Apple iPad Was First Tablet, Could It Be the Last?

With the Consumer Electronics Show 2011 winding down, the tech sector is starting to get a much clearer picture of the tablet PC market is going to look like in the wake of the Apple Inc. (NASDAQ: AAPL) iPad. There are finally more than just a smattering of sub-par  independent machines running broken versions of the Google (NASDAQ: GOOG) Android OS and the Samsung’s Galaxy Tab to compete with the Apple iPad.

But can they actually win that competition with Apple, Steve Jobs and the iPad? Wall Street analysts and technology industry pundits alike have started to wonder if the iPad is the iPod all over again, a non-essential consumer electronic that is so associated with the Cupertino, California company that all attempts at competition are dead on arrival.

That’s certainly what happened with the iPod. By the time other companies began preparing MP3 players for the market, like ill-fated Zune from Microsoft (NASDAQ: MSFT), Apple had already formed an unbreakable grip on the market. Portable digital media players weren’t called “MP3 players”; they were just called iPods. Apple replicated the success that Sony (NYSE: SNE) had enjoyed with Walkman cassette players in the 1980s. It’s easy to forget though that the iPod’s success was not instantaneous, and it was that product’s slow evolution that differentiates it so much from the iPad. It is also what will prevent the same competitive environment from crippling the tablet PC market.

The iPod itself went through two (arguably three) major redesigns before it became the industry-defining device it is today. The first generation iPod, released in October 2001, was in fact a sales dud. It wasn’t until the third generation Apple iPod released in 2003 that the device took off with consumers — and even then, it was the color-display fifth generation iPod and super-slim iPod Mini and iPod Nano that made the media player so successful. More significant to the device’s success though was the release of iTunes version 4.1 in October of 2003, a software not hardware upgrade. This brought Apple’s digital music player, and the just launched storefront, to Microsoft’s Windows operating system —  guaranteeing that the now ubiquitous iPod line had a legal and equally ubiquitous digital music storefront to buy music from.

It is impossible for the iPad to replicate this level of success for the sheer fact that there is no single desirable commodity tied to the device. The Apple App Store may currently have a wider selection of apps than on competing services like Google’s Android Market, the Nokia (NYSE: NOK) Ovi, Research in Motion (NASDAQ: RIMM) BlackBerry App World and others, but app developers are creating cross-platform software with ever-increasing frequency.

The other difference is the growth of competition early on in the product’s life. When the second-generation iPod released, it was still a niche product. When the iPad 2 releases later this year, it will come on the heels of more than 20 million iPad sales. It will also be releasing alongside a plethora of tablet’s included the Google co-developed Motorola (NYSE: MMI) Xoom, RIM’s PlayBook, the Windows 7-powered Acer Iconia, the Hewlett-Packard (NASDAQ: HPQ) Palmpad, Vizio’s VIA Tablet, and many, many others. While many tablet PCs will flounder compared to the iPad, the market’s already proven that it can support competitors. Samsung’s Galaxy Tab sold 1 million units inside its first month last fall, and it didn’t receive close to as favorable press coverage as Motorola’s Xoom and RIM’s PlayBook are getting prior to its release.

There is consumer excitement surrounding the entire tablet market, not just the iPad. That alone will keep the iPad from replicating the iPod’s successful blueprint for dominance.

However, as investors know after Apple Inc. stock has nearly tripled in three years, that is not to say that Apple will be hurting or that the iPad won’t achieve top market share. It’s just that unlike the iPod, Steve Jobs & Co. may not have a monopoly on this particular gadget.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, https://investorplace.com/2011/01/apple-ipad-ipod-aapl/.

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