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Acer chairman predicts iPad market share

Acer chairman J.T. Wang recently predicted that Apple’s share of the tablet market would decline precipitously as new rivals emerge, falling from nearly 100 percent to 20 to 30 percent.

via Apple Will Retain At Least Half the Growing Tablet Market, Says Analyst | John Paczkowski | Digital Daily | AllThingsD.

So let me get this straight: A PC vendor…

  • that did not consider building tablets because they failed to see an opportunity
  • that, once introduced, dismissed the iPad as a failure
  • that has no software assets to couple to an alternative offering
  • that cannot license software assets that compete because none exist
  • that does not understand what jobs the device is hired to do vs. what his current products do
  • that has no ecosystem to couple to an offering
  • that cannot market products any cheaper than the incumbent

…should be taken seriously when predicting share for products that do not exist?

Comments

30 Comments so far. Leave a comment below.
  1. Mike sander,

    If a product is not a simply produced raw commodity knock-off, why would Acer have any opinion at all? That is all they know or understand.

  2. iPad is unusual for Apple in that they've priced it quite aggressively. Their initial rivals appear to be struggling to undercut them and still make attractive products.
    I have no doubt that cheaper alternatives will appear in quantity and will sell, so I somewhat expect Apple to slowly increase the price of iPad to take it from the wedge that opens a market into the premium driver of the market that is their usual niche. (Having said that, $500 is still a heck of a lot of money for a computing device with such different utility)

    It's just about conceivable that Apple wants to start making more from software/services than hardware, and will thus continue to keep iPad's price low and tie it closer to cloud services and premium App pricing, but this would fly in the face of everything that has made them successful elsewhere.

    Ultimately though, Acer-guy is right that Apple's market share is going to fall, simply by virtue of them starting with nearly 100% through lack of competition ;)

  3. Vikram,

    If I am a hardware manufacturer competing with Apple I am starting to get very scared.

    Pricing anywhere near an Apple product means you lose because their hardware and software is so much better than yours.

    Yet how low can you go and compete on price and make any money?

    • asymco,

      Tim Cook in February re. iPad pricing: “we didn’t want to leave a pricing umbrella for competition, so we got very aggressive on this.”

      I don't see them moving in another direction on pricing for iPad.

      • Vikram,

        Yup … that's why these other manufacturers must be shaken

        ..Samsung's Galaxy Tablet that is 7 inches and basically half the area of the iPad is $399 with a contract and over $600 without. Who is going to by that when for $100 more I can get beautiful Apple hardware with a bigger screen?

        Basically they would have to go down to $300 or so to look interesting to an average person I suspect…maybe…

        This is what I mean…how low can you go? $250? $200? As long as Apple has a $500 price point for a 9.7 inch tablet you have to go really low to compete and where are your margins? How do you make money against Apple in the Tablet space?

        It's a near impossible situation…

        …Apple may have sewn up the Tablet market as effectively as the iPod market.

      • Tom,

        As effectively as the iPhone market too, considering profit share vs market share.

      • Guest,

        If Apple decides to keep selling iPad 1 at lower price points after they launch iPad 2. It will be very very difficult for competition to undercut Apple on Price. Imagine 9.7 iPad $399, iPad 2 $499, …

        With so many channels like BestBuy, Target and potentially Walmart. It would be hard to clear inventory and launch new version without impacting sales. Hence I believe they will definitely go this route. They are doing it for iPhones today.

  4. The truth is that the marker for tablet sized computers is far larger than what Apple is currently able to satisfy.

    I hope they realize the opportunity they missed with the iPhone and go for market share this time and not so much for profit. I hope they don't wait for the competition to out-distribute them this time.

  5. KRIS,

    They jump started the only damage control engine they know of.

  6. I think Apple will dominate the category for a few years.

    The 7 inch devices' screens are way too small; their only advantage over the iPad is weight, something I think Apple will address with iPad 2.

    Apple's lead in software, ecosystem integration and now Verizon in the US should give them a year or two to cement their position as the market leader in tablets.

    I think Apple is doing a lot of things right and is plugging a lot of holes that it left open in the iPhone franchise.
    But to me, the game changer would be availability of the device to carriers. We need to be able to give this thing to our customers for free and/or offer it cheaply on prepaid. Currently carriers have to partner with Apple resellers who put their own mark-up on top of Apple's mark-up making the whole thing expensive for everyone.

    Lastly, I think the guy is nervous. Apple has priced the device very aggressively making it very difficult to undercut them on price. The iPad is also bad news for PC manufacturers, 13% of the people who buy an iPad where going to buy a netbook or notebook and this should get worse with time. There are talks of 50% cannibalization at Best Buy, and those are sales that would have traditionally gone to Acer and Microsoft. Tough times.

