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The mere promise of such prompted me to buy and iPad last year. Alas, reality struck and although the iPad is superb for consuming media (as long as that media is the media that Jobs & Co. deem worthy of consuming), it fails miserably in the production and connectivity (except for Apple product connectivity, where it apparently shines). I have tried products from many vendors using many OSs - Windows, linux, Android... My latest foray, though appears to have hit pay dirt. Before I go on though, let's recap where Apple stands in this space and how it got there.

Apple is now a full fledged mobile device company

The vast majority of Apple's revenues stem from iPods (currently mature and rapidly shrinking as both % of revenues and on an absolute basis), iPhones (representing over 70% of Apples profit and iPads (the segment started to diversify away from the high concentration reliance on iPhones for profit.

While the reliance to on the iPhone is the result of an outstanding business success, it does leave the company vulnerable to competition wrecking havoc with its earnings. Apple's management wisely turned lemons into lemonade by refusing to compete in the low margin netbook arena (even as netbooks ate away at Apple market share) and reinvented the tablet PC. Voila! Selling a stripped down  netbook derivative product at 40-50% margins that has usurped much of the rather fledgling netbook market that fought and struggled for 10-20% margins. Of course nothing lasts forever. While the netbook vendors had a problem competing with Apple vis-a-vis hardware/ecosystem, the coming of Android's Honeycomb has not only solved the dilemma but also pushed the arena of competition into their purview - low margin, high volume, high utility production. In essence, what happened to the notebook computer through netbooks will happened to the tablet. For those that don't believe me, look at the first Android offering from the company that invented the netbook.

The Asus Transformer, is one hell of a piece of kit, and is the cheapest credible tablet device on the market at $399. For those who are not familiar with it, it boasts a bigger, brighter, more resolute screen than the iPad 2, bigger and better cameras, more memory, more speed, and a better optimized OS, for a minimum of $100 less than the entry model iPad.

Once we cut through all of the marketing inspire awe, first mover advantage and related media accentuated hoopla, do we find that the iPad is really a toy?

After experimenting with my own transformer and detachable keyboard, the obvious became even moreso. The Apple iPad 2 is an actual toy as compared to the Transformer, which actually give the user the ability to do real work, on a real keyboard, with real apps. I VNC'd and RDP's (or any other screen scape method you favor) my way into my office computers and had full, unfettered access to ALL of my files (Dropboxed or not), all of my apps in their full fidelity (Photoshop, Word, Excel, Outlook, Powerpoint, etc.) and Pinnacle for full 1080p video editing. This, in combination with a keyboard, is the real deal, and for much less than an iPad.

Stories of the iPad being distributed throughout the enterprise truly make you wonder why in the world they would choose such a device over a faster, more capable device with a full keyboard that costs 20% less!?

The misinformation that I hear spouted in the tech media concerning a lack of apps for Honeycomb is nonsense. I truly believe these guys haven't even tried the product before making such a comment. After signing into the Transformer, all of my applicable apps tranferred over from my Evo automatically, as well as all of by wireless settings. 95% of of these apps worked without a glitch. Out of 85 apps maybe two, three max, had an issue. And those apps that were coded specifically for the platform looked absolutely spectacular on the most stunning screen that I have ever seen on a portable device - any portable device! Oh yeah, did I add that this is the cheapest of all of honeycomb and iOS tablets?

[youtube gzGLmeuUV4c]

The long-awaited Samurai II: Vengeance has finally arrived on Android ! While the iOS version got rave reviews for its stylized manga graphics and quick, bloody gameplay, Samurai II for Tegra based Android phones and tablets delivers even more visual stunning graphics and polished gameplay.

Where Asus failed miserably in traditional support, it more than excels in the new age of the Android open source model. I doubt Apple can (or will even want to) compete at this level.

Now, it is not as if the Asus was not without its problems. It is obvious this is all bleeding edge, brand spanking new tech. After charging the device, I dug into it to find that I could not load apps from the market and the screen would freeze once I browsed with the attachable keyboard. I called Asus tech support, who was basically clueless (they actually had me downloading Windows files to investigate the problem). After nearly half an hour of nonsense and disgust I was told I would get a phone call from a developer after the case was escalated, which I never did. I then turned to XDA at about 1 in the morning. I was referred to a real time IRC chat where a developer solved my problem in 30 seconds (simply wipe data and reboot, something I should have thought of and tech support should have known). I was also directed to an Asus programmer who is a permanent fixture over at XDA developers. He suggested that I send him my devices firmware edition and mac address, which I did. He then pushed out an OTA update to my device within 24 hours which fixed all of the issues - ALL of them.  This is a NEW level of service, a level that Apple, et. al. will not be able to, and probably would not even want to) compete at.

