Motorola Xoom Underperformance Doesn't Weaken Android Tablet Chances

Motorola's Xoom tablet may be underperforming in the marketplace, but that doesn't prevent upcoming Android tablets from challenging Apple's iPad dominance.

Of all the tablets challenging iPad for market share, the Motorola Xoom was supposed to be the Ali to Cupertino's Frazier, striking a blow against Apple's dominance with a powerful combination of high-end hardware and the tablet-optimized Google Android 3.0 ("Honeycomb").

But fresh analyst reports hint that the Xoom, hit with early criticism over its premium price-tag and some half-baked features, isn't selling nearly as well as some hoped or expected. "Based on our checks, we believe overall sell-through trends for the Xoom ... have been disappointing," Pacific Crest analyst James Faucette wrote in an April 5 research note, as he slashed his 2011 revenue estimate for Motorola.

Meanwhile, Deutsche Bank estimated that Motorola has sold 100,000 Xooms since its Feb. 24 release. That would dovetail with a mid-March report from Global Equities Research, reportedlhy based on channel checks, which suggested the Xoom was selling at a sluggish pace.

The 10.1-inch Xoom sells for $599 with a two-year Verizon Wireless contract and $799 unlocked. It features a dual-core 1GHz processor, front- and rear-facing cameras for video conferencing, and 4G upgrade capabilities.

Even as outside sources suggest the Xoom is struggling to find its footing in the marketplace, consumers seem to be flocking to the iPad 2, with widespread sellouts reported at Apple's retail outlets. Consumer Reports also gave the device a high rating, suggesting in an April 5 statement that "Apple is leading the tablet market in both quality and price, which is unusual for a company whose products are usually premium priced."

The publication tested 10 tablets, including the Motorola Xoom and Samsung Galaxy Tab, before deciding that the 32GB iPad 2 with WiFi and 3G ranked highest across 17 criteria ranging from portability to touch-screen responsiveness. The Motorola Xoom, meanwhile, tied in those rankings with the first-generation iPad.

It was tempting for many pundits to position the Motorola Xoom as a possible iPad killer. Should the device's confirmed sales numbers indeed prove mediocre, it would be equally tempting to see that lackluster performance as yet another sign the iPad has sucked all oxygen out of the tablet market.

But the Xoom's underwhelming performance (again, if confirmed) could have its root in any number of self-generated causes: high cost, a lack of tablet-optimized apps, the requirement that early adopters send their tablets back to the manufacturer to actually install 4G, a confusing advertising campaign that suggested the Xoom's primary function was to convert into some sort of futuristic jet-pod.

The Xoom's possible crash-and-burn, however, doesn't necessarily affect other tablets' chances at having an effect on the market. For one thing, there are indications that devices prepping for release over the next few months-including the Samsung Galaxy Tab 8.9 and 10.1-will arrive at a comparable price point to the iPad 2.

Second, there are indications that Google, concerned about platform fragmentation and competing against Apple's tightly integrated software-hardware stack, is bringing a little bit more law-and-order to the Android platform.

"In the short term, [Google's decision to lock down] re-enforces the notion that there are some quality issues from the Android app portfolio," Al Hilwa, an analyst with IDC, wrote in an April 1 e-mail to eWEEK. "These are the result of lightweight automated procedures around app approval and we have seen the negative effects in terms of usability, privacy and security."

He also noted that Android's fragmentation issues, stemming from Google's previously-loose standards, harmed "the perception of quality and value which ultimately determines the profitability of devices and success of apps for developers." Locking down, therefore, could help create a stronger Android Marketplace that gives the platform more parity with Apple's App Store.

Paired with the tablet-optimized Honeycomb, that boosted Android Marketplace and tighter Google control could help Samsung, LG Electronics, Toshiba and other upcoming tablet manufacturers sell their wares as quality rivals to iOS. Those tablets will also feature better hardware, including dual-core processors and higher-megapixel cameras, all of which could draw consumers-if the price is right, and if those companies herald the tablets' launch with compelling advertising campaigns.

In other words, the tablet market is still in the early stages. The possible failure of one high-profile competitor doesn't necessarily mean that Apple's iPad will dominate the market in the longer term.