[macavity23]

I don't think Apple will be unhappy to see this at all.

The most recent figures I've seen have the iPad at around 70% market share. There's no chance that will survive after this kind of device appears, but I would guess Apple would be very happy to own, say, the top 40% of the market while the Android OEMs bleed each other dry at tiny margins.

Witness Apple's killer execution in the laptop market - and there they've fought there way upwards from virtually nothing, whereas with tablets they're starting with the dominant ecosystem.

[cheald]

Apple makes its money on recurring hardware purchases. The iPad owner buys the iPad 2 and the iPad 3 and the iPad 4 and so on and so forth every year.

Losing customers to a low-priced Android tablet before they have the chance to get them on board their "mini tablet" upgrade cycle could be disastrous. Apple effectively had first-mover advantage in the 10" tablet market, but Android is solidly ahead in the 7" market with the existence of the Kindle Fire and the Nexus 7, and it's much more difficult to gain ground in that kind of market. Add in a low-price high-quality competitor and you've got a really steep uphill climb.

[tedunangst]

maybe. remember when Apple was going to fade out of the computer business because they refused to make a $200 netbook? do you see anybody making $200 netbooks these days? everybody makes airbook clones at airbook prices.

[bryanlarsen]

No, but there are tons of people making $300 laptops. I think that did more to kill the netbook market than Apple did.

[officemonkey]

Netbooks were superlightweight computers you could take anywhere, just like the tablet market the iPad created. Most people complained that the netbooks were underpowered toys with tiny batteries. The first iPad addressed both of those concerns successfully.

[bryanlarsen]

Sure, that's what they were supposed to be. However, my argument is that to most people they were just cheap computers, for both senses of the word cheap.

[riffraff]

pardon me, I don't understand your reasoning. Why would apple be less happy with 70% of the market than with 40%?

Do you mean that you expect the total size of the market to double, and then expect apple to own 40% of it (so they have a total number of customers which is slightly more than what they had initially) ?

[bilbo0s]

I think he means, in layman's terms, Apple wants to sell Mercedes...

Someone else can sell Kia's.

Edit: Not sure how that will work out in the tablet market, but it certainly works with cars and laptops.

[16s]

Newer Kia's are the best value money can buy. They are solid and very reliable automobiles. And, they cost 10 times less than a Mercedes. Smart buyers buy them.

[potatolicious]

As someone who used to work in the automotive manufacturing sector I'll say this: Mercedes/BMWs/luxury cars are not nearly as overpriced as laymen make them out to be.

There is a lot going on under the hood (literally!) that sets these cars apart.

Which isn't to say that everyone needs a Mercedes, but there's certainly nothing intrinsically smarter about a Kia over a Mercedes.

[phaus]

I'm sure that Mercedes puts a lot into making their cars, but consumer reports seem to indicate that the end product is actually worse than low end Asian vehicles. Most of the people I know that have Toyota, Hyundai, and KIA automobiles drive them for a couple hundred thousand miles. The people I know who drive Mercedes, bmws and audis have constant. problems. I'm not a mechanical expert but my guess is that the extreme standards of precision that high end cars are manufactured to may actually make them less reliable. Maybe it's similar to the way that an AK-47 is the most reliable assault rifle because it is cheaply made, while our m16 jams if you don't clean it constantly because the machining is extremely precise.

[potatolicious]

The plural of anecdote isn't data ;)

Having actually seen the religiously-collected failure data that all manufacturers keep, I can safely say that your impression is incorrect. The budget brands suffer from substantially more expensive failures than the luxury brands, whose failures tend to be concentrated in non-critical systems (power windows vs. your transmission).

The AK-47 analogy doesn't really work here. There haven't been any "mechanically simple" cars since, what, the 80s? The main differentiator here isn't design or technological complexity, it's part selection and manufacturing rigour. So really you're talking about a hand-made M16 done up in a garage vs. a precision-manufactured M16. We're well past the age of "AK-47" cars.

[bitwize]

Pre-1995 Mercedes last forever.

Then when they finally do break down, there's like a million moving parts, and the one you have to replace is on back order for five years...

[endersshadow]

I bought a VW Jetta instead of any of the above mentioned. Jettas aren't more reliable than any of them, and they certainly come with a fairly hefty price tag when I need them serviced.

But my car isn't just a tool for me. It's a source of enjoyment. I love driving. And I love driving my car. Really, I love it. I would buy an Audi A4 in a second if I could afford it. If you're only judging based on one axis (reliability), you miss a lot of what goes into the purchase a vehicle. Just because it's your most important criteria, it's not mine.

