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August 21st 2011 2:45 am

The Duopolizer: Has HP inadvertently prevented a third major tablet player?

I was thinking about the many consequences of the HP Touchpad meltdown we all just witnessed, and I am thinking the biggest consequence may be one that doesn't end up affecting HP at all. That consequence is to scare consumers away from taking a chance on any but the two established options for tablets, Apple and Google, and thereby establishing them as an immovable duopoly for the next three to five years.

Some may point out that the problem with the TouchPad in the first place was a lack of marketing, which should mean that it is not on the average person's radar enough for them to have even noticed this meltdown. However, this $99 fire sale news has spread widely enough that it might get some attention even from the non-geek crowd.

So, why does this lock down the duopoly? By creating fear in the minds of the average consumer that, if they take a chance on a tablet from a non-established player, they may end up getting the shaft like the TouchPad buyers did and be left with a dead-end product. And who can blame them? Perhaps this fear won't be great enough to prevent Microsoft from entering the modern tablet space since people already believe that Microsoft has been around long enough to be immune to this kind of disaster (assuming they didn't hear the similar tale of what happened to the Kin).

I think any other hopeful contender, though, like Fusion Garage or even RIM, can kiss their chances goodbye. Why take a chance on another potential TouchPad when you can get an iOS or Android device, which both have solid futures? The only way to overcome this fear will be to enter at a remarkably lower price than the established players. Say, like, maybe $99, which is what it took for people to go ahead and finally buy a TouchPad despite its lack of hope for a solid future?

In general, I think this whole debacle has set a bad precedent in people's minds and will make them a lot more cautious about their purchase decisions in the future, which will hurt innovation by limiting viable products to the kind of thing that consumers already see working.

I hope I am wrong, but I fear that we will be talking about the unintended consequences of HP's decisions regarding the Palm unit for years to come. If Microsoft can't manage to become a viable third player in the modern tablet space within another year, any other companies with aspirations to enter this market should find a new hobby for the next three years.

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This is really interesting, because I had imagined that one unintended consequence that this action has had is to have killed dead the demand for the current generation of Android tablets. From talking to my non-geek friends, tablets seem to fall into two buckets: "ipad" (for which they are willing to pay a premium) and "everything else" (for which they are incredibly price sensitive - the cheapest tablet wins). I think this price-consciousness showed up in the way the demand for Asus' Transformer was higher than any other competing Android tablet, despite being, arguably, less good-looking and portable than its competitors, and later to the game. Sure, most geeks and some of "the masses" knew that it also had additional functionality, but by and large, I would've been surprised if that's why they bought the tablet.

If all "the masses" were waiting for was a good "everything else" tablet, then HP's firesale may have accidentally destroyed pent-up demand in the "everything else" bucket, meaning that Honeycomb may have been killed alongside webOS.

One thought, to wrap up: I think HP may have sold somewhere in the vicinity of 750K-1 million Touchpads, assuming Best Buy and Amazon got similar inventory numbers, and correspondingly fewer the smaller the vendor. That's about one Touchpad per 300 people; alternatively, if you believe that households is the correct cost-conscious denominator to look at, 1% of the households in the US picked up a Touchpad instead of an Android or alternative "everything else" tablet. This is what they're going to use for a year or more now, suppressing demand for an alternative or replacement "everything else" tablet.

I guess we'll find out pretty soon!
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There are seldom more than two major players in any "platform" type device after the dust has settled, with fringe of "me too" companies attempting to offer product. On the Desktop: A big flurry of competition at first, and then it was Mac and Windows. Servers: Dell and HP. Desktop OS: Mac and Windows, with Linux trying to be the "me too" product. Server OS: Linux and Windows, with the BSDs (including Mac) on the fringe. Book Readers: Nook and Kindle, with Sony and misc others on the fringe. There are, and will always be fringe tablets as well. Windows 8 will be one of them.

This is just the way the market works -- and it's not necessarily a bad thing. An app developer, hoping to be profitable, does not have to support three or four different platforms -- just two. This means that the developer community will also be less fragmented: more resources to develop better apps. The result is that on any given platform there will be more content choice for the consumer, and a greater community of users.

And besides, the Android platform has proven that just because the base OS is the same, doesn't mean that there is not huge room for innovation by individual hardware manufacturers.
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I agree with you that "eventually" it comes down to a 2 horse race, and this is nothing new to Marketing Students. But this has to be viewed in light of the Product Cycle and what stage we are in, because at the begining there is a lot of jostling that is done to weed it down to two horses that emerge in front. And I believe we are still at the start of the product cycle for this mobile race, so to call it as an Android/IOS only run yet is a bit premature.
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This article mostly explains my thoughts about this: www.asymco.com­/2011­/07­/06­/the­-post­-pc­-era­-will­-be­-...
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Server OS's are: IBM (z/OS, AIX and as400), HP (HP-UX), and Linux.
Servers are mainly IBM, HP, Sun with a few tiny Windows servers for SMB.
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In the enterprise, yes. But not on the web.
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