  7. Thomas,

    From the perspective of AAPL’s stock price, if he is right, it’s not necessarily bad.

    Today’s market is 20 million units a year and AAPL has 100%. In five years it’s 100 million and AAPL has 30%. That’s a 50% increase. And if he is wrong then it looks even better for Apple. It’s margins, not volume, that counts.

    And look at the development status:

    Mark 2 – in final test
    Mark 3 – in engineering
    Mark 4 – in Jon Ive
    Mark 5 – in Steve

    Not much to get exercised about here.

  8. Rick,

    Those predictions remind me of those made by Ballmer in a red-faced rant that the iPhone would never succeed because "It doesn't even have a KEYBOARD". Imagine that! Oh, the horror!!

    When I hear predictions like this, it is clear that these manufacturers believe they are making iron rebar and are competing on price alone and not on functionality and the ability of the consumer to change that functionality seamlessly and add to that functionality easily.

    As has been noted many times on these pages many times before, many think of the mobile market linearly when the market is anything but.

  9. Todd Salerno,

    It's far worse for the hardware clone drones in the tablet market than in phones. With a smartphone, the central function of the device is still to make calls. Android gets by because the "internet communicator" and "media player" functions are secondary for most users to the phone functionality. Good enough is okay.

    With tablets, there's no such cover. Copycat products will have to compete on their merits as mobile touch computers. In tablets, Apple has finally obliterated the network effect of existing Windows software and is rapidly building its own through the app store. Available android tablet software? Zero. So they do what? Shoehorn Windows into Atom-powered devices that get a fraction of the battery life? That's clearly a winning strategy… Furthermore, they have to figure out a viable connectivity strategy. Who wants yet another contract?

    Apple has caught everyone with their pants down. Again. With some time to work on it, ClonePad 2012 may be a viable alternative to iPad 2010. But by then it will be competing against iPad 3. They'll sell a few to the ever-present anti-apple at all costs crowd, but that's a rapidly shrinking market. I expect to see a long string of shipped before they're ready faceplants. Should be a fun ride.

  10. maddoguk69,

    The successes of the iPod and iPhone have effectively laid the groundwork (in terms of supply chain, volume component prices, ecosystem etc.) for Apple to go in at a pricepoint for the iPad that, for everyone else, is rockbottom.

    Anyone that still trots out the worn argument of Apple products being over-priced (or even "premium" priced) demonstrates that they don't actually have a clue how product development and manufacturing works.

  11. Kevin Chen,

    i believe it's impossible to understate just how powerful ios has become for apple, specifically in the ability to run modern, desktop class apis in a lightweight package. lower software requirements translate into cheaper, less battery hungry hardware that runs as well if not better than desktop class hardware. the new apple tv is a beautiful case of this. the previous apple tv suffered from horrible lag and freezes, all while running a lightweight 10.4.x on $200 desktop hardware. the new apple tv is utterly responsive at all the same tasks, and runs on 6 watts. it costs about $40 to manufacture.

    as long as other companies have no true lightweight desktop class software, they've already lost the hardware battle. (this is where google is aiming android/chrome)

  12. Alexkhan2000,

    All I see from these comments from Apple competitors is fear. They have no choice but say things that create doubts about Apple amongst *their* existing customers, developers, investors, etc. Seriously, what else are they supposed to say? They have to say and do something – anything – because they simply can't just sit around and do nothing.

    I truly believe that Apple is just getting started. It's not just about what Apple has *done* or is doing now, but how Jobs has positioned Apple for the future. A lot of people say things like "what goes up must come down" and that Apple has reached its peak, but I see absolutely no signs that the competition has anything that threatens Apple's continued growth.

    Apple has some pretty big competitors with a lot of resources and their own particular strengths: Google and Microsoft in the key OS platform arena and the likes of Samsung, HP, LG, Sony, Dell, Nokia, etc. in the hardware space. And Amazon in retail and Nintendo in games, etc.

    But let's look closely at all of the competitors. Who of these guys can provide what Apple does? The tight and seamless hardware-software integration? The content? The elegant industrial design? The base of apps and ecosystem across the entire product line? Will a competitor that has even 20% of what Apple has please stand up?

    Even beyond that in the operations side of things (supply chain), who can buy the volume of key components like flat-panel screens and memory chips like Apple can? Will all the Android and WP7 device makers pull their resources together to buy these things in volume when they are all trying to pummel each other to death?

    It's the positioning of the Apple brand and its ecosystem that makes the future even brighter. Of course, Apple has to continue to innovate and execute without any major hiccups to maintain that position, but based on history of the past decade, I think it's reasonable to expect that Apple will continue doing what they've been doing.

