There seems to be mass confusion as to how an “alternative” iPad Touchscreen Tablet will do.

Part of this perception is based on the “success” of the Android OS. If you simply use market share as an objective, then Android can be called a success. Never mind that Google makes very little return since it’s “free.” Even the manufacturers have made very little profit as it’s simply another nearly nameless-faceless phone. A few hundred thousand sell at full price (with a contract) but very soon, its price falls to BOGO … this is a typical ad for Android phones. The full range of choices from $29 to $199.

Of course, in the US, Android is pretty the default OS of choice on Verizon. They only sell Android or RIM phones.

And for Verizon, which OS are you going to go with? There is only one free phone OS – Android plus you get to ride on Google’s name recognition. Why pay when there’s free?

But the main problem with Android is that as its free – no two Android phones have the same OS Look & Feel. In fact, there are literally NO TWO ANDROID PHONES from the same manufacturer that run the same OS and LOOK SLIGHTLY TO VASTLY DIFFERENT.

Each Android phone runs a DIFFERENT Android OS, a different manufacturer look and UI and in many cases, the telco then ADDS another UI look & feel.

It’s no wonder that LG, Samsung (and Nokia with their own various OSes) sell 400 million phones while Apple is selling 17 million phones but YET Apple makes MORE MONEY than ALL of THEM COMBINED.

(From Fortune)

And this is BEFORE the iPhone 4 which was released in June 2010.

What does this mean when Apple is only 3% of the market but makes 39% of the profits?

It means CONSUMERS are willing to pay MUCH MORE for an iPhone. Even if you believe that a massive swath of people are “fooled” into buying the iPhone, clearly it’s working but more importantly, it means there is ONLY one brand & phone worth MUCH MORE.

The iPhone is ONE unified OS. Like it, love, hate it – you learn it once and you can use an iPhone, iPhone 3G, iPhone 3GS, iPhone 4, iPod Touch and iPad.

No Android, Blackberry, WIN, Palm, Symbian, or Java phone can make that claim.

EVERY PHONE has a different OS look, feel and UI.

And if you can use iTunes (and 160 million people do), you know how to sync and buy media for EVERY iOS Device.

No such PC or Mac application for Android, Blackberry, WIN, Palm, Symbian, or Java phones that is unified and a constant.

So, sure, Android phones are an acceptable OS – like going from the Nokia 8700 to the Moto RAZR to the Blackberry – you just have to learn that OS, no biggie – and the norm that everyone just accepted. Generally, going from one to another meant you had to spend less time learning the new OS – one reason for the Blackberry success. It’s like the last one.

And this was the norm that was accepted until Apple launched the iPhone.

Now, there is the iPhone and there is the rest.

Some people do not like the iPhone, do not like Apple, are simply contrarians, do not wish to spend $199 or $299 on a phone with a contract or of course, in the US – unwilling to switch to AT&T or not willing to switch from Verizon – so of course, they choose an Apple competitor but as the profit chart shows, clearly, they are NOT willing to pay as much for a non-iPhone.

So, where does this leave the Android-Blackberry-WIN tablet market?

In the bottom bucket.

The iPad is established as the best tablet. Most critics who thought they’d hate it like it or even love it.

In addition to the Apple name, the iPad also has the iTunes ecosystem that most people in the market know – they know that by plugging it in, they can transfer all their music, movies, tv shows, and now books.

It’s a known, liked and loved.

That is why there is/was a market for the iPad. We like, love our iPhone & ipods – yes, it would be great to have a bigger screen and we trust Apple to deliver.

In today’s society, if you work and want to be a part of society, it’s expected you have a cell phone. You don’t have to like it and you may not like being reachable and tethered by that’s society today (and that extends to about 80% of the 6 billion on Earth) so for those who do not care – if you have to choose a phone, you might just choose the cheapest like that $29 Android phone in the Best Buy ad. Again, clearly, iPhone buyers are willing to spend the most – all other makes, OS or telco choices – not so much.

So, why would they even buy a tablet?

