Competitors may “fall flat” in user experience and struggle to undercut Apple’s prices
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.