RIP: Why the iPad 'killers' are already dead

iPad is huge, big, massive hit, an echo of the iPod effect on the MP3 player market and the iPhone effect on the mobile world. Apple has stolen the tablet/netbook industry to the extent competitors face a pretty tough time in even manufacturing their 'iPad killers'.

Apple has already won - and that's even before the product hits the Asia Pacific countries, in many of which it has only today been made available for sale.

[This story is from the new Apple Holic blog at Computerworld. Subscribe via RSS to make sure you don't miss a beat.]

As expected, hundreds of customers queued across the territory to be among the first to get hold of the netbook-killing iPad.

Successful launch across the region is only going to drive iPad sales higher -- component suppliers are already unable to keep up with Apple's demand.

Off the hook

"My phone is ringing off the hook with calls from people who want more supply," said Apple COO, Tim Cook, earlier this week.

Supplies of flash memory and displays are particularly affected.

This is why Apple has won the battle for tablet computing already, killing those nascent 'iPad-killers' (with the possible exception of the spookily similar products from Samsung, which also makes components) before they even get born.

After all -- you can have the best product design on the tablet sitting on your factory floor, but it means nothing if you can't get the components you need.

Nor does it mean much if supply chain constraints mean you have to pay top dollar for the parts you need -- customers want compelling products at competitive prices.

You need to match the competition on a range of features, including price.

As reported by Reuters, LG Display CEO Kwon Young-soo said:

"Demand (from Apple) keeps growing and we can't meet it all. Apple may have to delay launches of the iPad for some countries due to tight component supplies and strong demand.

"We are considering increasing production lines for iPad products but overall supply is likely to remain tight until early next year,
" he said.

Analysts claim the tablet market is due for expansion.

On the up

Research firm iSuppli this week increased its forecast for iPad sales by 82 percent to nearly 13 million units this year.

"iSuppli believes that the only limitation on iPad sales now is production, and not demand," said Rhoda Alexander, director of monitor research for iSuppli.

"Apple has taken a very controlled approach introducing this product to new markets, with manufacturing limitations likely being the major inhibitor on how quickly iPad sales expand."

This may inhibit Apple's own sales, but it also impacts the path to market for Apple's nascent challengers.

Despite this, Forrester says the huge success of the iPad has forced it to alter all its tablet industry forecasts.

Even if competitors manage to match the iPad on price, manage to source components and manage to create a vital apps development ecosystem, will they be able to match Apple's offer?

Derek Lidow, president and CEO at iSuppli has previously said, "Anyone that wants to compete with Apple is going to have to consider the design of the iPad, as well as its huge implications on the electronics design and value chain."

Because Apple owns the OS and has control over the processor design used in the mobile devices it makes, it can ensure efficiencies, such as power or graphics management and so on.

Such efficiencies cannot possibly be replicated by any competitor, certainly not by the likes of Android or Windows 7 Phone. Both latter systems are not tooled for specific devices, but for multiple devices from different manufacturers.

This will serve as a huge Apple advantage in the mobile space, where efficiencies on low power demands are far more critical than on desktop PCs. Flash, or no Flash.

On the button

Apple hasn't had to play too many of its cards yet.

Executives confess they have been surprised at just how much impact the device has had on consumers, who are buying iPads in the millions.

Forrester analyst Sarah Rotman Epps observes the iPad is "Isn't behaving like other consumer devices: It has a steamroller of momentum behind it that indicates incredibly strong demand for this entirely new form factor."

Epps originally expected U.S. consumers would buy 3.5 million tablets in 2010 and 8.4 million in 2011.

Instead, Apple sold 3.27 million iPads (internationally) in the June quarter alone.

And it isn't just Wi-Fi. 3G iPads are also insanely popular.

Released yesterday, AT&T's financial results confirm this.

Apple's chosen US carrier says it activated 400,000 to 500,000 iPads during its second quarter.

Between 75% and 80% of those subscribers chose the biggest data plan available, said Rick Lindner, AT&T's senior executive vice president and chief financial officer.

This reflects just two months of iPad 3G sales, as the product didn't ship in the US until April 30.

The iPad is a hit on the consumer market, and now it is impacting on business markets too. I've reported this here and here, now do take a look at AT&T's statements.

On the edge

It is "surprising" how many business customers are approaching AT&T about the iPad. AT&T said a lot of companies have iPad trials going on, and many see opportunities to use the iPad in their business as a laptop replacement.

This spells death from above for netbook makers, too. And gives Apple an advantage Microsoft cannot hope to match.

Consider the news from the Consumer Electronics Association yesterday. They expect tablet shipments of 6.9 million units in the U.S. this year, generating revenue of $4.3 billion. These are set to double next year

"Considering these products weren't on the market a year [ago], it's staggering how fast they are developing," the CEA said, according to this report.

"CEA projected U.S. mobile computing revenue to be $20.6 billion on 37.7 million unit sales in the U.S. this year. Mobile computing revenue is expected to grow to $26 billion next year," CEA said.

Wireless handset revenues are set to reach $17.6 billion this year, the organisation said. Smartphone sales may reach in excess of 54 million units they said.

With Apple already in lead position in the smartphone category, inarguably in the ascendant in the tablet computing category it has invented, what could be its plan for ascendancy in the laptop field?

On the top

With so much to play for, Apple's enemies will be investing heavily now to ensure future component supply. Asia Pacific firms are already ramping up manufacturing facilities.

Where we are today, though. component supply constraints mean Apple has the advantage -- it has a popular product which is already at market.

The question is, will it be able to consolidate that short term advantage into an irresistible market lead?

History -- that of the iPod and iPhone at least -- tells us Apple has the potential to do just that. It learned what to do the hard way back when it ceded control of the desktop to Microsoft and Windows.

This time there will be no mercy.

The iPad killers are dead before they even get born.

Signing off: Below is the funniest Apple-related video of the day. Darth Vader on 'antenna-gate'.

Enjoy your weekend.

Copyright © 2010 IDG Communications, Inc.

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