From TechCrunch today, “Tablets Join the Long Race to the Bottom,” writer John Biggs decries his fear that the tablet market is basically the NetBook 2.0 market.

In a way I share Biggs’ fears: it would be shameful if the bottom of the tablet market fall out, if tablets get renamed ‘craplets,’ But for the most part, I disagree with the thinking.  I’m more bullish on the Tablet market overall, for several reasons.

First, I think the dynamics of the tablet industry and market are completely different than the netbook/PC business.  In the PC business, basically the entire profit pool on the hardware side is with Apple and on the software OS side is with Microsoft.  The net book phenomenon was spawned by low-cost manufacturers trying to use their unit volume capacity with ever cheaper componentry to try and gain share in low-income, emerging markets, or as supplemental PCs in middle-income households.  OEMs like ASUS bet that they could build and hit ever cheaper price points, and that this would create demand.

For these low cost netbook manufacturers, there was always hope that there’d be cheap web-based services that the manufacturers could resell that would then help make additional margin.  This was generally an epic fail, as low-cost hardware manufacturers generally lack the skills needed to build a high-quality and well done ecommerce solution.

While netbooks do continue to ship, particularly in emerging markets, they certainly haven’t made a massive dent in the profitability of the industry, nor have they shifted the powerful holds that Microsoft holds on the OS, Apple on the hardware, Intel on the chipset.   (Though ARM has undeniably had some impact, particularly in the tablet space.)

In the current tablet industry, by contrast, several key factors are different.  First, two of the leading hardware manufacturers are Apple and Amazon.  Neither has a strategy of being the low cost leader in hardware manufacturing–that’s not their strategy at all.  Instead, both have very substantial and well-delivered services (books, movies, etc.) they distribute through the tablets to users.  So unlike the netbook that wanted to try and sell you an upgrade crapplets from their crappy netbook desktops, Amazon Kindle Fire users are buying and reading books, magazines, and movies.  So the total value proposition for these tablet makers is totally different.  PC makers are all about lower BOM cost, win the lowest ERP on the store shelf.  Amazon and Apple has a different approach, one that’s  about winning share of one’s digital basket: hardware device, software, services, media, etc.

Given these core differences between the Netbook and Tablet markets, I’m more optimistic that the Tablets will evolve in a different direction.  Now don’t get me wrong: I do agree with Biggs that we will see tons of crumby tablets.  It is the hardware industry after all, and we still have too many hardware suppliers that will look to deploy resources into a new hardware market.  Expect everyone in mobile computing–Samsung, ASUS of course, but also the Japanese OEMs, Toshiba, Sony, Fujitsu, etc–to enter the market.  Prices will drop at retail and for users.

And I think that in general this will be fine for the market, though again, you’ll have to wade through a fair amount of junky hardware.  The reason it will be fine is because the price point pressure that the low-cost netbook centric tablet guys will drive will have some impact on guys like Apple and Amazon.  But at the end of the day, there will be equilibrium.  Equilibrium will be achieved when Apple and Amazon find a price point where they have a nice quality Tablet that is priced relatively competitively with lower quality machiens.  And Apple and Amazon can both subsidize in effect the price point of their SKUs knowing that users are likely going to use that to consume all sorts of digital media through their stores.  Razors and razor blades.