Mobile industry gets tablet fever

(This story is part of Connected Planet’s Mobile Data Paradox microsite – an ongoing collection of features, blogs and opinions on the key question facing mobile operators today: how do you make a business of 4G and mobile data?

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It’s been eight months since Apple (NASDAQ:AAPL) unveiled the iPad, yet the rest of the industry has yet to release a challenger to the Cupertino gadget-maker’s latest gamer-changer.

Samsung, however, might have just such a device in the wings with its new Galaxy Tab connected tablet. According to Business Week, the No. 2 phone-maker plans to announce at a New York event this week that AT&T (NYSE:T), Verizon Wireless (NYSE:VZ, NYSE:VOD) and Sprint (NYSE:S) all plan to offer versions of the seven-inch touch-screen Android-powered device — deals that could give even Apple pause, especially if those operators undercut the iPad’s $500-plus retail price through subsidies.

Whether Samsung’s Galaxy Tab mounts an effective offense remains to be seen, but if not the Tab, dozens of other tablet style devices are sure to emerge. It’s frankly the hot device right now, and we’ll be seeing more from PC-makers, phone vendors and possibly even from major software players like Microsoft (NASDAQ:MSFT). Meanwhile the rest of the wireless industry is rushing to support their efforts. Carriers locked out of an iPad deal are craving tablets of their own. Even the chipmakers are tailoring their products for the new segment. ST-Ericsson announced today it is launching a second-generation version of its netbooks' 3G module with power management and sleep modes redesigned specifically for tablets.

Samsung is clearly hoping the same strategy that produced success with its Galaxy line will apply to the tablet line. Though no individual Galaxy phone has proved near the success of the iPhone 4, collectively they’ve done well. By making a bunch of different tablets tailored to individual operators and individual operator needs, Samsung could gain a sizable chunk of market share through variety rather than through each device’s individual appeal. The fact that in the U.S. Samsung can also target the two-thirds of customers not on AT&T’s network with a connected version of the Galaxy Tab is also a major strength.

That strategy follows the same path analysts expect the Android operating system to take in the next few years. Gartner recently projected that Google’s (NASDAQ:GOOG) mobile OS will overtake both Apple iOS and the Research In Motion (NASDAQ:RIMM) BlackBerry OS in units sold this year. In 2014, Gartner predicts, Android will be challenging Symbian — and by inference Nokia (NYSE:NOK) — for dominance of the smartphone market.

It’s not that some specific Android phone or tablet will emerge that will knock the socks off of Apple or RIM in the collective mind-set — though that is a distinct possibility. It’s that multiple vendors will build multiple devices. Some will prove popular, while some will prove to be flops. Google can afford more missteps than an Apple or RIM. Because those companies are the sole manufacturers of their platform’s device, a big mistake in the next tablet or smartphone could set them back considerably. Google’s got a lot more cover.

That doesn’t mean that an Android-based tablet will be an automatic success. Android after all was designed as a smartphone OS, as was Apple’s iOS. One thing the iPad has made readily apparent is some of the limitations of a smartphone platform on a tablet. While not being able to render Adobe (NASDAQ:ADBE) Flash video on the small screen of the iPhone is merely annoying, it’s absolutely infuriating on the iPad (though this may change). The full screen of the device makes people crave a much fuller browser experience, which the smartphone OSes may not be able to deliver. Sure Android supports Flash, but an interview with TechRadar Google mobile products director Hugo Barra plainly stated that the latest version of Android isn’t designed for the tablet form factor.

The other issue is going to be data plan pricing. AT&T has moved the iPad onto its tiered pricing plans, but other operators will have to determine if they plan to treat any new tablet as a smartphone with an unlimited data plan, a laptop/netbook with a strict data cap or something in between. Putting tablets on unlimited 3G network plans is just begging for network chaos. Services like full-length movie streams that might have been awkward on the small screen of a smartphone suddenly become much more appealing on a tablet screen. 

Then there’s the issue of contracts, which subsidies would imply. A cheaper tablet than the iPad would attract a lot of attention, but the contract might turn off more than few potential customers. The iPad, after all, is unsubsidized and contract free on AT&T. Then again, it never ceases to amaze how consumers in the U.S. are willing to sign away years for a $100 discount on a device.