A sea of tablets at CES, but no iPad-killer

LAS VEGAS Sat Jan 8, 2011 3:23am IST

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LAS VEGAS (Reuters) - It was easier to find a tablet this week in Las Vegas than a taxi.

Rivals determined to prevent Apple Inc from dominating the tablet market the way it did with digital music players unleashed a tidal wave of touchscreen devices at the Consumer Electronics Show.

This year may well produce a viable competitor to Apple's iPad. But CES only served to underscore the challenge they face.

Of the slew of tablets on view at CES, devices from Motorola and Research in Motion were standouts. But none rose to iPad-killer status, analysts said. Some, lazier vendors seemed to use the show as a whiteboard to sketch out half-baked ideas.

Rich Beyer, chief executive of Freescale Semiconductor, which makes chips for tablets, said in an interview ahead of CES that Apple's rivals are still testing the market.

"I think a lot of people are hoping that this market is not going to be like Apple and the MP3 market."

Rivals are already playing catch-up, after Apple moved assertively to define the tablet market, sacrificing its precious margin profile to price the iPad at $500.

There is undoubtedly an opportunity for other tablets, particularly with different screen sizes and in the corporate market, where Apple has not traditionally been very successful. And the sheer ubiquity of tablets based on Google's Android software makes that the platform that Apple cannot ignore.

The tablet segment is expected to more than triple to 50 million units in 2011, with Apple seen as by far the dominant vendor.

Despite Apple's big head start, no one expects its competitors to stay away. Sony Corp said it hopes to become the world's second-largest vendor of tablet devices by 2012, but failed to show anything.

Paul-Henri Ferrand, head of consumer marketing for Dell, said: "Apple can't expect to have the tablet market to itself."

CORPORATE DEMAND

A host of manufacturers are producing tablets based on Android, which is free to license. But Android tablets will face the added challenge of not only competing against the iPad, but also one another.

"Android will be a key player in the tablet market but it will be hard for any single vendor to challenge Apple," said Gartner analyst Carolina Milanesi.

Lenovo, LG Electronics and Asustek Computer were just a few of the companies showing off Android tablets at CES.

Some tablet makers await the next version of Android, known as Honeycomb, expected in the next few months, before moving ahead.

"The key to non-iPad market is a more robust version of Android," said Ujesh Desai, vice president of product marketing for Nvidia, whose fast, dual-core Tegra 2 chips power tablets from Dell and Toshiba.

"With every update that they've come out with, it proves that they're getting better and better," he said.

Microsoft's Windows software is cropping up on a few tablets, but it is not well-suited for the devices.

Kumu Puri, a senior executive with Accenture's consumer electronics practice, said vendors cannot ignore tablet demand from corporate customers.

"If the traditional computer manufacturers aren't thinking about how this is going to effect their lineup for the enterprise, they might end up holding the bag," she said.

Tablets from RIM and Hewlett-Packard will be closely watched precisely because they do not use Android, and may be able to offer users an experience they cannot get elsewhere.

RIM's 7-inch PlayBook tablet, set to launch in February or March, received positive early reviews after the company offered hands-on demos at CES.

HP is hosting an event in early February where it is expected to show off a tablet running on webOS software, which the company acquired when it bought Palm last year.

(Reporting by Gabriel Madway, editing by Matthew Lewis)