Can the iPad survive the Windows 8 wave, or will history repeat for Apple?

This article may contain personal views and opinion from the author.
Can the iPad survive the Windows 8 wave, or will history repeat for Apple?
Much like CES and MWC have become parades for new Android devices, IFA has been the show for new Windows 8 tablets, and tablet/laptop hybrids. And, the question must be asked: With the wave of Windows 8 about to crest, can the iPad survive? The scene seems to be pretty similar to history that we've seen a couple times with Apple over the years. First, Apple was the king of PCs, then Microsoft took over by numbers. Then, the iPhone was the king of smartphones, until Google's Android army spread out. Now, the iPad is the king of tablets, but Windows 8 is looming large on the horizon.

The threat

To blindly say that Apple will continue to dominate the tablet market is something of a baseless endeavor, but Apple has withstood the threat from Android so far, and at least kept a majority of the tablet market. Android was able to whittle down Apple's lead in the tablet market from somewhere in the high 90% range, down now to somewhere in the low 60s or maybe high 50% range. It has been a slow decline, and even now premium 10" Android tablets don't sell particularly well. So, the iPad's lead has already been weakened, and Microsoft is a much more dangerous threat than Android. 

The key is in exactly what we've seen so far at IFA. Microsoft's hardware partners have continuously announced new tablet/laptop hybrid devices during the conference. And, these aren't devices that are limited by being tied to an App Store, Marketplace, or Play Store. These are devices that run full Windows 8 and have all of the freedom that entails. Additionally, these are devices that carry the Windows name. 

Apple has brand recognition, but Microsoft still holds the PC market by a pretty wide margin, and these devices fall just as much in line with that tradition than the new path carved out by the iPad. Windows has a huge amount of users, and when those users need a new computer, there is suddenly this new choice to either get an iPad, get a laptop and an iPad, or get a tablet/laptop hybrid. Sure, there are Android devices in the tablet/laptop hybrid market, but Android has even less market standing with PC users than Apple does. 

Potentially fuzzy math

The question will partially be in how sales are counted, because these devices could be counted as tablets, as laptops, or as a completely new category. So, we'd say that you should all be ready for some questionable statistics. When (not if) Windows 8 gains enough market share to be mentioned by either Apple or Google during a product announcement keynote, don't be surprised if only Windows 8 RT devices are counted as "tablets" by competitors numbers. Similarly, during a Microsoft product announcement keynote, don't be surprised if all Windows 8 hybrids and Windows 8 RT devices are counted under the same heading. 

And, more than likely, neither side will have numbers that are accurately portraying the market as it stands. The trouble with hybrid devices isn't just in categorizing sales, but in purchase intent as well. Some people may buy a Windows 8 hybrid with the intention of using it mostly as a laptop, and some will buy them to use mainly as a tablet with a full Windows experience. Or, given the average weight of these devices, we're likely to see many users splitting their time between use cases, which should put them into a new category of device. Plus, how do we differentiate between table/laptop transformers, where the screen detaches to become a tablet, with convertibles, where the screen and keyboard never come apart? Is one more of a tablet than the other? 

In the end, the honest numbers will fall into a hazy gray area that is nearly impossible to sort out. 

Apple may not care

Of course, then there's the other question: If Windows 8 does take over the majority of the tablet market from the iPad, will Apple care? 

Probably not. Apple has designed its business model completely on profit margins, not on market share. Microsoft and Google both require high market share to maintain profits. Apple gets a profit margin so large, that it can comfortably continue to exist in the 25-35% market share range. The company survived and thrived when its PC market share never cracked 10%. Now, it has seen its share of the tablet market shrink, and its share of the smartphone market fall quite a bit. But, Apple still records the highest profits around. 

This is what people mean when they say that Apple is the (*insert luxury car company here*) of the tech world. It has less to do with the quality of the product, than it does with what customers will pay, and the price that the company can command. People are generally willing to pay more for an Apple device, regardless of whether it is the best. Add that to the higher subsidies that Apple gets from carriers, and the way Apple controls its supply chain, and you've got the perfect recipe for big profit. 


In the end, that's why this feels so much like we're about to see history repeat itself all over again. To an extent, it would almost feel surprising if Windows 8 doesn't hold the majority of the tablet market within a few years. But, as long as units sold continues to rise, it doesn't matter if Apple's market share falls to just 30% of the tablet market, because its business plan will stay the same. The company will continue to make supply chain deals for cheaper components, and continue to keep as little inventory on hand as possible (its down to somewhere between 3 and 5 days of inventory right now), and that will keep the company profits high, which is all any business really cares about. 

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