It gets even better. I own an HTC Evo, which is currently significantly faster (running at 1.2 Ghz) than all of its newer, higher tech (hardware-wise) replacements and competitors. When I say faster, I mean 200% to 400% faster. Not only is it much faster, it is also more stable, has much longer battery life and boasts many more options. How is this possible? Well, the Evo has massive developer community behind it which facilitates constant improvement of the product, and significantly extending its life cycle. That means saved money, better experiences and most of all, ultimately superior products. HTC has been locking the bootloader on its recent products, basically telling developers that they are not welcome to much around with the insides. While I'm sure HTC (and Motorola) have done this to appease the carriers (who essentially don't have a clue and are less than two or three years away from being disintermediated if they don't get a clue), they are making a grave mistake. It is the half a million member strong XDA developer and real time beta testing community that has allowed the Evo to be the first phone to sell as strong as it has - and at full retail price - a month before it's product refresh date.

Asus, who has a history of catering to developers and the tech/geek crowd, via high end motherboard manufacturing and such, has actually made its custom source code available for download directly off of its web site. This will very, very quickly translate into near real time improvements, customizations and bullet proofing of the software and firmware (Sony has also made its source code available). As an example of what can be done with a strong developer and testing community, reference the Barnes and Noble Nook video above. It has been improved significantly since that video was made and now runs butter smooth and reliably at 1.3 Ghz, while playing nearly every video format that can be thrown at it. For the sake of comparison, it was purchased from Barnes and Noble running at 800 mHz and crippled to simple play YouTube and Barnes & Noble ebooks. Any problems had with the device can be addressed by the community in minutes, literally. Google has created a new way to sell computing!

So, is there truly a threat to Apple in the Tablet Space?

With Android's market share growing, Apple is getting considerably more aggressive in using the legal IP route in defending its market share and growth rate. Android and its manufacturing partners have been pushing the development bar in both hardware and software, forcing Apple to become materially more competitive. Now that the low margin Asian manufacturers have been given the gift of a competitive OS, the smartphone market has moved farther into their court for they are specialists at high volume low margin products. This is a game that is Apple’s to lose for they need to defend their margin. Notice what has happened to the iPad 2, although not wanting for demand, dropping in margin already with less than a handful of the 400+ competitors that have slated releases coming to market

With Google also eyeing the tablet market with the launch of Honeycomb (aka Android 3.0) for devices with larger screen sizes targeted at tablets, the competition is intensifying. Many media outlets and sell side analysts assume it as a given that Apple’s iPad 2 is the reigning tablet champion by a large margin for the balance of 2011 and 2012. Such a perspective is quite premature given that the hard hitting manufacturers have, for the most part, not shipped their tablet offerings yet an Honeycomb has essentially in beta (version 3.1 is slated for release now and is truly production ready). The Asus Transformer is, by far and large, materially superior to the iPad 2 in nearly every category save weight and size, where it is comparable but not as thin. It is also 20% cheaper and much better equipped. Contrary to reports, Asus has produced many of them, but the  demand proved to be overwhelming and they are on back order everywhere.

Anecdotal research shows such demand, ex. retailers who have ordered 100 show -234 in inventory, illustrating 234 customers vying for 100 tablets. A medium size electronics retailer receiving 100 units is a far cry from limited supply.

The Motorola Xoom tablet is the first tablet to ship with Honeycomb and there are several dozen other Android tablets (not to mention offerings from HP/WebOS, RIM/Blackberry and Microsoft/Windows partners) that are slated to hit the market this year. While Apple’s iPad may currently be enjoying the lead in the market, Honeycomb puts Google in an excellent position to catch up, much as Android has done in competing with iOS in the smartphone space.

Not only is competition expected to put significant pressure on prospective demand, it is driving costs up as well. The following is excerpted from the subscriber document Apple - Competition and Cost Structure.

Subscribers should be sure to read the 20 page analysis - Apple - Competition and Cost Structure

Related reading:

1. Google’s Android Market Share Explodes As It Expands Its Reach To Cars, Toys, Home Automation, Music & Movies – All In The Cloud Wednesday, May 11th, 2011
2. Looking at the Results of Google’s “Negative Cost” Business Model Employed Through Android Monday, May 2nd, 2011
3. Blackberries Getting Blacked Out, Imitate Amateur Base Jumpers Sans Parachute! Friday, April 29th, 2011
4. A Realistic Look At The Success Of Google’s Investment History Thursday, April 28th, 2011
5. My Thoughts on Roger McNamee’s View of Google and Mobile Computing Sunday, April 17th, 2011 and Google’s Q1 2011 Review: Part 2 Of My Comments On The Gross Misvaluation of Google Tuesday, April 19th, 2011