Archos Heads to CES with Two-Pronged Strategy for 2012 Tablets

Industry watchers billed the 2011 holiday period as the season of the tablet. When we asked TerBlanche if the category has been the hot seller it was promised to be, he said, “It definitely has been for the Kindle Fire.” Although Amazon hasn’t released official numbers on Kindle Fires sold, TerBlanche cited reports of 5 to 6 million Fires selling in December alone. He maintained the Fire’s holiday rampage has been “great for the market” and gives “credibility” to the tablet industry, while noting that the Archos 70B, debuting at CES, will be the first Honeycomb tablet on the market at $199.

Kindle has been criticized for various usability issues attributed to a barebones manufacturing model. After calling Kindle Fire “a fantastic product,” TerBlanche retrenched a bit and said the Fire’s biggest strength is its ecosystem and “out of the box experience” that connects users immediately to Amazon content including its MP3, movie and apps stores. Kindle Fire “falls short” with a device that has “no expandable storage, no HD video playback, no camera, no microphone and no HDMI out, so you can’t port it to a TV,” he said. TerBlanche said apps are limited for Kindle Fire and Amazon’s app store falls short of iTunes and Android Market. Archos has entered a partnership with Amazon to put Amazon’s MP3, Kindle, and movie stores on its tablets. Having the Amazon ecosystem along with Android Market available on Archos tablets puts the company “in a good position entering 2012,” he said.

When asked how Archos will be able to avoid issues that have dogged the Fire at the same price point, TerBlanche said Archos’ history as a manufacturer of MP3 players and portable media devices will help. The company introduced its first tablet two years ago and has a good relationship with manufacturers in China and a tier-one relationship with Google, he said. That gives Archos full access to Android Market and to Google Apps core suite including Gmail, Google Docs and Google Talk, he said. “We understand the game a little better than other manufacturers that are just getting into this,” he said. “We're able to drive down bill-of-materials costs so we can offer the best equations of feature and function” to meet a particular price, he said.

The $199 price point is critical to the success of the category, TerBlanche said. That entry point is going to be “very good for all manufacturers as long as they can find a playing ground at that price point because that’s going to be the price point where a lot of products move,” he said. Currently, Archos’ top-end product sells for $429, but its best seller is an 8-inch model that sells for $269, he said. “The Honeycomb 7-inch is going to move even more at $199,” he said.

Archos will also use its relationships at the higher end of the tablet market, where the company will be one of the first to show a tablet with Android 4.0, or Ice Cream Sandwich, when it runs demos of updated G9 tablets at CES. Archos will release an update to consumers at the end of Q1 that upgrades Honeycomb to Ice Cream Sandwich, he said. Ice Cream Sandwich will add a “fluid” user interface, make it easier for end users to have social feeds and stay connected, integrate contacts between phones and tablets, include near-field communications allowing two devices on the same wireless network to share music, games, and contacts and incorporate facial recognition software to unlock screens or enable other security features, he said. Prices for 8-inch Android 4.0 tablets will start at $299 for an 8GB version and top out at $430 for a 10-inch model, he said.

Archos will continue to “play at all different levels of the market,” TerBlanche said, as it studies which sizes and features consumers gravitate to. So far, users like the portability of a 7-inch screen size where tablets see use in commuting, traveling and education applications, he said. Larger 10-inch models are popular for HD movie playback where the “bigger is better mindset” exists, he said.

Looking to 2012, where market forecasts have pegged tablet sales at anywhere from 75 million to 150 million globally, TerBlanche takes the middle ground. He compared the tablet market to smartphones which took about 4 years to take off, he said. “We haven’t hit that amazing boom yet, but it might happen faster than it did for smartphones,” he said. “We're going to see massive adoption two years from now."

Netbooks will feel the most pain from tablets’ success, he said, as tablets gain more prowess. As tablets evolve, “you're going to see more productivity focus,” he said, citing office tools, keyboard docks, printing options, and PowerPoint functionality. “They'll be able to do the different things that they're now falling short on compared to laptops,” he said.

Productivity requires storage, and TerBlanche said Archos has that covered at the upper end of its 8- and 10-inch tablet lines with models that incorporate 250GB hard drives made by Seagate. Those drives, which were delayed in delivery because of flooding at hard disk production plants in Thailand, were originally designed for netbooks but “are very light and fit nicely into a tablet,” he said. The 7mm drives add 3 ounces to the weight of Archos 16GB models that use flash media, TerBlanche said. Originally due out in October, the 250GB tablets will ship next month with the drives that will be available by year-end, he said. The trickle of supply is still short of what the company wants, “but we'll have full allotments by the end of Q1,” he said.