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Tablet War Is Heating Up...for Second Place

Tablets are all engaged in an epic battle for dominance of second place behind Apple's iPad.

New tablets are being unveiled and launched at a dizzying pace. If the rate of new tablets being introduced was an effective measure of the tablet market, everyone would have two of the devices already and be shopping for a third. The feverish pace of tablets isn't an indication of the tablet market as a whole, though--just a sign that the race for second place is in high gear.

Just in the past couple of weeks we have seen demand for the HP TouchPad reach Cabbage Patch doll Black Friday levels, Lenovo quietly unveil a sub-$200 tablet, and details emerge about the mythic upcoming Amazon tablet.

In a matter of less than two months, HP went from launching the TouchPad with grandiose claims of going head to head with the Apple iPad to pulling the plug on the device and getting out of the tablet business entirely. HP simply could not sell the device when priced the same as its Apple iPad 2 rival.

In fact, even with a price drop to $400 few were convinced. When there was a temporary weekend rebate to $300 there was tepid interest, but still not very impressive. But, when HP cleared out the inventory at $99 after killing the tablet it sold them all in a matter of hours.

So, is that it? Is the answer to the tablet war competition to simply race to the bottom and undercut price?

If so, it's game time! Lenovo revealed details of the IdeaPad Tablet A1 this week. The 7-inch tablet is not the greatest or fastest tablet out there, but at $199 it offers enough features and capabilities to at least make a compelling case.

Then, there's Amazon. It has been rumored all year that Amazon is developing its own Android tablet, and many pundits have put their money on Amazon as the tablet competitor finally worthy of going toe to toe with the Apple iPad.

Thanks to MG Siegler of TechCrunch, we have a firsthand account of a Kindle tablet pre-production prototype. Siegler says the 7-inch device runs a proprietary Amazon fork of the Android operating system, and is expected to retail at $250. For all of the hype and expectations, though, this device sounds like it is designed to go head to head with the Nook Color 2, not the iPad 2.

Amazon may sell 5 million of them, but I am not sure it will dent iPad 2 sales. The people who will buy the new Amazon Kindle Android tablet probably already own an iPad. In my house we have an original iPad, and an iPad 2, and a second-generation Kindle, and a third-generation Kindle because the iPad and the Kindle are both great devices that have some minor overlap, but don't directly compete with one another.

The reality is that the iPad has no competition right now. All of these rivals are in a cage match to the death...for second place. They can launch new tablets every other week and have cutthroat price wars with each other. While these tablet competitors "ship" hundreds of thousands or millions of tablets, actual sales are in the thousands--tens of thousands for a "great" tablet.

Meanwhile, analysts estimate that Apple will sell roughly 45 million iPads (including both the original iPad and the iPad 2) in 2011. Not "ship", sell. Apple isn't slashing its price or offering rebates either. Apple can barely produce the tablets fast enough to keep up with demand, while the rest of the tablet field is engaged in a vicious battle for a fraction of the market that represents a drop in the bucket to Apple.

I am still holding out some hope for Amazon. I am hoping that the rumored 10-inch model is more tablet and less Kindle, and offers a better rival for the iPad.


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