In my previous post, I discussed Apple's 'walled garden' approach to its tablet and smartphone ecosystem. I described how Microsoft and Google gain a competitive advantage by licensing their tablet and smartphone operating systems to original device manufacturers (ODMs) such as Samsung, LG, HTC, Lenovo, Dell, HP and Asus.
Indeed, much of Android's success is related to multiple ODMs working with Google and perceiving Google to be partner and not a competitor. It has been argued that Google's purchase of Motorola Mobility, will prompt ODMs to work more closely with Microsoft and give Microsoft a better chance of enjoying success in the tablet and smartphone markets with its operating system.
However, in recent weeks, both Microsoft and Google have announced plans to launch their own tablets that run Windows 8 and Android respectively. Why this change of strategy? Well, it can largely be explained by the dominance that Apple currently has in the tablet market. This is a market that Apple has been allowed to define. The term 'iPad' is becoming synonymous with tablet in a similar way to Hoover once being synonymous with vacuum cleaners.
Apple currently holds nearly two-thirds of the tablet market. Android has not made the same inroads in the tablet market as it has in the smartphone market. So, Google is trying to galvanize the market in its favour by launching its new Nexus 7 with Asus. There is a widespread view that the ODMs are not doing enough to gain market share for Android in the tablet market.
As for Microsoft, it does not want to be left behind in the tablet market in the same way as it has, so far, in the smartphone market. Its Surface announcement was timed to deflect attention from Google's announcement. The announcement seemed to be rushed and perhaps made too early. No price points or dates were announced and the operating system that will run on the Surface, Windows 8, has not yet been released. Neither the Surface nor Windows 8 are ready to be sold. It appears that Microsoft is attempting to encourage developers to produce apps for its new environments. It is attempting to create excitement in the application development community. Microsoft executives know that the key to success in both the tablet and smartphone markets is the creation of an ecosystem that includes a large collection of apps. The company wants a library of apps to be available as soon as possible.
So, how will the tablet market evolve? Everybody is moving into hardware. Amazon, Microsoft, Google and Apple will all have their own devices. How will this impact the ODMs? Samsung and HTC have both driven the success of Android in the smartphone market. Will they have a similar role in the tablet market? Are Microsoft and Google launching tablets as a way of gaining share for Android and Windows 8 because ODMs are not doing this successfully? Will they move out of the hardware market and leave hardware to ODMs once they have gained critical mass for their operating environments? Or, is managing the complete user experience critical in the tablet market as argued by Apple?
Andrew Milroy is vice president, ICT practice, Asia Pacific Frost & Sullivan.
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