Is iPad 2 Just an Attempt to Crush Android?
After three days on sale, the iPad 2 appears to be selling in record numbers. With the new device flying off of shelves, it’s becoming nearly impossible to find one to purchase. A torrent of advertising, media coverage and all out consumer love may be pushing the iPad into the realm of “untouchable” status long before any competitor has a chance to mount a serious challenge to Apple’s dominance in the tablet space.
It wasn’t so long ago that the iPhone was predicted to capture the smartphone market and never let go. With a one-of-a-kind device, almost nobody expected a platform to rise to knock Apple from its perch. Along came Google’s Android, running on a multitude of handsets, offered on every major mobile carrier, and the fight was on. As it stands now, the market share numbers reflect a statistical dead heat, with both platforms hovering at about one quarter of the total market each, give or take a few percentage points.
The smartphone death match has now overflowed into the tablet market, and Apple doesn’t seem to want a repeat performance. With the release of iPad 2, Apple seems intent on heading off any competition from Android devices. A closer look at the iPad 2 hardware by IHS iSuppli indicates that the new devices are costing Apple approximately $326.60 to produce, not including manufacturing, marketing, and distribution costs. With a base retail price of $499, the numbers seem to suggest that Apple is practically giving away the hardware, merely breaking even on the cost.
When added together, Apple’s lack of sales margin on the iPad 2, coupled with the breakneck sales rates point to a strategy of saturating the tablet market with iOS devices before any other vendor can even get a foothold in the race. The Apple App Store, complete with a reported 30% revenue cut for all subscription services going straight into the Apple war chest, allows the company to sell their devices at a low price point that almost nobody else can sustain. Is there any hope for Android-based tablet devices in the coming years? Market analysts don’t see any real competition anytime soon, expecting Apple to retain about 80% of the tablet market for at least the remainder of this year. Of course it is possible that innovation on the Android platform may eventually win over the market, but the real question will continue to be: Can you afford not to buy an iPad?