Ben Thompson has written a great analysis of the differences between the phone market and the tablet market, highlighting many similarities with the music player market:
- The iPhone requires carriers; the iPod and iPad don't
- iPhones are sold through carriers; iPods and iPads are sold through retail
- iPhones are sold at a subsidized price; iPods and iPads are sold at full price
- iPhones have limited distribution; iPods and iPads are available everywhere
- iPhones are part of an indispensible product group; iPods and iPads are luxury items
- There is only one iPhone; iPods and iPads are product families
The importance of these points cannot be understated, however Ben also notes one critical difference between the tablet market and the music player market:
While the iPod faced its share of low-priced knock-offs, its brand-name competitors had the same business model as Apple – i.e. selling hardware for a profit... While that is the case for Samsung, it’s not true for Google’s Nexus 7 and the aforementioned (Kindle) Fire.
For structural reasons, Apple can’t and won’t match Google and Amazon pricing, but I believe they will be more aggressive than most people expect with this year’s upgrade cycle.