IPad Prompts Scramble for a Rival at Samsung, HP

Photographer: Tony Avelar/Bloomberg

The Apple iPad tablet computer sits on display following its debut at the Yerba Buena Center in San Francisco, in January. Close

The Apple iPad tablet computer sits on display following its debut at the Yerba Buena... Read More

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Photographer: Tony Avelar/Bloomberg

The Apple iPad tablet computer sits on display following its debut at the Yerba Buena Center in San Francisco, in January.

On stage at the Consumer Electronics Show in Las Vegas in January, Samsung Electronics Co. executive Doug Albregts showed off the Korean company’s new e-book reader. It had a 10-inch display, a slide-out control pad and could download books from Barnes & Noble Inc. Users would be able to make notes and doodle on the virtual page.

“Our goal at Samsung, whenever we enter a new arena, is not simply to join the conversation but to transform and lead in a new direction,” Albregts told the audience.

This month, days before the e-reader was to hit stores, Samsung delayed the introduction and called the device back for retooling, said a company employee who asked not to be named. Samsung may add a color screen, 3G wireless capability and a better battery, the person said.

“Samsung is revisiting its approach to the e-reader market in the U.S.,” spokeswoman Katie Seifert said in a statement.

In the wake of the debut of Apple’s iPad on April 3, hardware companies are doing a lot of high-tech soul-searching about the tablets they have in the pipeline, Bloomberg Businessweek reported in its May 17 issue. Hewlett-Packard Co., Dell Inc. and Asustek Computer Inc. also are reassessing the tablet market.

Much is at stake in getting it right. Although tablets are projected to make up only 1 percent of computer sales this year, that may rise to almost 25 percent by 2015, according to Coda Research Consultancy.

‘Gone Silent’

“Everyone expected the iPad to come out at twice the price with half the battery life and half the performance,” says Jeff McNaught, an executive at Wyse Technology, a maker of software that lets people view their Windows desktop from an iPad or other devices. “Lots of plans we saw last year have now been dumped. Nobody has called to say products have been scrapped, but they’ve gone silent since the iPad shipped.”

Hewlett-Packard presented a Windows-powered tablet called Slate at the electronics show in January and wrote about it on its Web site. The Palo Alto, California-based company hasn’t promoted the device since early April. A few weeks later, it agreed to buy Palm Inc., the handheld maker known for its easy- to-use software, for $1.2 billion. Hewlett-Packard won’t comment on the status of the Slate, and analysts said the company will now design a tablet using Palm’s software.

If Hewlett-Packard releases a consumer tablet, it would probably be based on the Palm operating system, not Windows, says analyst Tim Bajarin of consulting firm Creative Strategies. He said Windows software wasn’t adequate for touch-screen technology as sophisticated as the iPad’s.

“The vast majority of customers want a PC that can do it all,” Microsoft Corp. spokesman Bill Cox says.

Dell Redesign

Dell, based in Round Rock, Texas, will introduce a 5-inch tablet using Google Inc.’s Android operating system in June. It’s in the process of redesigning follow-on devices to deliver larger screens and new software by early next year, says Neeraj Choubey, director and general manager of Dell’s tablet group.

Jerry Shen, CEO of Taiwanese PC maker Asustek, says his company is accelerating its development of an Android-based tablet. The company still will sell a Windows version. One advantage of Android is that it runs about 40,000 applications, more than 30 times more than Windows’ 1,200 mobile apps. Verizon Wireless says it is in talks with Google about creating a tablet.

Apple’s rivals may have trouble coming up with an iPad- beater. Cupertino, California-based Apple chose every part in the iPad to conserve power. The company used a specially designed battery, as well as custom-made microprocessors. With other products, it has often turned to chips made by Intel Corp. or designed by ARM Holdings Plc.

“The battery life on this thing is like black magic,” says Dave Eiswert, who runs T. Rowe Price’s Global Technology Fund.

‘Already Too Late’

Designing components in-house hasn’t been the norm at companies like Dell and Hewlett-Packard, which in the past have outsourced design to Taiwanese manufacturers to cut costs. Both companies are expanding their own design teams.

The PC makers have a reason to say they can keep pace. There are only 5,000 apps designed for the iPad. That means Apple’s head start will not be as formidable as it was with the iPhone, which now has more than 195,000 apps.

Theo Gray, co-founder of software maker Wolfram Research, recently ditched his laptop and used only his iPad on a business trip.

“It was totally fine,” Gray says. “In terms of trend- setting, it’s already too late. Apple has set the trend. The only question is whether everybody else can catch up.”

To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Peter Burrows in San Francisco at pburrows@bloomberg.net

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