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Why no one lines up for the Motorola Xoom

Chief executives should think twice before they jump headlong into the iPad-like tablet market. It may be that the iPad is succeeding but not the larger tablet market in general.

A couple of prominent chief executives were shown the door recently because of their take on the tablet market. But the executive boards doing the firing should be careful what they wish for.

Device makers shouldn't try to ape the iPad. Motorola's Droid phone has been popular because, among other reasons, it offers a form factor quite different than the iPhone's.
Device makers shouldn't try to ape the iPad. Motorola's Droid phone has been popular because, among other reasons, it offers a form factor quite different than the iPhone's. Motorola

This week Acer's CEO, Gianfranco Lanci, was let go because, among other reasons, he believed Acer wasn't responding quickly enough to the tablet phenomenon. And earlier this year the CEO of Advanced Micro Devices resigned because, conversely, he was too unenthusiastic about the tablet market.

"This market is about growth," Richard Shim, an analyst at market researcher DisplaySearch, said in a phone interview, explaining why so many companies are rushing to the tablet market. "ASPs (average selling price) don't go up annually, they go down. In order to have a business model that supports that...means your volumes have to go up. So, everybody's trained to look for growth. And if you're not looking for growth, then there's something wrong with you" (so the thinking goes).

But are we really seeing the emergence of the tablet market? Or just the rise of the iPad? I would argue it's more of an Apple thing than the birth of a broader tablet market. At least for the foreseeable future.

One of the best ways to gauge this assertion--and what I would submit is one of the first red flags for the broader tablet market--is to do some good old-fashioned legwork. In the Los Angeles area, I visited Apple stores on the day the iPad launched, as well as Verizon and Best Buy stores during the Xoom rollout.

At the risk of repeating what most people already know, there were lines as far as the eye could see for the iPad 2. (And this persisted for days--even now, two weeks after it first went on sale, the iPad still sells out every day at stores in the Los Angeles area.) Nothing of that sort happened at Verizon stores or at Best Buy. No lines to speak of and no stores--at least in my area--that were sold out.

I was surprised. I had expected the Xoom to launch with a bang not a whimper. But it didn't take long to figure out why this was happening.

Aside from the well-known Apple allure, it was a triumph for Apple's stores. When consumers walk into an Apple store, they know immediately why they must have an iPad. Dozens of iPads are on display. They're front and center. And every iPad is brimming with apps.

Not the case with the Xoom. "There were no applications that showed off what the Xoom could do," said Shim, who visited a Best Buy in San Francisco and--echoing my experience in Los Angeles--was not able to find the Xoom immediately, as Best Buy places the Xoom rather inconspicuously in the PC section.

In short, an Apple Store experience it's not. "It pales in comparison to the way the iPad is demonstrated," Shim said. (Shim writes about this in his blog also.)

Verizon stores I visited did try their best to show off the Xoom's apps, but Verizon is simultaneously selling iPads and Samsung Galaxy tabs, too. So the Xoom does not get the sales representatives' undivided attention.

Will the BlackBerry PlayBook and HP TouchPad face similarly anticlimactic rollouts? I wonder.

And a word to the wise for the other CEOs: Don't just ape the iPad. Microsoft executive Craig Mundie was actually on to something when he expressed doubt about the long-term viability of the tablet.

My spin on Mundie's statement: Apple may succeed with the tablet but not others necessarily.

Motorola, Microsoft, HP, RIM, et al should also heed another kernel of truth imparted by Mundie. A highly sophisticated smartphone--let's say a future version of the Motorola Droid X or the HTC Desire--may suffice for many consumers. So, as Mundie stated, the must-have device market for many consumers may be a futuristic high-end smartphone and newfangled laptop--sans tablet.

Updated on April 10 at 12:05 p.m. PST: correcting for reason that Acer's CEO, Gianfranco Lanci, resigned.