Apple Partners: Well-Priced, Powerful iPad 2 Will Win The Tablet Market In 2011

Despite the emergence of a range of tablet devices in the market, and the expected release this year of several more tablets from various manufacturers, Apple resellers say the iPad 2 has a significant head start in the category.

Apple unveiled its iPad 2 tablet on Wednesday, featuring a thinner and lighter form factor, running on Apple's latest dual-core ARM-based A5 processor. At the presentation of the iPad 2 in San Francisco, Apple CEO Steve Jobs, present despite rumors concerning his health , presented a slide titled "2011: The Year of the Copycats?" with the logos of Samsung, HP, Motorola, BlackBerry and Android. Apple's channel partners said that may very well be the case.

"This will be the year where there are actually a few contenders in the tablet market shipping items that are potentially worthy of comparison to the iPad," said Nick Gold, director of business development at Chesapeake Systems, a Baltimore-Md. based system builder who partners with Apple. "However, it seems that with the iPad 2, Apple is still far beyond the other manufacturers, and it's difficult to imagine HP's WebOS offering, or Blackberry's Playbook, making serious inroads into the market in the way that the iPad has. We'll see about Android Honeycomb, but it too seems unlikely to achieve mass appeal in the way the iPad has."

Gold said the primary advantage Apple's tablets maintain is the sheer number of apps developed for the mobile Mac platform. "iPad has, after all, 65,000 applications that are optimized for it," Gold said. "It's this entire 'ecosystem' for the platform, in addition to the high quality of the device itself, that makes it so much more compelling than the alternatives, who will likely be in catch-up mode for some time, if not forever."

However, Daniel Duffy, CEO of Valley Network Solutions, a Fresno, Calif.-based Apple partner, said he found the comment to be ironic given that Apple entered the tablet market well after other companies, even though Duffy said he considers the iPad to be a great product. "HP/Compaq was doing tablets years ago," he said. "Granted the technology was not what it is today, but Apple had nothing until a couple of years ago so they are very late to the game."

Michael Oh, president of Boston, Mass.-based Apple partner Tech Superpowers, took issue with that account of the emergence of tablets, saying the category didn't exist until Apple came around. "You could say they copied the previous tablet PCs," Oh said. "But from a technical standpoint they threw out all the 'features' of other tablet PCs and went with what they thought were the best features to add to the tablet."

In particular, Oh said Apple's touchscreen user interface brought a unique experience which other vendors are now trying to replicate on their systems. "Apple's touch interface is really what the tablet is about," he said. "And everyone copied that, from RIM to HTC to Samsung. The tablet has defined the user's interaction between the device and their fingertips and that's what other people are copying."

Next: The Prospects For Copycat Tablets

As for Apple's prediction regarding the proliferation of tablets in the coming months, Oh said that other vendors will bring devices to market, but that none were likely to challenge iPad 2. "2011 is going to be the year of copycats, and the copycats are going to get a lot of press, but at the end of the day when the sales figures come out iPad 2 will be the clear winner," he said. "It's a very good, popular product being revised in a very timely matter, with critical features like the video camera, which a lot of competitors are coming out with."

Along with the front-facing and rear-facing video cameras, Apple's iPad 2 comes with an HDMI output for full 1080p quality video, and Apple's iOS 4.3, which will offer enhancements to applications such as Safari, GarageBand, and iTunes. Oh said that these added capabilities combined with the opportune scheduling of the launch are likely to keep Apple's iPad 2 in first place in the tablet market.

"The timing of the release couldn't be better," Oh said. "With Mobile World Congress in Europe last month, other hardware manufacturers are coming out with interesting tablet solutions. Meanwhile, Apple is making incremental changes that have taken away the wind in their competitors' sails."

Oh also pointed out that many of Apple's competitors in the space have yet to bring devices to market. "A lot of the tablets people are talking about from companies like the RIM playbook aren't even in people's hands yet," he said. "By the time of the release they will already be behind iPad 2. You'll see copycats come to market, but 2011 will not be their year."