  13. John,

    Long term, vendors like Acer and Dell have a serious price problem. Their strong point isis cost. But component costs are falling through the floor. It is laughable that people ding the iPad for its price if $500. I once bought 32MB of memory for my kids’ computer for $500. I bought my wife a 512MB (not GB) for $500. We are at the point that hard drives are almost free. I’ll bet that lovely box the iPhone comes in cost more than many of its components. Give this another five years and imagine how much worse it will be. If an iPad costs $200 and an Android tablet costs $150 will anyone care? Competing on price in this business is death. Apple is clearly looking down the road at selling the whole experience.

    • asymco,

      Not to mention Microsoft. I remember the price problem was looming for PCs years ago. If a PC (or device) is priced at less than $250, charging $40 for system software makes it the most expensive component. That may not be visible to the buyer but it is to the device vendor who makes 10% margins ($25 or less than what Microsoft makes on that $40). If he can replace the software with something good enough but cheaper (Android or Chrome) then his margins will surely go up. Now Microsoft can respond as they did when faced with Linux on the netbooks by dropping XP prices. However that is a slippery slope and their margins drop could compel them upmarket thus freeing the device space for competitors.

    • dms,

      I actually think they would feel OK if component prices are falling as much as you say. I think the primary reason everyone is doing 7" tablets instead of 9.7" tablets is because Apple has basically bought out the entire stock of 9.7" LED touch screens world wide.

      And Apple controls the pricing of the Flash market because they're such a big buyer. Apple buying such huge quantities drives up the cost for everyone else. So the only option these hardware makers have is to go with alternative form factors, even if that's not desirable from a design point of view.

  14. Matt,

    What’s the guy supposed to say? “Yes, it’s going to destroy our business. We’re screwed.”

    Of course he can’t say that.

    You almost have to feel bad for the guy.

  15. Kal,

    Comment from an analyst who finally seems to get it Oppenheimer analyst Yair Reiner
    “Bottom line, as big as Apple is today, it seems destined to get much bigger,” Reiner wrote. “We’re still taking our first baby steps into an iOS world in which seamless connectivity to cloud services through purpose-built apps lays waste to conventional modes of broadcasting, marketing, distributing, and consuming every manner of video, audio and printed material.”

    Talk about disruption. The comments are from apple insider.com

  16. David Chu,

    Seems like a lot of readers think that Apple missed an opportunity by not 'going for market share' with the iPhone.

    I'd like to remind you that the tablet and iPhone market have two distinctly different structures and different buying behaviors by consumers.

    The carriers have a strong influence over the iPhone market since they control the network and most consumers go to a cell phone store to buy their phones. This is not a market where any one platform can easily 'go for market share'. There are restrictions out of Apple control, such as if the networks can handle the amount of data usage and the willingness of carrier's to push the iPhone.

    In contrast, the iPad market is different. The Best Buys, Target and Wal-Marts of the world only care about one thing. Will this product move and how fast will it move. Apple is free to add more features, the only exception being the use of the 3G network. The less number of obstacles makes it a safer bet to go for market share. While competitors are looking to get into the game using subsidized models, Apple smartly went the unlocked route so that it could distribute the iPad through any sales channel it wished.

    What amazes me about Apple is how they make decisions based on the products. Different products have unique strategies that fit the product's profile. They don't rely on the same strategy over and over again.

  17. skips,

    The tablet marketplace resembles the MP3 player marketplace at the time that Apple entered it with the iPod. I expect the results in the tablet marketplace to be similar to the MP3 marketplace in the long term.

    As for price, you need only look at the pricing of Apple's line to determine that the iPad pricing is not going to change significantly in the future. Apple priced the iPad to be between the pricing of the iPod's and their notebooks. If you want less screen and power, buy an iPod Touch for less money. If you want more versatility and capabilities, buy a MacBook.

    The only exception to the current pricing strategy for Apple is the iPhone and I suspect that its pricing is effectively driven by the dynamics of the carrier domination of the cellular networks. The iPhone pricing will only change when the carriers are forced to accept any compatible handset and clearly identify how the handsets are subsidized. That is exactly what happened on the wired telephone networks.

    The above statements are only my opinions. skips

  18. min,

    Well, Mr Wang. Since there's no required marketing skills to make predictions:
    I predict no iPad competition for the remaining months of 2010.
    I predict that once competitors show that there is a market for 5-7inch tablets, Apple will produce a product in that category at a competitive cost and still make a 20% profit on said product (think iPod product line).
    I predict a 70% market share by Apple. Because….
    iPredict (patent pending)

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