has learned about low cost design and integration. The genius in this whole thing was Job’s decision to go forward with the iPhone and delay the iPad.

      Had it been my decision I would have opted for the iPad due to broad phone competition and low cost producers already in place. Questions about how to get the telecoms to play would have weighed heavily. Apple took the harder route, and is now reaping the benefits.

      Apple cut their teeth on the phone, and used it to breach the Corporate / Enterprise wall. The iPhone opened to door wide for iPad. Pure Genius, and not one that I can see any other CEO making happen.

      1. Good thoughts.

        I wonder how sucessful the iPad would have been if it came out first. That would have been a big risk in and of itself (new category). I think the iPhone was less of a risk (not a new category) and actually was the first iPad anyhow, wasn’t it?

      2. >Had it been my decision I would have opted for the iPad due to broad phone competition and low cost producers already in place. Questions about how to get the telecoms to play would have weighed heavily. Apple took the harder route, and is now reaping the benefits.

        Good thing you’re not Apple’s CEO. 😉

        1. No Kidding.

          But nonetheless, it was a very gutsy call by S. Jobs, and the whole thing depended on Apple Execution. Most CEO’s would have opted for the open field running that the iPad market offered instead of slugging it out with the Nokia’s, Samsung and Teleco’s.

          1. Agreed. Jobs has nerves of steel and an amazing sense of how the consumer playing field is moving. Sort of like Gretzky in hockey…moves to where the puck will be.

    2. Don’t forget that a couple of years ago, at an earnings conference, Apple warned of lower margins due to “new products” to be introduced. Obviously, Apple reduced their margin on the iPad for the very reasons mentioned in the article. Gobble market share before others can get out of the gate. They have done something very “unApple”, and frankly, very difficult for any company: produced the best in class product that is also the price leader. Wicked one-two punch.

      1. The lower margins were due to the cost of the unibody frame for MacBook Pros. Foxconn had to buy over 1000 new CNC machines from Japan. This cost was then passed on to Apple and hit margins. Of course, this eventually benefitted the iPad, which also uses a unibody frame.

  2. The days of stuffing a box with parts, loading Windows and selling it for a few dollars of profit are gone.

    Windows is dead and Android is a bit like the asteroid belt, with uncountable objects adrift, following random orbits.

  3. Ubiquity can be boring.

    Think about it. Apple can end up looking like Microsoft during the PC era. Indeed, it’s important the company that asks people to “Think Different”, act differently. To continue to innovate for the sake of innovation. To continue to nurture the third-party iOS and OSX software community (i.e. Expand WWDC to more than one country and do it more often).

    Arrogance and pride makes for a nasty bed-fellow, for which Ballmer and the Microsoft BOD are all to intimate with. Let’s not let ourselves, the Apple community, be so seduced.

    1. Hey simpleton Ubiquity is nothing but a quantitive state.
      Boring is the simplification of compound facts that are a sum of their parts and highly subject to detail.

  4. Apple needs to be careful though. One thing that made PC users so loyal was the heavy investment in expensive platform-specific software. If tablets don’t require this, users will be a lot more ready to chop and change between them.

    1. You are still thinking in PC era terms. If in fact platform specific software is no longer a driving factor for loyalty or brand selectio, then the only thing you have left is end user experience on the device itself and there is no other device that provides that experience better than apple. Plus, just because you can use the Facebook app on various different devices, doesn’t mean that you get the same experience on each device. I tried to use facebook on a friends droid and it sucked in comparison.

    2. No, what’s beautiful is that almost all of the apps I bought for my original iPhone in 2007 transferred seemlessly to my iPhone I bought in 2009, to my iPad in 2010, and now my iPad 2 in 2011. Factor in all the iPod touches out there, and this is huge. I wouldn’t so much say this is “lock-in” as I would say this helps build incredible consumer confidence. Who wants to buy apps if you find out they’re confined to only one device? I would be very surprised if this was the case in the Android world. From what you’re saying, you could buy a Xoom, buy some apps, and transfer them to a Galaxy Tab. I don’t think so.

  5. truth be told, once you own a Mac or any other Apple product and your msft misery has finally ended you’re so relieved and ecstatic you never buy anything else. Apple’s US computer share will be 25% within a year and then it’s all over for anything microsh*t.

    1. Ran into a friend I hadn’t seen in about 18 months. Financial guy who now teaches MBAs at a State Univ. He told me he had replaced all his PCs with Apple products: iPads, MacBooks, iMacs, iPhones… the whole 9 yards. Asked him how that was working out for him. He gave me the typical answer for switchers: “Why didn’t I do this years ago?!”

      Microsoft: Fade to black.

      1. Sounds like my story. Brother got an iPhone 3G about 1.5 yrs ago. Said I should get one, which my wife and I did.

        Now: Me – iPhone 4, iPad 1, MBP 13″, 21.5″ iMac, TV, AirPort Extreme.
        Wife – iPhone 3G (soon to be iPhone 5), 2 kids (hand me down iPhones 3G functioning as iPod touches)

        Plus: now brother has iPhone 4 and MBP 13″, dad has iPhone 3Gs and MB Air, and another friend now has MBP 13″ and 21.5″ iMac and is chomping at the bit to get his iPhone and iPad 2.

        All former PC users, the halo effect is more like concentric circles. We all wonder why we spent a little less $$$ just to do it again every 2 years, and then be down for a week or two while you reinstalled all your PROGRAMS and transferred your files (if you could recover them). We’ve all used Time Machine now, and purchasing a new computer or retrieving info is a DREAM!!

        But I ramble. People ask me if I work for Apple now.

  6. The thing is, this “playbook” hasn’t been working for 10 years! The much vaunted competition hasn’t come up with anything as classy as the iMac, couldn’t “kill” the iPod, can’t match the Air, couldn’t stop the iPhone from garnering a significant foothold, and still doesn’t match any aspect of Apple’s design aesthetic anywhere. And if detractors don’t think any of that matters, Apple is also making all the money!

    So why, in light of the complete failure of the commodity box makers til know to catch or match Apple, why do any of them still think they have a chance of challenging Apple’s iPad?

    Hope springs eternal, I guess.

  7. Apple have several things in their favor:
    1. They design their products well over several years. That helps them make very high quality products.
    2. Apple are taking advantage of common component supply for the iPhone and iPad. That provides the ability to sell at a competitive price and still make god money.
    3. A lot of consumers are simply using email and surfing the web. That’s why netbooks became popular. The iPad is even better and provides a more satisfying experience at about the same price.

    Same old story – Apple lead, others follow. Apple may not have dominated the phone market because of the carrier issue but it could well dominate the tablet market just like it does for mp3 players.

  8. Apple has defined the iPad form factor, now everyone is working hard to imitate it.

    Apple should be working hard to win the enterprise. When Microsoft catches up with the software to run on the iPad form factor, they’ll leverage their privileged status with enterprise to carve out a market. They just need to come out with Office for their pad, neglecting to make an iPad version. Once they do that, Apple will be back to the PC conundrum: how to sell iPads to people who are getting their MS pads for free from their company.

    1. I don’t believe Windows has privilege in Enterprise any longer. Enterprise as suffered along with the rest of the windows users. Microsoft has worn out its welcome and burned their bridges. The giant is limping along and on its way out.

  9. i don’t think the article title is using the words “collateral damage” correctly. there is nothing “collateral” about the damage the ipad is causing to it’s rivals. it’s just plain old, intended, damage.

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