Is Windows 8 an existential threat to Android tablets?

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Nagging questions shadow the impending launch of Windows 8, threatening to scuttle Microsoft's plans to reinvent itself for the age of mobility. Will desktop users graciously accept the redesigned Modern interface? Will the Windows Store have enough apps to entice would-be Surface RT buyers? Can Windows 8 breathe life into sagging PC sales?

Microsoft's future success depends on its ability to make serious, quantifiable, no-nonsense headway in the mobile market, but it’s not the only company with a massive stake in the ultimate fate of Windows 8. The new operating system will also have a major impact on Google. Just look at the list of Microsoft’s Windows 8 tablet and hybrid partners—Samsung, Asus, Toshiba, and the rest. They all make Android tablets, too.

Apple’s position in the tablet market is so dominant that it need not fear encroachment by Windows 8 devices. But most of Google’s hardware partners—especially the ones that make the larger, so-called productivity devices—need to ask themselves a tough question: Will Windows 8 obliterate consumer interest in Android tablets?

Early opportunity squandered

At least one expert thinks that this question isn't hard to answer. Forrester analyst Sarah Rotman Epps sees a bleak future for Android tablets.

The Kindle Fire HD, which emphasizes media consumption, is one of the few Android-based tablets that consumers want.

"No one's buying Android tablets other than Amazon or Barnes & Noble [models] anyway," she says. "If there’s a market for non-Apple tablets, it has been and will be Windows. It’s pretty clear that there just hasn't been any demand for Android tablets other than the niche earlier-adopter market, while Windows has mainstream consumer interest."

Despite being the only major tablet alternative for people who don't want to bite into Apple, Android has clearly had little impact on the tablet market. IDC's second-quarter tablet report shows that more than two-thirds of all tablet shipments originated in Cupertino, and even those numbers don't tell the full story. IDC (which is owned by PCWorld’s parent company IDG) and other top research firms track tablet shipments to retailers, not tablet sales to customers. So when you take into account that some variable proportion of shipped Android tablets languish unsold on retailers' shelves, Android's situation may be even bleaker than IDC's numbers suggest.

In the recent Apple vs. Samsung case, for example, court filings showed that Samsung had managed to sell only 712,000 Galaxy Tab 10.1 tablets in the United States since the slate's launch. Those are sad numbers, given that many observers considered the Galaxy Tab 10.1 to be the perfect iPad alternative for much of 2011.

Also troubling for Google's operating system is the fact that the Kindle Fire—Android's brightest tablet star and best tablet seller—is not the droid you're looking for. It runs a proprietary, heavily skinned interface that renders it more of a content delivery system for Amazon than a proper Android tablet.

Ominously, the Kindle Fire accounts for the majority of Google tablet sales. IDC claims that Amazon is the world's third-most-prolific tablet manufacturer, even though Amazon sells its slate only in the United States. And reports from ComScore, Pew Research, and Amazon itself indicate that the Kindle Fire outsells all other Android tablets combined.

In other words, Android owes most of its slim slice of market share on an Android tablet that doesn't look or feel at all like a pure Android tablet. Google's baby is sucking wind, folks.

Cue the Windows 8 tablets.

Windows 8 and its direct Android prey

Finding agreement among tech industry analysts is always a challenge. Nonetheless, all the analysts I consulted agree that Windows 8 tablets will devastate the handful of productivity-focused Android tablets on the market, such as the Asus Eee Pad Slider and the Asus Eee Pad Transformer series. Whereas security concerns have prompted risk-averse corporations to shy away from Android tablets, Microsoft's operating systems sport deep, business-friendly features—including the all-important Microsoft Office.

Image: Loyd Case
A Windows 8 productivity machine like the Asus Vivo Tab could threaten existing Asus products like the Eee Pad Slider and Transformer series.

"I think [productivity-focused Android tablets] are going to fade away," says Rob Enderle, the principal analyst of the Enderle Group, summing up the group consensus. "I think we'll see Windows convertibles and hybrids pick up that category. The keyboard really goes with Office."

