Apple looks to corner tablet market

Timing of new iPad launch is designed to take the oxygen out of the room before Microsoft gets to market, according to Larry Walsh

Long lines formed at Apple stores across the country and around the world last week in anticipation of the new iPad hitting the shelves. While that's precisely what Apple - and any company - wants for a new product launch, there's more to this release than just a new device.

It's the erection of a barrier-to-entry to keep would-be competitors at bay.

Apple's timing is near perfect. The device (unofficially "iPad 3") comes at the same time that Microsoft is releasing Windows 8 beta for pretesting and evaluation, which marks the ramp up of production for new tablets that will run the new operating system.

By releasing the iPad 3 now, Apple is sopping up market demand for tablets. Consumers and business users will race to buy these proven devices long before even innovative competitors such as Windows 8-powered devices hit the market in the second half of the year. The net result: Apple is making it much harder for Microsoft and its tablet partners to come to market.

While few have seen the new iPad, critics and tech enthusiasts alike have been underwhelmed. Many thought it would have a new form-factor and design features, such as a haptic response interface. The high-definition retina display, faster processor and 4G wireless are good features, but some say they're not enough to warrant buying new units.

Maybe so, but consumers aren't the technorati. Apple is delaying the pre-order release by three days because it's already sold out of its online inventory. Apple Stores across the country and around the world were bracing for long lines last weekend when the iPad hits the shelves.

Analysts expect Apple to sell more than 9 million iPads (roughly $6 billion in sales) before the end of the month. It's an impressive number that will add to Apple's fourth quarter holiday surge, when it posted $46.6bn in sales and sold 15.5m iPad 2s - more units than all other PC vendors sold combined.

The arrival of the iPad 3 doesn't retire the iPad 2. Apple is lowering the price of the basic iPad 2 to $399, which makes it more-than-competitive to rival Acer, Toshiba and Samsung tablets running versions of Android. Between the two products at different price points, Apple will continue to dominate tablet market. Apple already has a 70 percent tablet market share, and analysts do not expect that lead to slip below 60 percent over the next decade.

Microsoft is looking to claw its way into the tablet market with the much-anticipated Window 8 launch. Reviewers have given Microsoft high praise for the operating system's innovative features and the revolutionary Metro interface. Studies in the past six months indicate

Microsoft could become a serious rival to Apple by appealing to business users who want the interoperability with the legacy Windows systems.

Apple's strategy to take the oxygen out of the room before Microsoft gets to market has worked before. The iPad 2 was raced to market last year just ahead of Hewlett-Packard's ill-fated TouchPad running WebOS. While the TouchPad has many technical flaws, comparisons to the iPad had it dead on arrival. The only thing that saved the TouchPad was reducing the price to fire-sale levels.

Samsung is proving the most viable competitor to the Apple tablet franchise. The Galaxy Tab and other devices running Google Android are gaining in market share, but sales are still far behind those of the iPad - particularly in North America and Europe. Amazon appeared to have a model for challenging the iPad with its Kindle Fire, but that too has cooled since its November 2011 launch.

With the iPad 3, Apple may prove yet again that it has the technical, marketing and business smarts to stay ahead of the competition.

Lawrence M. Walsh is president and CEO of The 2112 Group, a channel strategy and business services provider, and editor-in-chief of Channelnomics, a blog on channel business trends. You can reach Larry at [email protected] and follow him on Twitter @lmwalsh2112.