Dell, Sony Don’t Need to Kill the iPad

Dell (NASDAQ:DELL) and Sony (NYSE:SNE) have together just unveiled several tablet PC models, but considering how well the Apple (NASDAQ:AAPL) iPad 2 is selling, most investors would be forgiven for thinking these devices are being sent to die in a monopolized market.

Maybe not — Sony and Dell will likely never match Apple’s sales, but these devices can and will be used to strengthen their other businesses. That may be all a tablet needs to do.

Dell’s trio of tablets sport the same suite of features that have become standard issue for tablets — cameras for video chat, GPS, accelerometer, HDMI-output, and, in the case of its Streak model, access to Google’s (NASDAQ:GOOG) Android App Store — but these feature won’t help Dell’s bottom line.

What will make these tablets successful, and ultimately (hopefully) a boon to Dell shareholders, is how they integrate with Dell’s many business services.

CEO Michael Dell highlighted in an interview with The Wall Street Journal on Monday how PC sales represent just one-third of his company’s business, and of that business, just one-third is sales to consumers. The rest, of course, comes from its business “solutions” (server setups, data centers, corporate software, etc.)

When Dell first announced that its Latitude Windows tablets were coming in February, it explicitly said these were created for business customers. If Dell begins offering deals on the devices to corporate customers, subsidizing any losses on manufacturing with increased support of its business services, it will have been well worth introducing these tablets to the market — even if they aren’t matching Apple’s millions of sales

Sony’s S1 and S2 tablets, meanwhile, are targeted at consumers, many of whom are already served by Apple’s devices, but these, too, are intended to supplement existing Sony services and products rather than create a whole new segment as the iPad has done for Apple.

The Honeycomb-powered tablets join the recently released Sony Ericsson Xperia Play phone as an attempt by Sony to use already strong branches of their business, particularly the Playstation gaming brand and software, to carve out a niche from Apple. If they keep the cost of S1 and S2 slightly below that of the iPad, they won’t necessarily need to match Apple’s sales, thanks to strong software sales.

Both companies are taking a wise approach to the tablet market. For the time being, no one is going to match Apple for raw sales. Using new tablets to create just one more selling point for products already performing well — like Dell’s business services and Sony’s Playstation — may make for good business.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/04/dell-sony-dont-need-to-kill-the-ipad/.

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