The analysts I contacted also agree that Windows tablets will quickly gobble up Android's market share in the premium-priced tablet segment. Dropping $500 or more on a 10.1-inch Android tablet requires a lot more deliberation than spending $200 on a 7-inch Google Nexus 7. For this reason, analysts believe, consumers will flock toward the more seamless (and less glitchy) Windows experience when going for a big-screen (and non-iPad) tablet.

But will Android tablets vanish entirely? Most of the experts I spoke with don't think so. Excluding Forrester's Rotman Epps, most analysts expect Android tablets to be around for the long haul, albeit in a niche role that focuses on low prices and media playback.

A possible path for Android success

"I think there will be a market for 7- to 10-inch, very inexpensive Android tablets," says Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. "Not from the major makers, but off-brand. Android tablets will be the budget option."

Google's Nexus 7 is squarely focused on consumption, not productivity.

"There’s a reason why Google came out with the Nexus 7," says Gartner's Carolina Milanesi. "It basically was a very loud message to the OEMs saying, 'Stop trying to be Apple, because you're not. And you're not going to be successful competing at that price point or that form factor. Go cheap. Go $199, so it becomes more of an impulse buy, and consumers will get them and watch videos, listen to music and play games.' All of which is very much media-centric and content-centric."

Enderle agrees, calling the Nexus 7 "the quintessential Android tablet, almost entirely focused on consumption, and that's probably where Android is going to continue to shine."

Rotman Epps doesn't buy this analysis, though: "Other than Amazon, [OEMs] just aren't selling any Android tablets. The iPad mini, if that comes out as we expect it to, will be the final nail in the coffin for Android tablets."

The other analysts think that if Android tablets do die off, it will be due to other causes entirely: lawsuits and Google's lackluster OEM support.

Manufacturers fear the reaper

Even if customers suddenly decide to support Android tablets, OEMs may not stay in Google's camp now that Microsoft has joined the fray. The analysts we contacted say Google's reputation for dealing with manufacturers is spotty at best; in contrast, OEMs generally enjoy working with Microsoft, occasional Surface tablet tensions aside.

Image: Loyd case
After suffering considerable grief over its Android devices, will Samsung give preferential treatment to its Windows 8 tablets, like this ATIV SmartPC?

Hardware manufacturers jumped on the Android bandwagon primarily because it was the only way for them to join the tablet revolution. In that sense, Apple helped spawn Android tablets, but now Apple might be the hammer that drives manufacturers away from Android for good.

"What really triggered the trend [of manufacturers hedging their bets with Android devices by also developing Windows devices] isn't so much customer satisfaction issues as much as that $1 billion judgment against Samsung," Enderle says, pointing to the sudden ramp-up of Windows Phone development by HTC and Samsung as examples.

"A lot of the OEMs really sweat bullets about being next on that particular list. Apple's actually doing Microsoft one hell of a favor here. That $1 billion judgment made 'free' not so free,” Enderle notes, referring to the ostensible price that Google charges OEMs for Android.

Gartner's Milanesi agrees that the risk of litigation from Apple encourages OEMs to see the value in adopting a Microsoft OS that costs money up-front. When you're in the Microsoft fold, she says, you're protected against Apple lawsuits, and Redmond also chips in with marketing costs and support for the developer community.

Where do manufacturers stand?

What do the companies that have skin in the game think about Android tablets' prospects for long-term survival? On the record, they're decidedly less pessimistic than the analysts are, which should come as no surprise, as they have to be cautious when making comments that might reflect on their roadmaps. Nonetheless, the OEMs do acknowledge the altered role that is likely to define Android's future.

Jay Parker, Lenovo's head of consumer/SMB operations for North America, recently told AllThingsD that the company plans to offer Android tablets "for the foreseeable future," but that it will offer only Android slates built in the Kindle Fire mold: small, cheap, and designed for playing around.

"We see them as pure media-based devices, where people are going to be surfing the Internet, reading books, or watching a movie, and really not a heck of a lot else," Parker said.