[cema]

Yet there is a strong niche for Mercedes buyers as well. (Executives and so on.) But I think you are right that Apple is not likely to be happy to become a niche manufacturer once again.

[__abc]

People purchase products for all kinds of reasons. Don't be "that guy" that says only smart people "buy X".

[icefox]

10 times less? Have to call you on that. Straight from their website for the cheap-o prices: mercedes c-sedan ~35K, kia forte ~15K. Amusingly the Cheap-o kia forte is a manual transmission and to upgrade to an automatic cost extra. But take note there is no way you could ever sell me the 15K kia forte as the low of the low end models manufacture's put out are _bare_ bones. After renting cars the last few years and seeing just how cheap they could be I honestly checked to see if it even had power windows. Unless you really do want a bare bones car you probably are going to be spending more on top of that 15K, but if you are only going on price why aren't you buying a used car again?

[recursive]

You don't have to be smart to buy an Apple device.

[levesque]

Implying Google sells subpar tablets - I disagree with this statement. I believe Jelly Bean is a better OS than iOS5 for tablets (idk about iOS6, but I'd be willing to say it still holds for that one as well). On the hardware side, all you need is enough CPU/GPU to run the OS and apps flawlessly, which I believe both Apple and Android tablets manage to do.

[mtgx]

Getting so tired of car analogies with tablets, especially when they're meant to describe such large differences. Nexus 7 is a very good tablet, and very very close to an iPad in quality.

[majormajor]

I'd be curious to see if the volume selling "Mercedes tablets" in four years would be enough to sustain Apple's supply chain and logistics advantages, or if it would open the door for someone else to start matching them on build.

[Someone]

I think he means it in inevitable that there will be something below (price-wise) Apple's offerings. If there is, Apple would prefer to see lots of suppliers. That will keep keep margins down for the low end stuff, so the suppliers will not make enough profits to dare invest in high end stuff (traditionally, that has done in workstation manufactures such as Sun and SGI). It also will force those suppliers to compete on price, so that they will not gain experience in building for high quality.

Of course, even if that happens, the risk remains that, eventually, the low end stuff becomes 'good enough'. Half the quality at a third of the price will at some stage look enticing to many.

[achompas]

Why would apple be less happy with 70% of the market than with 40%?

I think the point is that Apple would lose a segment of the market that generates very low margins (or zero, if > $99 is a barrier to them).

[jdminhbg]

Say this Google tablet changes the tablet market from being "lots of early adopters" to "everyone remotely tech-savvy." In that case, Apple would be way happier with 40% of 10x the market they currently have 70% of -- it'd be more than 5x their current business.

Additionally, a popular $99 Android tablet means that Android is now the bargain tablet. Other Android tablet makers will have to compete with Google, leaving Apple the high end, just like Apple currently owns the high end of the laptop PC business.

[ajross]

Apple doesn't remotely "own" the high end of the PC laptop business. They're doing very well among web developers, so to a poster here maybe it seems that way. They're merely the largest single manufacturer among a very long list of PC vendors.

And the bit about "bargain" vs. "high end" presupposes there are features there that justify the distinction. A $99 tablet isn't going to have a 4G modem (though it's unclear if Apple's $300 item will either), but beyond that and its physical size the current Nexus 7 is a very feature-comparable device to the retina iPad.

[jdminhbg]

> Apple doesn't remotely "own" the high end of the PC laptop business.

Hm? Apple went over 90% share of the $1k+ PC market way back in 2009: http://betanews.com/2009/07/22/apple-has-91-of-market-for-1-...

[ajross]

That's pretty spun. It's true, of course, but by excluding the $950 laptops of other vendors (which are spec-wise very comparable with the Apple offerings) as "not high end" it's mostly just true by construction.

A similar number for "total units of 15 inch laptops with 4+GB memory and discrete GPUs" (my personal guess at a "high end" definition) would tell a very different story.

[moheeb]

If I sell one $50 million dollar laptop I'll have 100% of the $50 million dollar laptop market!

[esrauch]

I don't really understand what point you are making. Do you think that $1k is too high to be the "high end laptop market"?

[27182818284]

Because it is like the MacBook line. Of the so-called "luxury" laptops, Apple has, for years, owned 9 out of every 10 "luxury" laptop purchase. 9/10 of the most expensive laptops consumers can buy have an Apple on their lid.

So they'll probably try to do the same thing with iPad. They aren't racing to the bottom.

[bound008]

Also keep in mind the amount of money spent on iTunes and the App Store vs. Google Play. Those $99 consumers may spend less where the margins are more.

What Apple should really do is put iTunes on Android.