NEW YORK ( TheStreet) -- Holiday sales of tablets may sort out the winners from the losers in a technology sector inundated with ambitious hardware and software rollouts. After years carving out distinct identities, Apple ( AAPL), Google ( GOOG), Microsoft ( MSFT) and Amazon ( AMZN) are sprinting toward the end of 2012 in a dogfight for mobile-device supremacy. Operating systems and apps are a big part of the story. As in past market-share grabs for the hot new tech gadget -- think the smartphone or the digital music player
otherwise known as the Apple iPod -- there's likely to be a long list of losers. PC makers are getting in on the act: Dell ( DELL) and Hewlett Packard ( HPQ), along with Barnes & Noble's ( BKS) Nook and, in early 2013, Research In Motion's ( RIMM) BlackBerry 10. The size of the competition is an indication of just how high the stakes are for a piece of the tablet market. Consumers shopping for tablets this holiday season aren't just picking hardware, they're also deciding the software and online stores they'll use for years to come -- long after this year's crop of tablets, smartphones and e-readers becomes obsolete. Winning the device battle may lead to an even richer score. There's the battle for operating systems, in this case iOS (Apple), Android (Google) and Windows 8 (Microsoft), and for interfaces such as the iTunes Store, Google Play, Nook and Amazon Prime, as consumers increasingly shop via mobile devices. The savvy among us probably have already aligned ourselves with chosen devices and operating systems, so I decided to canvass the market for tablets and e-readers with a swing voter this holiday season: my mother. A language specialist by trade, she's an able user of computer essentials such as PowerPoint, Word and Outlook. She owns a MacBook and an iPhone 4S. Still, she's yet to fully realize the capabilities of her smartphone -- outside of Siri and the camera -- and hasn't synched it with any home electronics. I suspect she's the type of prospective buyer whom tech giants are trying to win by year-end. A tablet or e-reader could pique her interest in apps, unveil the possibility of over-the-top media, and make everyday shopping and travel easier. After a Sunday spent shopping in New York City, here are three insights on the device market with three weeks left in the holiday season.
Amazon Needs an Apple Store As the world's largest online retailer, maybe Amazon should never open a retail outlet. As a tablet and e-reader upstart with an emerging media and e-commerce platform that could rival iTunes and the App Store, Amazon needs a branded retail presence to match Apple. Given that my mother already owns a high-end laptop and smartphone, Amazon's Kindle Fire devices would appear to be a cheap and seamless way to fill out her tech needs. After all, she's already a frequent Amazon shopper and could easily be coaxed into signing up for Prime. A tablet's biggest selling point to her -- better reading ease -- plays into Amazon's content library and she's yet to commit to a steaming video service like Prime, Netflix ( NFLX) or Hulu. We visited Best Buy ( BBY) primarily to try out Kindle tablet devices. The service was great, but too bad no one wanted to show Kindle Fire's to us. After reaching out to a salesperson for a primer on tablet and e-reader options, Amazon's Kindle Fire came in far behind Apple's iPad products and the Google Android-powered Galaxy Note, made by Samsung. The sales team had little positive to say about the Kindle Fire as a tablet, and they spent much of our search showing off the gaming functionality of the Galaxy Note. The last video game my mother played was likely from the Pac Man era. Amazon needs to take control of its tablet push, especially given the company's investment in its hardware and infrastructure. Without retailers fully committed to selling its platform, a big-box salesforce that doesn't breathe everything Amazon may not give the Kindle Fire and Prime their fare shake. Meanwhile, with Wal-Mart ( WMT) and Target ( TGT) reluctant to sell devices that could quicken Amazon's ascent, branded retail outlets may simply be a matter of practicality. Consumers have a do-it-yourself spirit when hunting for online shopping deals. When it comes to explaining the value proposition of Amazon's Kindle as a hardware and software product, consumers need to be coddled. That's what the Apple store is about and what Microsoft stores are hoping to achieve. Amazon needs to follow suit. See TheStreet's review of the Amazon Kindle Fire
Who Is Microsoft Competing Against? Demoing Microsoft's Surface tablet and the Windows 8 operating system at the company's banded kiosk in Manhattan's Time Warner Center proved to be a far more hands-on experience than our brief encounter with the Kindle Fire. Microsoft employees did a fine job showing the product and, at first glance, it seemed like a simple and intuitive operating system that has clear benefits to Apple's iPad and iPhone products. Constantly updating email, social media tiles and split screen functions appeared to be efficient and helped to make the tablet seem on par in functionality to a laptop. The keyboard, the ability to switch to a desktop mode and USB port all seemed valuable for users needing to work on the fly. But the functionality of the Surface for work-related uses also raised questions of whether it truly is a consumer product. The Surface isn't mobile-broadband-enabled and, some might say, has the soul of a laptop, not a tablet. Without broadband, Surface doesn't fit into all-you-can eat Verizon ( VZ) and AT&T ( T) family plans. Meanwhile, for current laptop owners, it's not clear how much of a benefit Microsoft's Office products and desktop convertibility will be. Unlike the Kindle store, Microsoft's store isn't compatible with Apple smartphone devices and it wasn't immediately clear how online book, app and video offerings would stack up to Amazon or Apple. It means if you're already a loyal Apple or Android user, the bar is very high when it comes to switching costs versus benefits. The Microsoft Surface also didn't appear to be a choice between it and an Apple, Amazon or Google-powered tablets, as much as it raised the question of whether to ever buy a laptop again. It appears to compete directly against Dell and HP Wi-Fi-only devices, and may be more appealing as a business-use tablet, cutting into Research In Motion's market when the company launches BlackBerry 10 in early 2013. Surface may beat Dell and HP tablets, but the real fear should be whether it steals from their prospective laptop customers. While Amazon's Kindle allows users to weave it into smartphone hardware from competitors like Apple, Microsoft's Surface also seems like more of an all-in proposition. As a tablet, questions about the Surface remain. However, as a possible replacement to a laptop or netbook, it seemed like a leap forward. See TheStreet's review of the Microsoft Surface.
Apple Switching Costs Are Hard to Overcome Apple took the early lead in the consumer smartphone and tablet market, and those who still have a personal use computer at home are likely to be using the Apple iOS. Consumers who have built a portfolio of Apple products by way of MacBooks, iTunes accounts, iPhones and iPods probably would never switch. Even for tech agnostics like my mother, the fear of moving to a new content store and operating system may be too big to overcome. But even if all iOS users remain entrenched with the operating system and don't move over to Android, Windows 8 or whatever BlackBerry 10 will be, there's reason for some tablet makers to be optimistic. The Kindle seems to nicely blend Amazon's online retail and content expertise, while allowing prospective users to continue to be compatible with their Apple wireless devices. Meanwhile, the Kindle Fire HD 8.9's $50-a-year wireless broadband contract may be a strong alternative to tiered data plans offered by carriers like Verizon and AT&T, given the prospect of data-overage charges from a streaming video player. Barnes & Noble's Nook may prove to have similar interoperability with more ambitious software giants like Apple and Microsoft. While Apple certainly is facing the stiffest competition yet in competing hardware, software and content stores offered by Google, Microsoft and, to a lesser extent, Amazon and Barnes & Noble, there seems little reason for Tim Cook and Co. to sweat it out this holiday season. My mother went into our tech-product tour wanting either an iPad or iPad Mini, and she emerged from a whirlwind presentation of alternatives still wanting an Apple tablet. See TheStreet's review of the iPad Mini and the iPad Follow @agara2004 -- Written by Antoine Gara in New York