The Apple iPad 3 or iPad HD or other successor to the incredibly successful iPad 2 is being announced on Wednesday, March 7, and all signs are pointing to a very compelling device. Android tablets have failed to attain any significant market success (unless you include the Amazon Kindle, and you probably shouldn’t), and so the advent of an even better Apple product portends some significant difficulties ahead for Android tablet makers.
I wrote about this before, where I said that 2012 would be the year when Android tablets would finally be successful. I based my argument on better marketing and, specifically, better pricing of Android tablets. Unfortunately, so far, the same mistakes are being made, and so I thought I’d elaborate a bit on why I think Android tablets are failing to sell at significant numbers.
The bottom line, as I see it, is that there’s nothing inherently bad about Android tablets. In fact, there’s quite a bit that’s excellent about them—whether we’re talking about Ice Cream Sandwich, which so far is available only on the Motorola Xoom and the ASUS Transformer Prime, or Honeycomb, which is on a large variety of tablets and still works perfectly well. Outside of a paucity of optimized tablet apps, Android tablets are great for consuming multimedia content and for light productivity work. In fact, the Transformer Prime makes a for a nice writing machine when integrated with its keyboard dock—better than notebooks in many ways as long as we’re talking about simply putting words on the screen.
No, what’s wrong with Android tablets isn’t that they’re not viable alternatives to the iPad, but rather that nobody knows about them and, where they do, there’s no compelling reason to take a risk. Why buy anything but the iPad 2 if it’s roughly the same kind of device and costs just as much? The inherent advantages of an Android tablet—customizability, flexibility, file system access, more app and content choices, etc.—remain virtual secrets as far as the typical consumer goes. In short, it’s the marketing, stupid.
Marketing – The Four P’s
Now, when some people talk about marketing, they’re really talking about advertising. And let me tell you something: marketing’s about a whole lot more than just how much a company spends pushing ads around, and what those ads look like. Marketing is a complex discipline that spans many aspects of how a company does business, from what products they sell, to how they’re priced, to how they’re promoted, to where they’re sold. In fact, according to my college marketing classes, there are officially “Four P’s” of marketing:
– Product: What kinds of products will does the market demand (and yes, Steve Jobs fans, that includes products that individual consumers don’t even know they want)?
– Price: How should a product be priced? Pricing is a very complex issue, with companies succeeding by being market leaders at both the low and high ends. Apple is a classic example of a company that succeeds at being a price leader at the high end, as are BMW and Mercedes in automobiles. Part of the appeal of Apple products are that they’re expensive, which many consumers equate with being of higher quality.
– Promotion: How should a product be communicated to the market and differentiated from the competition? This includes advertising, direct mail and email, sales (as in salespeople), discounts, sales (as in sale pricing), and other means of promoting a product. Today, that includes social media like Facebook and Twitter.
– Place (distribution): How and where should a product be sold? Technology products are sold in all kinds of ways, including at retail, online, direct, etc. Again, Apple has done the best job here—they’ve created a bunch boutique stores where people visit just to hang out and feel cool, while still managing to sell through their Web site, retail outlets like Best Buy, wholesalers like Sam’s Club, and other online retailers like Amazon.
Clearly, the Four P’s are interrelated and aimed at specific business objectives, like revenues and profits. One can be a price leader at the low end, but that typically means giving up profit margins in exchange for more revenue (by selling more units). One can be a price leader at the high end, but that usually means giving up revenues in exchange for profit margin (although of course Apple bucks this trend, particularly in tablets, by selling more units than anyone else at higher or equivalent prices). Making the best product (better design, better components, more features) means either selling at a higher price or sacrificing profit margins. Selling through retail can mean increasing market coverage but giving up profit margins as the retailer takes their share. The combinations are endless, which is what makes marketing so complex.
