“Hence that general is skilful in attack whose opponent does not know what to defend; and he is skilful in defense whose opponent does not know what to attack.” — Sun Tzu |
It’s time to admit it. Despite all the forecasts and best hopes for the competition carving out a stake in the tablet market, success isn’t happening. And it isn’t going to happen. Apple owns this market, and the best the competition can hope for is crumbs.
Apple has an unsurmountable lead in the tablet market, and it’s going to stay that way.
Forever.
This is a bold assertion, but it can be backed up by looking at all the key elements that come into play and discarding wishful thinking.
First, there seems to be a common perception that in this ever growing tablet market natural things will happen. That is, as the market for tablets grows to several hundred million or more a year, Apple’s competitors will get smarter and successfully dilute Apple’s market share by virtue of the sheer number of competitors.
That’s baloney, and here’s why. The iPad isn’t a device that’s easily built and marketed. It requires huge infrastructure both in terms of software technology, products, services and supporting data centers. If you throw together the parts for a tablet, slap an Android OS on it and boast about Adobe Flash, you’re in for a disaster.
On the other hand, the iPad is more than the sum of its parts, a design principle that Mr. Jobs has mastered.
Second, the mentality of the competitors is all wrong. They’re using the military philosophy of “You fight with what you have.” In this decade, the key is conjuring up something you don’t have to compete with. That takes money and talent. Executives who are accustomed to skimping on engineering talent and computing resources are unable to create, out of nothing, the software needed to compete in this era. Worse, how do you design and build the next generation technologies with Windows or Linux? As Apple jumps to warp speed, the company’s parting message to the PC world is: You’re living with tools from the past and trying to create the future with them — but you can’t.
“Out of Time” by Abraham Imola
Third, Apple is strategically grabbing all the component parts the world can manufacture thanks to the cash it has on hand. Whenever a new company springs up to meet demand, Apple jumps in and locks up contracts with them as well. It’s a Catch-22. Suppliers know that Apple has the money, so they can’t wait to work with Apple. Other tablet makers fall behind. With less cash to play with, the competition can’t ever get to the head of the line. It’s a vicious circle of failure for others that Apple has erected.
If Apple were a puny company, such as it was in 2000, it might be easy to out spend and outmaneuver Apple. But now, Apple is a giant and flexing its muscle. It’s not easy to ride roughshod over a hundred billion dollar company. Moreover, once customers start to use Apple equipment, it’s very hard to lure them away. For a customer to forsake an iPad and all its apps and convenience requires that they be presented with an overwhelmingly better proposition by the competition. So far, the competition can’t even come close to equalling the product line, retail availability and customer experience Apple offers. So good luck with that.
Here’s an estimate of 2012 tablet sales by Maynard Um at UBS, published on 27 July. Some of these companies, realizing that tablets are the future, will stir up the courage to compete vigorously and blow a lot of money, likely in vain. Others will realize that they’re not cut out for that business and try to find another more profitable line of business. I expect this list of companies building tablets to be half this size by Q1 2013. (For more on this, see Bryan Chaffin’s excellent analysis and charts.)
Estimated 2012 Tablet Sales. Credit: UBS
Finally, we should recall that after Windows 95 came on the scene, it just about did Apple in. Apple has fought Windows ever since then, about 16 years and never has been able to gain more than single digit market share against Windows. The combined might of all of Apple’s talent, Mr. Steve Jobs, and his capable executive team, have made headway, but never seriously threatened Windows.
So we have a precedent. If you get out ahead, maneuver well, and stay out of trouble with the DOJ, there’s no law of physics that says you’re bound to fall down the ladder of market share. (Apple’s iPod series proved that.) Winning doesn’t come naturally in the tablet market, and time is not the competition’s friend.
Apple has made the assertion that all the things everyday people need to do can be done on an iPad. With each iOS upgrade, that simple fact is being communicated increasingly well to customers. PC sales are being cannibalized. Hell, even Apple’s own Macs are being cannibalized — or the Mac’s rate of growth would be even higher.
Not only is the PC in decline, but the tablet market, measurable by the hundreds of millions in the next few years, will be dominated by Apple. That’s the way it’s going to be, and Apple’s tablet competitors have to decide if they want to get out of the game, spend billions fighting for crumbs, or try to change the rules. These are not savory options, and they’re all summed up by the lead-in quote by Sun Tzu.
This is the reality, and it just can’t be brushed under the rug any longer.