Acer makes the W510 Windows 8 tablet, but says that it's definitely not abandoning Android.

When asked whether Acer plans to support both Android and Windows 8 tablets, Paul Tayar, Acer America's director of product marketing for connected devices, unequivocally says "yes."

"The more ecosystems that we can play with and have available, the better we, as OEMs, can come up with developing the right hardware for the right consumer,” Tayar says. “Having options available to us lets us bring fresh solutions, and fresh designs, and fresh technology to the table."

Tayar feels there's enough consumer interest to support “even more than three” distinct operating systems, largely because of the very different user experiences offered by Windows 8 and Android. Windows tablets are more focused on productivity and might be more suitable for stationary office settings, whereas Android tablets tie deeply into Google's cloud-connected vision, and might appeal to people interested in everyday, on-the-run use, thanks to their smaller sizes.

Acer plans to tailor its hardware to take advantage of the specific ecosystem advantages of Windows 8 and Android. "You will not see a Windows 8 tablet, and then see the same tablet two days later with Android," Tayar says. He doesn't think Android will disappear any time soon.

"The Android market space, in both tablets and smartphones, is pretty much vindicated by the number of applications that are out there," he says. "That market has been validated. It's the real thing. It's not something that you're wondering 'Is this space going to exist or not?'"

You thought the Windows Store lacked tablet apps?

Tayar's last comment raises an interesting point: None of the analysts I spoke with think Android as a whole is in danger of dying, as the phone platform remains quite strong. Google Play features an abundance of Android apps—more than 675,000 by Google's last count—and the overwhelming majority of them are designed for smartphones, not tablets.

But that situation, too, is a double-edged sword for Google, as Android phone apps tend to translate poorly to the tablet experience.

Image: Robert Cardin
Ironically, for all its inventory problems, the Windows Store may quickly eclipse Google Play in terms of pure tablet apps.

"Microsoft hasn't even launched the Windows Store yet, and it probably has five times more tablet applications than Android does," Moorhead says. For context, consider that the original 7-inch Samsung Galaxy Tab kicked off the Android tablet effort nearly two years back.

Despite some blustery talk by Google chairman Eric Schmidt, signs indicate that Google is finally beginning to understand how serious the Windows tablet threat is. Google recently improved its Google Play developer console and finally—finally!—introduced a set of tablet design guidelines for developers. "I think that they'll even give incentives for developers to develop applications," Moorhead says.

Incentives are crucial because Microsoft is gunning for those same developers, with an extensive support system that draws raves from developers. If Google wants an Android future on anything other than smartphones and embedded systems like Google Glass, it must convince some of those developers to create tablet-specific apps for its OS.

Yea or nay: Will Windows 8 tablets kill off Android?

Android tablets won't burst into flames on October 26 in some kind of self-destructive conflagration. Manufacturers won't pack up and leave Google holding the bag just because Microsoft is selling tablets—at least not initially. But serious questions loom over the launch of Microsoft's next-gen operating system, and until the company can allay some of those concerns, partners like Acer, Asus, and Lenovo will probably ride the fence until a clear market winner emerges.

But Microsoft isn't afraid to play the long game or to toss billions of dollars at marketers and manufacturers to ensure that its tablet initiative ultimately pays off. When—not if—Microsoft clears the initial hurdles, Google will have to step up its own game to ensure that Android tablets have a fighting chance, even as budget options.

Sure, Android might be the best choice for inexpensive media slates. But Google needs to get busy to bolster even that path to success, especially if Apple releases a miniature iPad. Google must do more to stimulate app development. It must work more amicably with OEMs. And it must step up to the plate, and protect its partners from Apple's litigious wrath.

If Google doesn’t do all of these things, manufacturers could very well throw up their hands and join the Windows team for good. Then we'd see the classic Apple/Microsoft duopoly all over again, this time in the mobile arena instead of on the desktop.

Will Windows 8 tablets kill Android tablets? Only Google can answer that question.

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