London - Apple is facing a similar challenge with the iPad as it has with the iPhone - battling lower-cost rivals and proving that incremental changes to existing products are enough to win new customers. Apples market share in tablets has fallen from 62 percent to 30 percent from 2012 to 2013. This will not unduly concern Apple, it has never focused solely on market share, the company is more concerned with maintaining high margins on its products. Apple has made the same play with the iPad Air as it did with the iPhone 5C, which is to not compete on price, instead to focus on quality and design.
There is nothing spectacular here from Apple, the launch shows a continuation with the familiar iterative strategy. There will of course be a bump in sales with the holiday season coming up; however these iPads do not fundamentally change the market dynamics.
The real story here is the fact that Apple is giving away Mavericks OS for free, and with iLife and iWork also free, we can see Apple is set on commoditising the software market. By using its hardware revenues to subsidise its software business, Apple is taking full advantage of its vertically integrated model, making it extremely difficult for those companies that make a living from software. Specifically, this will force Microsoft to reconsider their pricing strategy, and considering around 96 percent of its operating margins are from software licensing, this move from Apple should have Redmond very concerned. Additionally, moving more users onto the same operating system drives less fragmentation across its devices, and readies Apple to merge OS X and iOS in the near future. With iPads and iPhones also now on 64-bit processors, we are on a way to a device agnostic platform. This is part of the larger, more important move for Apple, more important than any specific product launch. Building the infrastructure for a seamless ecosystem experience across iOS and OS X is crucial to the long-term success of the company.
As Nokias product roadmap comes to an end, Microsoft continues to persist with its RT platform With Microsoft recently launching the Surface 2, Microsoft basically have two of the same devices on the market, considering the $900m write-down the company took last quarter on the original Surface RT, this is a bold move. The Lumia 2520 matches the Surface 2 spec-for-spec, that being said, more devices on the market is good for Microsoft as it extends the reach of their Windows platform.
The device itself shows exactly why Microsoft bought Nokia, it is an amazing piece of hardware, and Nokia's expertise is creating beautiful looking devices will be welcomed at Microsoft considering its struggles with the original Surface. From a Nokia product roapmap perspective, a Tablet would have been a critical part of building out the Windows ecosystem. This is very much finishing the roadmap, before Nokia transitions onto Microsoft products.