Tablets: Where Are We?

As the first quarter of the year is coming to an end, so is the first round in the tablet fight. Were are we? And what's coming next? Now that the iPad 2 has launched, Apple seems to have added enough impulse to retain its market leadership (its share stands at more than 80%), while the competition has organized itself, mainly around Android 3.0 - codenamed "Honeycomb". But Google is not the only competitor that wants a warm spot in the tablet space: HP, RIM, Microsoft and Intel, are working on long-term plans. The tablet space is competitive at several levels, all important:
Hardware


System on a Chip:
At its lowest level, a tablet is powered by a system on a chip (or SoC), which is basically the equivalent of a PC motherboard, integrated in a single chip the size of a fingernail. It has all the processors, co-processors and memory required to run the operating system and applications. Most designs are using technology licensed from ARM, a processor design firm, but don't be fooled - the ARM cores are important, but it's the overall architecture and the co-processors that truly differentiate one SoC from another "ARM-xx based" actually means very little. How fast data transit within the SoC, and how much data can be processed by specialized hardware is crucial for the end-user experience.

In a game of never ending integration, which puts more and more functions within a chip, there are those who believe that controlling the communications chip is critical. It's not always the case. Integration allows lower cost, and lower cost is only "critical" in low-cost designs. It's not as important in high-end devices, which tend to evolve quickly.

Design:
The industrial design covers all the underlying technology and gives tablets their external look. There, Apple leads both in terms of attractiveness, but also in terms of cost-effectiveness. In short, nobody else can build an iPad... at the price of the iPad.

To understand why no competitor can compete on pricing with an entry-level iPad, you have to understand that Apple is a vertically integrated company. They control almost all aspects of the creation and manufacturing of a device. Many OEMs (original equipment manufacturer -  HTC, Dell and HP are examples of OEMs) ask an ODM (original design manufacturer) to create a design based on the OEM's specifications. The OEMs then goes to buy components (from Qualcomm, TI, NVIDIA, Samsung...), and get yet another company (like Foxconn) to actually put the devices together in a plant. At each step and with each intermediary, there's added value, and everyone involved makes money (a margin). It also means that the "added value" makes the end-product more expensive.
 
In a vertically integrated company like Apple, there are less intermediaries, and if you produce your own processor (A5) for your own tablet (iPad 2), you can save a hefty 50% margin on that processor.  Add to that the margin from the ODM, and massive economies of scale of producing a single, high-volume device and the result is a sharply lower cost. This is why it is so hard for iPad competitors to fight in terms of pricing. The weak point of such vertical integration is that if your product isn't selling, all your sub-businesses (design, processor, etc...) are in trouble at once. 

Market Share

We just talked about market share: it is viewed as a very important metric by many industry observers because it can create momentum, which leads to a trend that is very hard to reverse. However, as consumers, it is not so important because you can always get the next big thing in a couple of years, no matter who makes it. Also, having a lot of market share doesn't always mean that a product is better. It can simply be the result of arriving first on the market, being cheaper, having better marketing etc...

However, the true of market share is that it attracts developers, which leads to having more, and better, software on a particular platform. And once the hardware dust has settled, the software is what really rules the user experience.


Software

We all know it (I hope): software is key to the success of any computing platform. The software battle is fought on two fronts:

1/ The Operating System (OS):
The operating system holds the basic user interface and serves as a software platform for every single application. Right now, iOS and Android are getting all the love from the public, but there are many other contenders.

HP is preparing itself to integrate WebOS in laptops and printers. I don't know for printers, but the laptop integration could be amazing: imagine if you were able to *instantly* access WebOS to quickly browse the web, or send a message. When you need to use Windows software, you can boot into Windows. This could be reality soon.

Microsoft's upcoming Windows 8 is supposed to be (more) touch-friendly, but it will also have a version compiled for ARM processors. That means that hardware similar to what tablets use today could power Windows 8 in the future. This is a huge shift from Microsoft. I don't know why Microsoft isn't doing anything with its Windows Phone OS on tablets - this is a big mistake.

The Blackberry playbook is going to use a new OS but it's too early to tell how successful it will be. The demos have been very interesting so far. Other operating systems, like Meego are trying to create a spot for themselves, but for now it's been a bit difficult.

2/ Applications:
As I said before, the OS battle is key to win the "app" battle. For decades, we've seen it: the most popular OS get the "better" apps. Now, I realize that "better" is a bit loose and mean different things for each of us, but overall, it is hard to argue that in the desktop world Windows doesn't get the best apps, and the most recent versions of most of everything. The same goes for iOS in the tablet world.

But in a relatively young market like smartphones and tablets, things can change quickly: Android has now surpassed iOS in terms of market share, but I don't think that developers have perceived this achievement as better business opportunity, yet.

Conclusion

2011 should be a very interesting year. Although Apple currently leads the market, it will lose the technological edge as the rest of the industry collaborates to create more attractive devices. Apple's cycle (1yr) is simply too long for that market, and it wouldn't be a surprise if they had to update the iPad before next year. The result is going to be ever faster tablets, with better networking capabilities than iPad 2, thanks to Quad-core processors and 4G LTE networks. Those tablets will probably appear starting in August or September, and most of them will be powered by Android 3.x, there's simply no way around it. Unless Palm pulls a huge come back, Google's Android is going to be the "only hope" for most makers out there, at least for 2011. Android, and every other OS need great applications, and lower prices - there's no way around it. Windows has shown us that once a platform has become a juggernaut, it is just too hard to displace.



What's your take on the tablets for this first quarter of 2011, and how do you see the near-future for tablets? Post a comment and tell us how you would like things to turn out.

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Ubergizmo loves gadgets and the technologies that make the gadgets go. We are geeks to the core, but while we talk geek, we also talk electronics in a way that our grandparents can understand. We take everything into consideration from design, to user interface to practicality, pricing and competition.We make lists to help you decide what gadgets you need (or don't). And we deliver live coverage at conferences like CES, E3, Mobile World Congress, CTIA, DEMO and GDC, so our readers can feel like they are there with us. If it's cool, we are covering it. Hubert Nguyen is the co-founder and editor of Ubergizmo. He is a retired engineer who programmed special-effects demos at NVIDIA. Hubert also managed the developer education program and edited the GPU Gems 3 book. Before joining NVIDIA, Hubert was at 3dfx interactive. Prior to that, he worked on 3D-Engines in various video games.