Apple, Amazon have won the tablet wars

By Jonny Evans

People, hear me out. We're heading for the endgame in the tablet wars as major PC manufacturers declare victory to Apple [AAPL] while leaving the low-end market to burn in Amazon's Fire.

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Big brands quit the stage

A Digitimes report claims HP, Dell, Acer and Asus feel the rhythm and plan to withdraw from the tablet market next year, leaving it wide open for Apple, Amazon and those remaining lower tier players.

Q: Other than terrible sales, component supply issues and the impossibility to compete at the high-end, what's their problem?

A: Lack of content, if the report is to be believed. Tablet makers just can't deliver the kind of content ecoystems Apple and Amazon are able to provide.

You see, outside of Apple, Amazon (and also soon Sony and Barnes & Noble's Nook) tablet manufacturers who lack a viable content ecosystem can't look to media sales in order to subsidize their devices.

This makes it incredibly difficult to compete with a low-priced solution such as that offered by Amazon.

(And that's even before Amazon begins to explain to business, corporate and educational users why it is that their systems won't support HTTP proxy servers, making them a bit rubbish in most work and school situations.)

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Content is king

At the high-end of the market, manufacturers just don't have the design, the user interface or the media solution to deliver an effective competitor to the iPad.

Samsung has even been forced to drop features from its insanely imitative Galaxy tablet in several countries.

The market for high-end devices belongs to Apple. Others can't even match it on price because it sells so many of its tablets it is able to demand the best available component supply deals, driving down end product price.

With so many vendors choosing Android, the situation remains challenging. Yes, there's Google Music so you can get hold of content if you want it, but hardware device makers don't see any cash from these sales.

It might make their solutions a little more relevant, but they remain involved in a deeply competitive and value-conscious market. They get no income other than from device sales and are undercut both at the top and the bottom of the market.

Can you feel the squeeze? Can you hear the screams? Can you see the full shelves in warehouses everywhere as the unsold inventory piles up?

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Prediction: Google will make hardware

With this much challenge, no wonder players are leaving the field. They know there's just no way for them to win. This virtually guarantees Google will be forced to introduce its own tablets at some point next year via its soon-to-be newly-purchased Motorola Mobility arm.

Equipped with a content subsidy, Android device makers with the exception of Amazon will see even less room for maneuver, leaving Apple facing Amazon and Google for the tablet market.

It gets worse. There are multiple claims Amazon and Barnes & Noble will one day offer their tablets for free, hoping to profit from media sales.

There's no way even Dell can undercut free, and even when Windows 8 for touchscreen devices appear, Apple's foes will have a tough time competing on price, as they still won't keep a slice of media sales.

This is the end of the road for yet more players in the tablet space. The HP TouchPad fire sale was just a sign of what's to come, as consumers move to demand either the best device they can get, (an iPad), or the not-so-great tablet that's sold at an approachable price, as in the Kindle or Nook.

[ABOVE: You might be amused to listen to Steve Jobs tell us all about television. Sorry for poor audio quality.]

Smartphones -- the next iFrontier

This misery is just the thin end of the wedge. There's reports Amazon intends introducing its own smartphone next year. When it does, what's the betting it will offer a device which is also subsidized by content sales? In the event it does manage this, then every Android licensee will begin squealing in utter terror. How can they profitably compete?

This is the inevitable shake-down I've talked about taking place right before your eyes:

  • Android device makers beating each other up on price
  • Apple beating everyone up on design, features and desirability
  • And Google forced to dump on its manufacturing partners in order to get into the hardware game, or end up in some weird OS developer client relationship with its only successful licensee, Amazon.

Android fanbois, please, please don't blame me for this. I'm just the messenger. I'm simply letting you know the future's going to be something like this, unless someone changes the scenario.

It's a tough business

The Digitimes report also claims sales of the iPad 2 to be lower than those of the iPad, but cites no proof of this. They seem to think that slowing consumer sales at the beginning of an epoch-defining financial meltdown tells us enthusiasm for tablets "has disappeared". That's not what the surveys say.

Another report claims Samsung, LG and Sharp have delivered a total one million high-res flat panels for next-generation iPads, with production set to increase and once again claims Apple to be developing a 7-inch iPad.

Things are becoming even more interesting as the pennies drop in the tablet wars.

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