Marketing – The Mistakes
Suffice it to say, Android tablet makers have fallen down in pretty much every P. Where they’d done a decent job of distribution and product design, for example, they’ve significantly overpriced their products. The Motorola Xoom was a good product available through a number of sales channels at launch, but it was priced way too high and promoted poorly with a set of overly techie and masculine robot ads that did little to demonstrate the actual value of the product to real people. Samsung does a decent job of promoting and placing their products, but they, too, are priced too high (as much as or in some cases more than the market leader, the iPad 2).
Some companies have done better at pricing, but have fallen down on both distribution and promotion. ASUS is a classic example. They’ve made some very good tablets at competitive prices—the original Transformer was $399 for the 16GB version, or $100 less than the equivalent iPad 2, and the Transformer Prime is $499 for the 32GB version, also $100 less than the equivalent iPad 2. But finding ASUS tablets is a challenge, at least initially. Both the Transformer and the Transformer Prime suffered from significant supply issues during their first few months on the market, and the latter is still hit or miss at retail (and far more miss than hit).
Signs point to more of the same. Toshiba is releasing its Excite tomorrow (the same day as the next iPad’s announcement!) for $529 for the 16GB version, fully $30 more than the equivalent iPad 2 (which will likely drop significantly in price on the same day). Even were the next iPad not clearly on its way, pricing higher than the iPad 2 would be a profound mistake. Given that the Excite is yesterday’s technology—a 10.1” tablet running a fairly pedestrian 1.2GHz dual-core processor—it’s even more confounding that Toshiba would try to take the high road in pricing.
I’d also like to point out the simply appalling product placement at retail. If you’ve ever checked out an Android tablet at Best Buy, you’ll know what I’m talking about. Whereas the Apple iPad 2 has its own section, with actual live, working tablets on display, the Android tablet section is a few rows of non-functional, dirty, broken tablets that often don’t even turn on. Best Buy should be ashamed—if they’re going to devote shelf space to a product, they should make sure it’s decently presented—but it’s mostly the manufacturer’s fault. Apple’s smart enough to know that if a product gives a bad first impression, it’ll never sell. Android tablet makers apparently haven’t picked up on this simple fact, or they’re not devoting the necessary resources to make sure display units are actual selling tools—or both.
Marketing – The Solution
So, what should Android tablet makers do differently? It’s simple, really. So simple, in fact, that it’s hard to fathom why they haven’t figured it out already.
First, recognize that you can’t beat a dominant market leader at its own game. This means, you can’t make a me-too product and price it the same way. Not if you want it to sell, at least. A tablet like the Toshiba Excite should be a minimum of $100 less than the equivalent iPad, and if you can’t manage to make a decent margin at that price, then get out of the business. Toshiba understands this when it comes to notebooks—they make entire lines of well-made, respectable notebook computers that run a fraction of the price of a Macbook Pro—so why can’t they apply this knowledge to tablets?
Second, find a way to show the Android tablet’s advantages. Many people would likely love the customization and flexibility they offer (I provide an example here), with home screens that can act as robust information portals. Others would like the ability to easily purchase content, be it ebooks, music, or videos, from a variety of sources. Still others would like the ability to store and access files locally. So, tell them. Simply and effectively. How hard can it be?
Third, Android tablet makers need to clean up their acts. They should work out better product placement at retail, and make display units more presentable. If that means sending around some paid interns to keep things running well, then so be it. Whatever it takes. While selling online might be sufficient if you’re promoting your product effectively, if you’re going to sell at retail outlets, then make sure you’re putting your best foot forward. Otherwise, it’s likely to get chopped off.
I like my ASUS Transformer Prime quite a bit, but I have to admit to being tempted by the thousands of excellent tablet-optimized apps available for the iPad. That retina screen (notice the marketing there?) is also pretty attractive. If I’m tempted by the iPad 3/HD, then imagine how the typical consumer will feel.
I think Android tablets can be successful. But they won’t be unless their manufacturers study up on their Marketing 101.