Apple Inc. (NASDAQ: AAPL) sold 4.19 million iPad tablet computers in the July to September quarter, the device’s first full annual quarter. The company missed target expectations for the device by a wide margin. While some like Piper Jaffray’s Gene Munster expected Apple to move 4.5 million iPads throughout last summer, others were anticipating sales as high as 7 million or more. In all likelihood, Apple could have sold that many and then some on the international market.
Bernstein Research concluded at the beginning of October that the iPad is on track to become the fourth highest selling electronics category on the market in 2011, ranking alongside the classifications for HDTVs and DVD players. That is how popular Apple’s tablet is here at the end of 2010, and with retailers from Target (NYSE: TGT) to Best Buy (NYSE: BBY) are moving the device alongside telecoms like Verizon (NYSE: VZ) that don’t even support the tablet’s 3G models, the iPad appears to have a wide open space to expand. Which throws into stark relief how the broader tablet market is still very much in its larval stage.
While a number of low-cost, low-functionality tablets have been rushed to market using truncated versions of the open Google (NASDAQ: GOOG) Android operating system—devices like the Gentouch 78 Android tablet made headlines earlier this year, riding high on iPad hype—scant few major competitors in the consumer tech industry have gotten products to market. Samsung released their Galaxy Tab, which also runs on the Android operating system (albeit version 2.2, which Google says is not optimized for tablet use), earlier this fall. In the U.S., the tab is sold through Verizon and Sprint Nextel (NYSE: S) at the price of $599, comparable to Apple’s pricing, though not exactly competitive. T-Mobile and AT&T (NYSE: T) are also offering the Galaxy Tab.
Reviews of the device have been mixed, especially in the United States where the Tab does not have phone functionality. While it’s still too early to say whether or not the device has found an audience, it’s seems that the Tab may be just a placeholder for Samsung as they build a strategy to establish themselves in the tablet market. Rumors about the Samsung GT-i9100, the company’s next smartphone and would-be successor to the Galaxy S, popped up on tech blog Engadget last weekend. Word is the device is based on the updated Android version Gingerbread and running on a dual-core processor. The new phone could anticipate a new, more advanced version of the Galaxy Tab to be rolled out early in 2011.
Other manufacturers are having trouble getting their devices to market and even keeping them there. The Google Android-powered, 16GB, WiFi-only, 10-inch Toshiba (LSE: TOS) Folio 100 began shipping in Europe just 10 days ago. PC World stores in England are reportedly already pulling the device from shelves because of negative consumer feedback. ViewSonic’s 7-inch, Android-powered ViewPad 7 tablet is shipping in the U.S. from retailers like Amazon.com (NASDAQ: AMZN) at $599, $100 more than the MSRP quoted by ViewSonic when they announced the tablet would be released here this fall.
Hewlett-Packard (NASDAQ: HPQ), who started selling their new Slate 500 tablet (which runs Microsoft‘s (NASDAQ: MSFT) Windows 7 operating system) in October and have struggled to sell just 9,000 units. Dell (NASDAQ: DELL), one of HP’s major competitors with whom they shared the notebook PC market that the Apple iPad has dramatically eroded this year, has also struggled to make an impact this year. Dell CEO Michael Dell announced 7- and 10-inch models of its Dell Streak device back in September, saying that the 7-inch model would release in “the next few weeks” with the 10-inch model to follow in early 2011. Neither Android-powered device has been seen since.
Apple will remain the lonely monarch of the tablet market for the rest of 2010 and it is difficult to predict what shape the tablet market will take at the beginning of the next fiscal year in April 2011. Research in Motion (NASDAQ: RIMM), the company whose once powerful BlackBerry smartphone business is in rapid decline thanks not just to the iPhone but also Google’s Android OS and the popularity of phones using the platform, is preparing an aggressive but considered strategy to take the tablet market. The BlackBerry PlayBook tablet revealed in early October is positioned to undercut the current tablet market in pricing. RIM CEO Jim Balsille told reporters in Seoul last week that his company’s iPad competitor would retail below $500. It’s still unknown what the final specifications of retail PlayBook models will be, but if the highest end SKU can undercut Apple’s cheapest iPad SKU, Research in Motion would stand to dent Apple’s monopoly on the market.
Other future competitors exist purely in the rumor category. There have been rumblings of Symbian tablets from Nokia (NYSE: NOK) as well as a Droid-branded flagship for Verizon made by Google and Motorola (NYSE: MOT). Investors keen on getting in on the ground floor of the burgeoning tablet space should be patient. Unless, of course, they already own Apple.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.