Wednesday, August 31, 2011

Are the Amazon Tablet Hopes Misplaced?

In the tech industry, it's common practice to bet on - or at least write articles betting on - the most shocking result the writer can think of. This is especially the case in major markets, where many of us love to fantasize about the new replacing the old. Because of that, I'm not surprised that people are failing to keep their skepticism at the ready when they approach the recent claim by Forrester Research that Amazon's upcoming tablet will be the one true threat to Apple's dominance of the tablet market.

Surprised that you haven't heard much about this tablet? Well, that's because barely anything is known about it at all. In fact, the only evidence we have that it even exists is some rumors from "people familiar with the matter" - no official announcement has been made. Considering that the iPad has so far been able to flawlessly maintain its near-total control of the tablet market, defending itself easily against all challengers, I'm not buying anyone who thinks that a completely unknown tablet that doesn't exist yet will revolutionize the market. Many tablet manufacturers have made such claims, and each has seen their efforts end in humiliating defeat. One common anecdote I've seen lately is that people don't want tablets, they want iPads, and that sums up the current state of the market quite well.

Of course, considering recent events, it's not shocking that so many are forecasting that a cheaper tablet might see success. After all, it's only been a week since HP dropped their poorly-selling TouchPad's price and watched the remaining stock practically fly off the shelves. However, there have been other Android tablets that performed poorly despite being cheaper than the iPad. What most analysts seem to overlook is that the TouchPad wasn't a $100 tablet - its hardware alone was estimated to be worth at least $300, and the current price point is easily far less than it's worth. It isn't as good as an iPad, but it's still a quality product that's worth far more than what it's currently selling for.

Why exactly do I focus on the quality, you ask? Well, much noise has been made about a study showing that nearly half of potential tablet buyers would consider buying a $300 Android tablet over a $499 iPad, and a shocking 79% of respondents would consider a $250 Android tablet over an iPad. However, that's not quite accurate, and relies on a misreading of the survey question. Those people were not indicating that they would choose a $300 Android tablet over an iPad, they indicated that they would choose the $300 tablet "with similar features" to the $499 iPad. In other words, Android tablet makers have a clear path to victory: they simply have to make tablets that are comparable to the iPad for just half the price.

The Amazon tablet rumors, if true, imply rather strongly that the end result would be a low-cost tablet which undercuts Apple significantly, selling the hardware at a loss in hopes of making a profit on software and content sales. The Forrester report assumes that the final result would be an Android tablet that costs less than $300. But while price is important, it's not the only thing that matters. We know from surveys and studies that a <$300 tablet with "similar features" to the iPad would be quite successful, but the rumors suggest that the Amazon tablet won't come anywhere close to meeting those conditions. Supposedly, both the design and the manufacture have been outsourced to Asian factories, a lower-quality touchscreen with inferior multitouch will be used, and the camera will be omitted entirely. What little we know about it makes for a rather worrying picture.

Can Amazon deliver a $250 tablet? Honestly, I think they can. But even if they eat a loss on the hardware, they can't do it without cutting so many corners that the end result is appallingly bad. The phrase "there's no tablet market, only an iPad market" isn't just a response to the popularity of the iPad and the failure of everything else - it also implies that people think "iPad" when they hear "tablet", and expect all tablets to be at least somewhat comparable to the iPad. Because of that, I suspect a tablet that's built for the sole purpose of being a bargain-bin tablet won't perform nearly as well as analysts would expect from its price. Low specs, bad build quality, cheap materials, imprecise screen, minimal features...even at half the price of an iPad, something like that could be far less attractive than the market currently assumes.

Certainly, the current crop of Android tablets is too expensive, and manufacturers' half-baked efforts can't compete at the same price as Apple's premium iPad 2. But are lower prices at the expense of quality really the answer?

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