President Obama probably used his iPad to post the most popular tweet in history Tuesday night. The fact that the President is stepping out with an iPad instead of his BlackBerry is a coup for Apple, but like the President the Cupertino company has faced a challenge to its position this year. And for Apple, the fight is just beginning.
Apple (AAPL) shares have taken a major hit in the days since the company launched the iPad Mini tablet priced at $329. Many investors think that price seems high when compared to Google’s Nexus 7 and Amazon’s Kindle Fire HD, which both start at $199 for the Wi-Fi-only versions. Next came concerns about Apple’s Asian suppliers’ ability to meet demand for the iPhone 5. Now the stock has tumbled more than 20% in less than two months.
Microsoft’s Surface RT turned in an Apple-like retail performance last week, selling out during its first 24 hours on the market. The news was followed by rumors that the Redmond giant is now working on a 7-inch tablet. But a bit of the shine came off the Surface this week when Microsoft admitted that the 32GB really has only 16GB of free storage, with the remaining disk space housing Windows RT and the Microsoft Office apps. In comparison, Apple’s 32GB iPad offers 28GB of free disk space.
The Microsoft Surface starts at $499, again significantly more than the Nexus and Kindle products. “We believe Google and Amazon have a better chance of success in tablets than Microsoft given their willingness to sacrifice profitability and their stronger fundamental positions,” says Shaw Wu, who follows mobile devices for Sterne Agee. “For Google, it is its established leadership with Android and its apps ecosystem and for Amazon, it is its strong track record in reselling digital media.”