At retailers, iPad faces new foes

The tablet era has arrived at big-box retailers, which are now setting aside large swaths of floor space previously devoted to traditional PCs.

Best Buy is probably the highest-profile example of this trend. At U.S. stores, it has overhauled--or is in the process of overhauling--display areas. Tablets like the Samsung Galaxy Tab 10.1, Motorola Xoom, and Hewlett-Packard TouchPad now get prominent placement at stores, rendering the iPad just one among equals.

This is all part of Best Buy's "Tablet Central" strategy. Here's how Bill Seymour, vice president of investor relations at Best Buy, explained it during the company's earnings conference call last month. "We're making a big push in tablets this year...We started rolling out Tablet Central in May. In the beginning of July, we expect it will be in all of our 'big-box' stores," he said.

In fact, this strategy is already obvious at many locations. In the Los Angles area, for instance, when a customer walks into the PC section of some stores, they are greeted by an array of individual displays featuring the Xoom, Galaxy Tab (which both run Google's Android operating system) and the TouchPad (running the WebOS). Walk further into the store and large tables hold a variety of tablets and e-readers from other vendors such as Acer, HTC, RIM, Amazon, and Barnes & Noble. And more tablets are on the way, including Toshiba's Thrive.

Aside from giving the iPad much-need competition, what does all of this mean? Even casual observation makes it apparent that a pretty radical change is afoot. As more retail real estate is occupied by tablets, proportionately less is devoted to traditional personal computing devices, such as the clamshell laptop.

And Best Buy likes what it sees so far. "We've been able to sell virtually everything that we're getting as this category continues to generate excitement," said Mike Vitelli, president of Best Buy Americas, when queried about tablets by an analyst in last month's earnings conference call.

But will other brands be able to replicate the iPad's phenomenal success? To date, a lot of Best Buy's success with tablets is due to iPad sales, said Richard Shim, an analyst at DisplaySearch.

Best Buy is "hoping that these other players can bring in the same sort of business as the iPad did," said Shim. HP is even sending their own people to about 100 select stores in the U.S. in an aim to boost sales of the TouchPad, according to Shim. "This is something that has to happen. The brands have to become more involved in the retail experience because the sales associates aren't going to be well-educated on every product," he said.

Staples is going through similar changes in the U.S. Stores are devoting more floor space to tablets like Motorola's Xoom and Samsung's Galaxy Tab. And Staples does not sell the iPad. So, the sales numbers at Staples for tablets in the coming months may say more about the success--or lack of success--of tablets beyond the iPad.

All of the above doesn't change the fact, of course, that the iPad is still far and away the best-selling tablet. And it also doesn't change the fact that tablet suppliers need to do everything in their power to draw attention away from Apple's tablet.

Apple said it sold 4.69 million iPads in its most recent quarter. While Samsung has shipped about 850,000 tablets worldwide in its most recent quarter and Acer about 800,000, according to DisplaySearch.

"The other question is, would some of these guys be better served launching their own retail stores?" said Shim, referring to the Apple store, a big part of Apple's success story. "It's a big risk and big investment," said Shim but may be necessary to "take charge of their destiny," as Apple has done.