Apple 2.0

Covering the business that Steve Jobs built

Tough slogging for iPad knockoffs

September 3, 2010: 8:32 AM ET

Many will try, few will survive, says an Asian manufacturer working on several of them

Samsung's Galaxy Tab

Two new tablet computers based on Google's (GOOG) Android operating system -- one from Samsung, the other by Toshiba -- were introduced at a trade show in Berlin this week, part of a wave of knockoff designs inspired by Apple's (AAPL) iPad.

Many of them will disappear within a year, Compal Electronics president Ray Chen told investors on Wednesday, as the new arrivals quickly discover that competing with the iPad is not as easy as it looks.

Chen should know. The giant Taiwanese original equipment manufacturer is building tablets for three of the biggest players in the market: Acer, Lenovo and Dell (DELL).

His remarks, picked up by DigiTimes, echo a report issued in late August by iSuppli's Rhonda Alexander.

The new tablets' specs are likely look better on paper, Alexander noted. And indeed, both Samsung Galaxy Tab and Toshiba's Folio 100 have built-in cameras and can run Adobe (ADBE) Flash, two things conspicuously missing from Apple's iPad. But, she added:

"It's still unlikely that any of the competitors will be able to equal the overall performance experience of the iPad. Apple's complete integration of hardware, software, operating system and applications is a major piece of what makes the device a standout. And on that basis—an integrated hardware/software design—we don't see anything in the marketplace at present that seems likely to rival what Apple is offering in tablets today."

The proliferation of devices, each with different specs, actually works in Apple's favor.

"Apple's interface and many of its applications are geared to the pixels per inch (ppi) and screen configuration of the iPad," she writes, "optimizing their appearance on that device. Developers designing applications to work across the broader base of new offerings from the various competitors are facing a mix of pixel densities, screen sizes, and touch technologies."

Source: iSuppli

According to Alexander, Apple will have captured by the end of 2010, more than 74% of the tablet sales. And she predicts that despite growing competition, it will dominate the market for at least the next two years, with 70.4% and 61.7% of tablet sales in 2011 and 2012, respectively. (See chart.)

Chen's numbers aren't that different. He predicts that between them, all the iPad knockoffs combined will sell no more than 10-12 million units worldwide next year. According to Morgan Stanley's Katy Huberty, Apple is currently building 2 million iPads per month and has told its suppliers to ramp that up to 3 million per month, which implies a 2011 run-rate of 36 million.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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