Barnes & Noble has finally brought out a true (if dated) Android version of its color Nook, which likely makes it the cheapest tablet around. It’s clear from both the performance and features of the new release and the pronouncements of the company that this isn’t intended to be a general-purpose tablet. But it’s also pretty clear that it presages a price war in the tablet space, which will have a profound impact on everything in the online world.
The Nook will likely launch a kind of e-reader/tablet price war that inevitably spills over into the broader Android tablet space. Sony also announced its own pair of tablets, one roughly iPad sized and the other a five-by-five inch fold-screen model, which shows that more and more device players are jumping in and jumping on Android.
The result of all this is likely to mirror smartphone trends. Android has already taken the lead and isn’t likely to lose it. That would be bad for Apple because it confronts it with the same problem it had in PCs — a choice to sustain margins and control ARPU by creating a more closed ecosystem costs you market share forever. That makes you a second-tier player in a market you created.
The other dimension of the tablet market that’s critical is the impact of the tablet on 3G/4G planning, policy and deployment. Nobody believes that we’re moving to unlimited-use broadband wireless even now; it’s clear that everyone will do a combination of usage-based pricing and a usage tier that imposes rate-limiting to constrain video at a certain point. Even with those accommodations, wireless capacity needs will be much higher as tablets deploy.
That means more backhaul and metro, less wireline access and core. Most financial analysts are matching our December forecast that wireless will be where growth is and that operators will constrain wireline spending. Wireless impacts metro, and primarily Ethernet, as well as (obviously) the radio network. This could have a very favorable impact on vendors with strong RAN capability matched by support for Ethernet transport/backhaul and mobile/LTE voice elements.