Tablet timing: What the TouchPad says of the market

I missed last week’s big news of HP ending the TouchPad and other webOS hardware by only a few hours. The issue was one of timing for me, as about two hours prior to HP’s(s hpq) bombshell revelations — the company is also looking to exit the PC market, where it holds the no. 1 spot globally — I was feeling ill and ended up taking a few days off to rest up and recoup. As it turns out, timing is a central reason to both the demise of the TouchPad, and also why Apple’s iPad is still well positioned for years to come against challengers in the tablet market.

I hit upon the issue of timing earlier this month in a GigaOM Pro article (subscription required), noting that Apple’s iPad was announced in January of 2010 and that so far, no other tablet has yet caught up to what Apple offers. Yes, there are plenty of folks happy with a Google Android Honeycomb (s goog) tablet, but fewer that purchased a BlackBerry(s rimm) Playbook. I’m not suggesting that Apple’s iPad is the best tablet for everyone. It’s can’t be, because consumers all have different needs and preferences. But from an overall sales perspective, there’s no data yet to dispute that Apple currently holds the tablet crown.

How else does timing impact the overall tablet market as well as HP’s decision to table the TouchPad?

  • Consumers aren’t buying devices for their potential. I’d argue that for most people, the iPad is the most complete tablet solution available. Why? Out of the box at launch it had strong third-party app support, as well as backward compatibility with phone apps, a media store, and an operating system interface that tens of millions were already used to. It took more than a year before the first tablet contenders even appeared, and they’re still just now gaining some key features: movie stores, stretch and zoom capabilities for phone apps, for example. Consumers want a complete tablet experience, not one that’s “coming soon.”
  • If tablets are the future, companies must commit for the long haul. HP’s $1.2 billion investment in webOS convinced me that it was in the tablet race for the long haul. I defended the company’s move to sell the TouchPad at a discount — and bought one of my own at the time — only to find out a few days later that I was wrong: HP wasn’t selling the tablet at low prices to quickly expand the user base and help attract developers. HP apparently gave the TouchPad one brief chance to gain an audience, which it didn’t do at full price, so the product’s plug was pulled in a short amount of time. Research In Motion and the many Android tablet makers should take note: To compete with the iPad, be prepared to invest much time and money.
  • When a product comes to market is nearly as important as the product itself. The tablet landscape might be very different if all of the iPad competitors arrived a year ago. I still believe, for example, that webOS offers a smart and effective user interface. Had HP been able to deliver the TouchPad last summer, it might have held the No. 2 tablet spot right now. Instead, Apple’s iPad has the mindshare of both developers and consumers, in addition to enterprises. By not delivering viable tablet alternatives for more than year, Apple gained valuable market share. At this point, hardware makers are only setting themselves up for strict comparisons to the iPads already in use.
  • Timing is key to partner strategies. It’s easy to look back in hindsight, but clearly, HP should have lined up a hardware partner to license webOS before announcing the demise of the TouchPad. At this point, the lack of a hardware partner makes the webOS software look like a dead product to many, including consumers and developers. Now the webOS asset looks more like a liability: Who will take the chance to create hardware by licensing the platform now? Had a partner been announced first, the future of webOS on a tablet might show promise. Instead, it now looks like a big risk that already hasn’t paid off for two different companies: HP and Palm.

One other aspect to the tablet market that’s worth mentioning is pricing, since the $99 TouchPad fire sale has resulted in nearly a complete inventory sellout in just a few days’ time. Consumers are willing to pay between $100 and $150 for a product that offers solid basics. The TouchPad certainly has glaring software gaps, but excels a browsing, email, calendar activities, and messaging to name a few functions. Even though the future of webOS as a platform is murky at best — and so too is third-party developer support for a platform that has no hardware to run on — a very basic tablet at a low cost may be hard to keep on store shelves.

I think that bodes well for an Amazon(s amzn) tablet entry because the company is likely to differentiate its tablet from the sea of slates. A low-cost device — say $150 to $200 —  that does the basics really well, along with Kindle experience, Amazon’s Unbox video service, and a limited but curated application store, could be a big seller, even if arrives later than all the other tablets. And that’s the key: If you’re going to jump into the market later than others, you either have to offer a complete package at an appealing price from the start or be willing to commit for long haul. One look at how Apple entered the crowded MP3 player market and rose to dominance shows how such a strategy can pay off.