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Xoom's teething troubles

But for now, the fight against the iPad rests in other hands. The Motorola Xoom is just about the only product in the iPad's category that is actually on sale for comparison but, even though well reviewed, it has a high price tag and the justification of LTE connectivity may work only for a minority of buyers (although the Wi-Fi only version, at a more affordable $600, ships this week).

Jefferies analyst Peter Misek commented in a research note: "Xoom sales have been underwhelming. While marketing has just started we believe MMI will likely have to cut production if it already has not done so. We believe the device has been a bit buggy and did not meet the magic price point of $500. We believe management knows this and is hurrying development and production of lower cost tablets. Importantly we believe management will likely have to make the painful decision to accept little to no margin initially in order to match iPad 2's wholesale pricing."

Teething problems with Xoom are hardly unexpected – Apple often suffers these too, most famously with iPhone 4's "Antennagate". But bugs in the Motorola tablet highlight the downside of not having full control of one's platform, since most of them appear to come from crashes and other faults in the new tablet release of Android, Honeycomb – not from the hardware. Google's "perpetual beta" approach may be fine for free web services and software, but is unacceptable for expensive hardware – and even after Xoom's bugs are fixed, the brand will remain damaged for a while in consumer perception, especially given the premium price.

Other hopes of healthy competition to Apple mainly revolve around yet-to-emerge products such as the Samsung Galaxy Tab 10.1 – on past track record, Samsung may fiddle around with its product for a while longer, but will finally unleash a big hitter in terms of design and distribution clout. The RIM PlayBook and HP TouchPad are widely expected to be squeezed into their respective niches in the enterprise.

In a new survey from ChangeWave Research, conducted last month in the US only, 82 per cent of those planning to buy a tablet in the coming three months said they would choose an iPad model. By contrast, the next most popular choice, the Xoom gained 4 per cent of the votes (though at the time of the survey, it had only just gone on sale, so awareness may have risen since). The PlayBook and the first generation Galaxy Tab tied for third place at 3 per cent.

This contrasted with a previous survey, conducted in fall 2010, when the PlayBook was in second place with 8 per cent, even though it was not set to ship during the quarter. Its debut now looks set for 10 April but the public may have grown tired of waiting. The long gap between launch and availability has been criticised as a tactical error by RIM, contrasting with Apple's swift shipment of the iPad 2 in order to get to the shelves ahead of new competitors.

"It remains to be seen which of these tablet devices or other new entries will be able to successfully compete," said Paul Carton, ChangeWave's VP of research. "Each faces an uphill battle with the refreshed iPad 2 hitting the shelves on March 11."

Tablet forecasts

Despite warnings of a glut, many researchers remain bullish about tablet growth. Canalys is looking for 52 million units to ship this year, with Apple accounting for 75 per cent of these, or 39 million. Tablet sales will slow down PC upgrades in many markets, the firm thinks, saying: "The innovative user experience has captured the imagination of consumers, who are extending the life of their existing hardware while taking an interest in pads."

For every 10 tablets sold, five netbook or notebook sales will be lost in developed markets, it estimates, limiting notebook growth to 8 per cent year-on-year in 2011, and pushing netbooks into a decline of 13 per cent, to 34 million units. Many areas – especially the US, western Europe, China and Indonesia – will suffer from overstocked retail channels for mobile PCs, although the iPad's impact on emerging markets will remain minimal.

Another researcher, Parks Associates, forecasts that tablets with embedded 3G or 4G will exceed 68 million units by 2015, and will be the majority of a tablet total of 126 million at that point. In 2010, 29 per cent of the 16.5 million tablets sold had embedded 3G.

Copyright © 2011, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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