Nvidia CEO: Tablet makers struggling with sales

One of the biggest challenge for tablet makers is figuring out how best to sell the devices, the chief executive of chip maker Nvidia Corp., said.

Jen-Hsun Huang, speaking Friday in a media roundtable in New York, said one of the iPad's biggest advantages is Apple Inc.'s  ability to sell the device through its own stores rather than relying on retailers such as Best Buy Inc. That gives users the ability to try out the devices without the tablet maker sharing a portion of the sale with the retailer.

"Apple stores have an advantage over anything sold through Best Buy," he said. "Everything sold through Best Buy has to pay Best Buy a margin."

He added all other hurdles for non-iPad tablet adoption--including usability, craftsmanship and affordability--will soon be solved. "That's easy," Huang said. "What is less easy is how it's going to get sold."

While many companies are racing to introduce tablets, the iPad continues to control a large portion of the market. Device makers are grappling with the task of designing tablets consumers desire and building ecosystems to attract users while also providing outlets for consumers to try out the products. Small players like Ovim and Viewsonic are currently experiencing such challenges.

Sony Corp., Chief Executive Sir Howard Stringer made comments similar to those from Huang in a recent interview with The Wall Street Journal, saying trying out products is a key factor to getting customers to buy them. But it's difficult to rely on retailers such as Best Buy to provide that experience, he said.

"That's why we started our own stores," Stringer said. "We did it a long time ago and didn't do terribly well, but we're getting much better."

He added a big weakness for Sony to solve is marketing, figuring out how to spend the right amount of money to make sure consumers know about products. Tablets will be the most lusted-for gadget in a holiday season, according to the Consumer Electronics Association estimates. The group says the average consumer will spend $244 on electronics, nearly one-third of his or her overall gift spending, making it crucial for mass merchants to grab a piece of the action.

But chain stores are facing problems of their own. Electronics experts say consumers are more likely to buy the top-selling tablets--the iPad and Amazon.com's Kindle Fire--directly from their makers, who are selling their own digital entertainment such as e-books and movies in addition to the hardware itself.

Best Buy has said it hopes its new in-store "Tablet & e-Reader Central Zone" will beckon consumers, despite alternatives such as Apple stores for iPads. The company has said the feature will allow consumers to easily compare devices.

Meanwhile, Huang said Friday the rate of improvement of mobile processors will be "quite shocking to people." He said improving the performance and power efficiency five-fold every year is "very possible." 

"It's possible to deliver more performance and lower power at the same time," Huang said. "We need to keep this trend up." He added tablets using Nvidia's newest mobile processor, Tegra 3, will "easily" cost about $299 in a couple of quarters, getting closer to the mainstream price points desired by consumers.