The vast majority of non-Apple OS buyers want a phone – do they want more? In other words – do they even want a tablet? If they were only willing to pay as little as possible for the phone version, are they even a viable market for a tablet?

Blackberry – beyond the reason that their company buys their phone for them, most choose the Blackberry because it has a keyboard and the email just works. Has anyone outside of RIM ever said – what a GREAT OS – I just wish it were much larger. After 4 years, RIM still has fewer than 10,000 apps in their app store – clearly, buying apps is not high on the list – nor is buying music or watching videos high on Blackberry buyers reasonings?

Will a few thousand buy a Blackberry tablet, sure, of course but who choose among the mass audience will willingly pay $400-$1,000 for a Blackberry OS large version – to read email in a larger format? With a “real” keyboard?

Or some rumors are that it will require being tethered to a Blackberry phone – so will you continue to type on the Blackberry but read it on the tablet? And if after 10 years, RIM can barely create a functioned all-around OS for their smartphone, in the last year, they figured out how to upsize their OS so it’s better than Apple’s iPad?

And create an ecosystem of upsized apps, a music store, a TV store, a movie store and a bookstore? (Ok, the Kindle app would work …) and how many Blackberry tablet apps will there be available if after years, there are less than 10,000 for the regular Blackberry?

Show me the market.

And same but different with the Android.

The biggest fans of the Android OS are Linux fans, Apple haters, contrarians and DIY hackers (in the good programming sense).

What is the one thing that binds them together?

The belief that hardware is just components. Just parts.

Why are there no high end netbooks? Because they believe a laptop should cost around $300 – why don’t netbook sellers cram the fastest processor, SSD drives or other exotic hardware in there? NO SALES.

This will be true of Android tablets fanatics.

First, they believe iPads are overpriced so it can’t be priced anywhere near the iPad.

And with 100 (?) Android competitors coming … we already know that every tablet will look and operate different – from size to screen resolution to the OS version to it UI look & feel … how will they compete?

ON PRICE.

But unlike a cell phone where you pretty have to buy one – no one really needs a tablet.

So, why would you buy an Android one?

If you’re a Linux fan, an Apple hater or a hacker programmer, you might want one but again, NOT a necessity – what is your criteria – specs and price – EXACTLY the same as the netbook or PC – and if they believe a $499 iPad is overpriced, that does not leave much room for Android tablet sellers. So, the high price benchmark is $499 or maybe $399 by next year as the iPad will either get a price drop or much better specs.

And iTunes represents all they hate – EASE OF USE IN BUYING. This is an audience that believes in their own formats (OGG, DIVX, FLAC, PDF Books, etc, etc …) so what they want is the complete opposite of the iPad – they want a tablet they can rip apart and that’s cheap – they will load their formats. But you just have to look at the PC netbook market. Only low end and low margin netbooks sell. Brands don’t matter. The OS doesn’t even matter. WIN or Linux is all the same. This is the Android market buyers. It’s not Lincoln versus BMW, it’s bottled water versus the guy with 45 rain barrels in his backyard.

The mass market on the other hand knows what the iPad is and represents – any other branded OS is a compromise … unlike a phone where you might rationalize saving $200 bucks because you’re not going to “play games,” but you still need to buy a phone.

Buying a tablet is optional. You are a) in in or out and then b) If you have decided you want a tablet, which one is branded as ‘the best?’ while the others choices are “not an iPad” … and what criteria will these buyers choose? PRICE.

Google has admited the Android OS will not scale up at this point. (CNET).

How many more iterations before it becomes stable to upsize and unlike Apple, they have no idea what the specs are for Android sellers – it could anywhere from 4″ to 15″ and could be anything from LED to some exotic choice …

The same time MS releases a working WIN portable OS?

The Tablet market will actually more closely resemble the iPod market.

Apple will hold 70-75% of the market and maybe 85% of the profits.

Android tablets, WIN tablets, Palm-HP, Nokia and RIM will scrape by selling a random series of bargain hunter-low margin choices … just as you can buy a $69 ipod knockoff … there will plenty of low margin-low end choices.

Now things could change in 4 years but for Apple, the next 4 years, it’s clear sailing for Apple.