Shahid Khan makes iPad predictions

INVESTOR'S BUSINESS DAILY

IPad Rivals Poised To Be A Top Theme At Electronics Show

By PATRICK SEITZ, INVESTOR'S BUSINESS DAILY

Posted 12/30/2010

Consumer electronics and PC vendors have been scrambling to respond to iPad since the media tablet hit the market to great fanfare in April.

With Apple's (AAPL) iPad dominating the consumer market for tablet computers, rivals including Hewlett-Packard and Research In Motion are focusing on business markets for their upcoming tablets.

But they'd better hurry. Apple already is making serious in-roads in enterprise markets.

Tablet, or slate, computers are expected to be a major story at next week's annual Consumer Electronics Show in Las Vegas. The Consumer Electronics Association, which produces CES, expects some 80 tablet computers to debut at the show.

Companies expected to show off new tablets include Acer, Asustek,Cisco Systems (CSCO), Dell (DELL), HP (HPQ), Motorola (MOT), NEC, BlackBerry maker RIM (RIMM), Samsung and ViewSonic.

"Everybody and their mother is announcing tablets," said Shahid Khan, chairman of digital media firm MediaMorph.

As usual, Apple won't be exhibiting at CES. It prefers to hold its own events. But its impact will be felt.

Consumer electronics and PC vendors have been scrambling to respond to iPad since the media tablet hit the market to great fanfare in April. The iPad is a combination e-reader, video game player and Web-surfing device. The thin, lightweight gadget features a 9.7-inch LCD touch-screen.

Market tracker Gartner expects global tablet shipments to reach 19 million this year, 55 million in 2011 and 103 million in 2012. Makers of PCs, consumer electronics and smart phones all seek to carve out a slice of the fast-growing market, says Ross Rubin, an analyst with NPD Group.

Rivals will compete with iPad by offering features Apple doesn't, such as integrated Webcams, support for Flash video, and USB and HDMI inputs.

"There are things companies can do to differentiate," Rubin said.

Vendors also will distinguish their products by targeting business and other enterprise users, says Kumu Puri, a senior executive with consulting firm Accenture (ACN). Current tablets, especially the iPad, are sold as media consumption devices for consumers, she says. Enterprise users want devices optimized for productivity and content creation, she says.

Companies are fast adopting the iPad for business uses.

About 7% of companies provide their employees with tablet devices, according to a November poll of 1,641 corporate information technology buyers by ChangeWave Research. That's expected to rise to 14% next quarter, ChangeWave says. The research firm says iPad leads with 82% of the corporate tablet market, followed by HP with 11% and Dell with 7%.

Internet access, e-mail and working away from the office are the top business uses for the iPad, ChangeWave says. Sales support, customer presentations and laptop replacement are other big business uses, it says.

Dethroning Apple in tablets will be tough, says Richard Shim, analyst with DisplaySearch. Apple has built an ecosystem around its iPad with its App Store for downloading useful applications from third-party developers.

The tablet market is shaping up as a fight between Apple's iPad and a host of companies using Google's (GOOG) Android operating system, Khan says. Software developers are focused on Apple's iOS and Google's Android, he says. "They aren't even looking at other platforms," he said.

That could spell trouble for RIM's PlayBook and HP's upcoming WebOS tablet, if they can't attract developers to build useful apps for their proprietary operating systems.

"A tablet is only as good as the apps running on it," Khan said.

Android has struggled with tablets so far. Early Android tablets used a version of the operating system that was optimized for smart phones, not large-screen devices.

Still, developers are rallying around Android and will make it a viable competitor, Khan says.

"In two years or so, Android tablets will have a larger market share than iPad," Khan predicted.