The most significant difference between the iPad 2 and its predecessor is the inclusion of a faster A5 dual core processor based on a reference design licensed from ARM Holdings. Jobs at the launch event said the A5 will offer twice the CPU speed and nine times fast graphics performance of the original iPad's A4 processor.

Oh said adding processing speed with a new chip is critical for Apple to maintain its leadership in tablets, and that having its own processors gives Apple a distinct advantage in pursuing higher margins. "It's different from buying a processor from Intel," he said. "With the ARM design, it's in effect Apple silicon which is much more to Apple's advantage in terms of reducing the supply chain and the cost of components than the other way of working. Keeping it in house and being the supplier of their own silicon makes Apple able to make more money per unit."

Gold agreed that the A5 chip alone should allow Apple's iPad 2 to dominate the market this year. "A faster dual-core CPU, a significantly faster graphics processor, twice the memory (in all likelihood, although not yet confirmed), much thinner profile, cameras, HDMI-mirrored video output, gyroscope, and same 10-hour battery life as the previous model, at the same price points, make this new version of the iPad a very strong product," he said.

Relatively speaking, Gold said, other manufacturers offer lesser products, at a higher price in some cases. "Their devices are simply not as refined, and most are more expensive," Gold said. "iPad as a platform already has a lot of momentum, and the iPad 2 keeps that momentum going strong by improving on what was already a by-far best-of-class user experience for a tablet."

Next: The Pricing Of The iPad 2

Oh agreed that, surprisingly, Apple's pricing in the case of its iPad 2 is an important part of its value proposition, whereas the company's other PC form factor devices are not exactly known for being cheap. "In the tablet wars what you're finding Apple is doing very well on pricing. If you compare the iPad with Motorola's Xoom or Samsung's Galaxy, you're really finding Apple as the price leader. Remember who this is. They are never the price leader. What really surprises me is that Apple is able to maintain that position."

Apple's pricing for the iPad 2 may be an important differentiator for resellers bringing Apple-based products to market. "As a channel partner, that's excellent. That $499 version gets people in the door and it's our job to sell the other features to the customer based on what's best for them."

The other positive sign to emerge from the launch was Steve Jobs' presence and his being in good enough health to present the updated device and talk about its features. Given that Jobs has taken a break from running the company, Gold said, Jobs' participation is also a sign of Apple's commitment to this device in particular among its PC offerings.

"Steve Jobs' presence at the iPad 2's launch certainly seems to indicate how important he feels the iPad is to Apple, and the use throughout the event of the term 'post-PC' is an indicator of why he sees this technology as so important," Gold said. "It is the mass-computing device that Apple believes most people will eventually use, more primarily than a full-fledged personal computer."

As for longer-term concerns about Apple's future given its founder's medical history, Apple resellers say Jobs has brought in enough talent to maintain Apple's success in his absence. "He has a very strong team who have been working together synergistically to create the iPad," Gold said. "I have no concern about the company's ability to push ahead no matter what may be in store down the road."

In the meantime, Oh said many of the concerns about Jobs' health seem to have been exaggerated. "The worst case scenario of Steve falling off the earth and never being seen again, or never being involved in Apple again turned out not to be the case," Oh said. "Symbolically, it's very important for shareholders and people to see that he's still involved in the places that matter. He's not the one designing the devices, but the CEO is the leader of the company who shows the products and their capabilities to the public, and that's what he's doing."

Oh agreed, saying Jobs' well-being may be cause for worry, but that the company he created is in demonstrably good shape. "From a health standpoint everyone's concerned for Steve and for Apple's success," he said. "Their success is because of the people he's picked to run the company. So if he's gone, Apple will be successful for quite some time."

The iPad 2 will be available March 11 in the U.S. for the same pricing scale as the original iPad, starting at $499 for the 16 GB Wi-Fi-only model.