The iPad 2 is likely to dominate the market again this year despite the abundance of new competitors on the horizon. A report issued today by Forrester analyst Sarah Rotman Epps details three major miscalculations in the market strategies of iPad competitors. Her analysis adds to our take on why it's so hard to compete against the iPad. However, her report goes further to suggest that the best iPad competitor would be an Amazon tablet. Really?
Epps' report points to high pricing being the biggest mistake. According to Forrester surveys, consumers' perception of tablet cost has fallen from $504 to $257 between June 2010 and January 2011. Consumers sometimes do not differentiate between a NOOKColor e-reader and say a Motorola Xoom tablet, leading to a much lower average price expectation.
Distribution strategy is also another major category that has got competitors beat. Apple not only sells to major retailers such as Best Buy, Target, Wal-Mart, and carrier stores, but they also sell direct through their own channel of Apple Stores where customers can learn and get support on their products. According to the report, more consumers prefer buying from an electronics store such as Best Buy (40%) rather than through a carrier such as AT&T (11%). Despite this figure, competing tablets increasingly rely on distribution via carriers.
The final category is in product differentiation. Although competing tablets tout 4G compatibility, Flash support, and various other specs that trump the iPad 2, they do not not necessarily differentiate enough amongst themselves, leaving confused consumers to still opt for the iPad 2 as the safest bet.
So how does Epps then conclude that an Amazon tablet would be the best rival to the iPad? Well, she relays her previous points on pricing and distribution as both areas that Amazon excels at. Amazon could sell a tablet at or below cost and make up for it by selling content. As for distribution channels, Amazon already dominates with a large number of consumers comfortable purchasing electronics from the online retail giant. Epps also believes that Apple's new in-app purchasing policy that places strict regulations on eBook sellers and content providers will be strong motivation for Amazon to launch their own device. Can you really picture an advanced Kindle taking on the iPad?