Rivals Cede High-End Tablet Market To Apple

Ipad-Kindle-FireMost of the major hardware players have taken their shot at the iPad, to no avail. Big hardware makers, at least on the PC side, are ready to cede the field to the apparently indomitable iPad.

According to their sources in the Asian supply chain of parts, DigiTimes is reporting that manufacturers like HP, Acer, Asustek and Dell are going to phase out of the market because their products are offering no compelling advantage to consumers over the iPad.

The “upstream supply chain” that creates the various parts for these OEMs tells DigiTimes that they see the market coalescing around the three companies that have strong content plays in the market: Apple, Amazon and Barnes & Noble. 



The pure hardware players can’t find room to compete with low-end entities like Amazon and B&N; both can sell the hardware at a loss or break even in order to profit from content sales. The supply chain sources say they expect these two low-end tablet makers to compete on price, eventually offering the device for free. 

Whether Apple remains alone in the higher end has more to do with the intentions of the non-PC hardware companies like Samsung and Motorola, the two rivals that have made direct runs at the iPad.  

But the possible pullback of hardware suppliers in this field might have implications for Microsoft’s Windows 8 operating system, which will have an interface optimized for tablet use. Win 8 will be the company’s big run at Apple for some tablet market share. But Microsoft is wholly reliant on the enthusiasm of the OEM partners to support the OS. If HP and Dell have been scared away from the market and drawn down their design teams, then Microsoft may have to incentivize their OEMs to get back into the tablet fray when Win 8 is ready.

One mildly ominous note from the supply chain, per DigiTimes, is the potential peaking in the iPad market. Suppliers say that sales of iPad 2 units have been strong but still not as great as the iPad, suggesting that the fierce enthusiasm for the tablet has eased. One of the enduring questions about tablets is the full extent of their potential reach and how applicable this experience is to the broad range of digital consumers.

Many analysts put tablet ownership in the U.S. at about 10% -- most recently Pew. But while cell phones and PCs or laptops have become essential tools of everyday life, tablets remain a highly elective device whose ultimate appeal is yet to be determined.

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