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Can iPad 2 fend off challenges from rivals such as Motorola Xoom?

With Apple set to announce the iPad 2 this week and a flood of competing tablets hitting the market ? including the formidable Motorola Xoom ? where should brands and retailers focus their budgets?

Tablets such as the iPad2 and Xoom give retailers new high-growth computing products to sell, and they give advertisers new channels to reach customers. For example, Best Buy can offer alternative choices to netbooks and ebook readers, while advertisers can target high-value tablet users.

?A key challenge for retailers and advertisers is that the devices market is fragmenting into multiple sub-categories and multiple screens,? said Neil Mawston, director of global wireless practice at Strategy Analytics, Milton Keynes, England. ?In the past, life was simpler?a retailer would sell just a handful of product types, such as a desktop and a laptop.

?Now, those same retailers have to choose between stocking desktops, laptops, netbooks, tablets, ebook readers, MIDs, superphones and a range of other emerging wireless devices, which makes their logistics far more complex and risky,? he said. ?Pick the wrong sub-category and it could cost millions in foregone revenues.

?Similarly for advertisers, making sure they push their adverts through the right channels to reach the right consumer has become harder than ever due to fragmentation of hardware, software and services.?

Robust sales of Apple?s iPad and competing tablets from manufacturers such as Samsung, Motorola, Dell, Research In Motion and Hewlett-Packard may be killing off 2009?s hot computing device, the netbook (see story).

Tablets are changing the face of mobile and are a game-changer for media companies (see story).

Apple has reported that there are more than 25,000 native iPad applications in the App Store.

As consumer of adoption grows, advertisers are flocking to target tablet users.

Tablets are a fantastic canvas for rich-media advertising.

News Corp.?s iPad app for The Daily launched with campaigns from brands such as HBO, Land Rover, Macy?s, Paramount and Pepsi. However, its long-term success will not only depend on ads served, but also the number of paid subscribers it can attract (see story).

Land Rover claimed that its advertising campaign within The Daily iPad app achieved a 50 percent engagement rate (see story).

"Retailers can now consider adapting the shopping experience due to the advanced interactivity of both tablets and smartphones," said Pratick Thakrar, founder and managing director of Imagine Worldwide, London.

"Instead of walking through the aisles endlessly searching for everyday items with screaming kids at their side, why not provide shoppers with the luxury of an in-house cafeteria with crèche facilities?" he said. "At the same time offer retailer branded tablets to place their shopping order on - all available to be picked up once they've finished their earl grey.

"Consumer behavior is changing due to the advancements in technology, but are brands and retailers evolving at the same rate?"

Motorola Xoom
Motorola Inc.?s Xoom wireless 3G tablet, which runs Google?s Android 3.0 Honeycomb OS on the Verizon Wireless CDMA network, launched Feb. 24.

Analyst firm IHS iSuppli reported that the 10.1-inch display, 1.6-pound tablet closely approximates the Apple iPad?s dimensions but outdoes its year-old forerunner by including both a 2-megapixel front-facing camera and a 5-megapixel auto-focus primary camera.

Motorola is selling the Xoom through Verizon for $599.99 with a two-year contract or for $799.99 without a contract. The 3G data plan costs $20 a month for 1GB of data.

The Motorola Xoom is marketed to consumers as a device that is upgradable to 4G free of charge. However, owners must ship their product back to the factory for a physical upgrade to 4G networking.

By all accounts, Xoom will be a force to be reckoned with in the tablet space.

However, Xoom is far from the only iPad rival.

The HP TouchPad, based on the Palm webOS, will debut this summer, and there are a whole slew of tablets that have less definite ship dates: a larger Samsung Galaxy Tab with a Wi-Fi only version, the Android-based LG G-Slate, a T-Mobile exclusive in the U.S. to begin, and the HTC Flier.

In addition, Asus is coming out with three Android-based tablets and one Windows-based tablet, while Dell announced a Windows-based tablet primarily focused on corporate/business functions.

With all of that competition, Apple will have to respond, and it will do so on March 2 when it announces the iPad 2.

?The rumors surrounding the iPad 2 have not indicated dramatic changes from the original iPad?we may see something a bit lighter, thinner and faster perhaps,? said Ross Rubin, executive director of industry analysis of consumer technology at NPD Group, New York. ?An all-but-guaranteed addition is a front-facing Web cam to support FaceTime, which Apple has been pushing across virtually all of its devices.

?The pricing on many of the Android tablets have been on the high-end of the market, many at or above the iPad?s opening price,? he said. ?Xoom is an $800 device unsubsidized, $600 with subsidy, with 32 gigs of Flash memory, a micro-SD slot, stereo speakers and two cameras, whereas the iPad has none.

?For 2011, it seems like the iPad will continue to dominate the tablet market?it has a large head start in terms of the number of apps available for it, as well as accessories.?