Apple 2.0

Covering the business that Steve Jobs built

iPad lead seen as 'overwhelming'

October 4, 2010: 8:53 AM ET

Competitors may "fall flat" in user experience and struggle to undercut Apple's prices

Click to enlarge. Source: Deutsche Bank

Deutsche Bank's Chris Whitmore has surveyed the tablet computer scene and concluded that things do not look good for the iPad's competitors.

"We believe Apple's lead in the tablet market will prove difficult to close by the onslaught of competing products coming over the next several quarters," he writes in a note to clients issued early Monday. "Ultimately, we expect the slew of upcoming competition to fall flat from a user experience standpoint while struggl[ing] to materially undercut the iPad on price."

How far ahead is Apple (AAPL)? According to Whitmore:

  • 12-18 months in content (see chart)
  • 2 or more years in terms of other media acquisition and integration via iTunes
  • Untold dollars in terms of component pricing

"What's troubling for competitors," writes Whitmore, "is Apple's growing scale advantages and leverage with the supply chain." Not only is Apple the largest buyer of FLASH by a wide margin, he says, accounting for 20%-25% of the world's supply, but it has locked down much of the world's touch screen manufacturing capacity.

"We expect significant margin pressure among the host of undifferentiated Android-pads as dozens of vendors battle for shelf space," Whitmore concludes. Most at risk, he says, is Hewlett-Packard (HPQ), but there's rough sledding ahead for Microsoft (MSFT) and Google (GOOG) as well, now that it's clear that tablets built around their operating systems are going to miss the holiday season.

Below: Whitmore's pie chart of the iPad's bill of materials.

Source: Deutsche Bank

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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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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