Guess what? The iPad, Apple Inc.s shiny new tablet computer, isnt meant to replace your phone or your laptop. Its not even really meant to be a 3G device. Its best target functionality might be acting as an augment to existing communications gadgets, in the home, used most likely over Wi-Fi.
After the frenzy that was the Wednesday launch of the device, which is not quite a smartphone, not yet a laptop, some are wondering what the point is. Its supposed to be better than a netbook, but theres a lack of Flash support, which means it wont run some Web sites the way it should, and theres little online video support other than YouTube. Theres also no camera, no multitasking, no voice support and limited disk space. It runs on the iPhone OS rather than the more open Mac OSX. For a cloud and multimedia-focused gadget, these would seem to be glaring omissions.
Perhaps its no surprise that Apples stock closed down more than 4 percent on Thursday, the day after launch.
The iPad is an additive, Jeff Orr, an analyst at ABI Research told xchange in clarification. Its not as applicable as a mobile phone every young adult wants to carry with them. Its not your home computer. Its for those that say, I have this need to have quick access to things in my lifestyle.
It will be used for applications like having a common family calendar or phonebook, or bolstering more productivity in home with, say, step-by-step videos in the kitchen. It will sit on a coffee table so that users can pull in notes on the State of the Union address as they watch. Its about different forms of content publishing from iTunes, he App Store or iBookstore be it an e-book, magazine, newspaper, or rich media like audio and video.
And with about 30 percent of households in the U.S. using Wi-Fi, he said, its likely the target audience for the iPad will be leveraging an 802.11 connection rather than 3G.
In other words, the general message of the iPad is not as a connected device, particularly, but rather as another way to access developer offerings. And conversely, there is now a greater opportunity for the content ecosystem already established by Apple giving developers a change to reach beyond the 75 million iPod Touch and iPhone users that for now make up Apples total available market.
This type of product was either going to be a Macbook coming down-market, or a form factor increase for the iPhone and iPod Touch: and the iPod Touch prevailed, noted Orr. They make their money from the content and services and thats a compelling strategy for a hardware company. For Apple, its all about iTunes, which has catapulted company as a content engine.
And that would explain the lack of a carrier subsidy and the odd, prepaid AT&T data plans on offer, which go for $15 per month for 250MB or $30 for unlimited. We do believe that the market for the media tablets is in and around the home, as a premium or luxury consumer electronics device, said Orr. Prices are typically higher than the price for a netbook. And its hard to compare to a smartphone bundle because its not subsidized.
But by focusing in so much on iTunes value proposition, making it a general device in a closed ecosystem, Apple may have missed an important competitive advantage. I was hoping for something that would tie more content networks together, said Orr. Like Apple TV: make it easy to transfer from HD TV to the iPad and keep the video going. Or synchronization or presence different behaviors that would make the environment Im computing in more fun.
All in all, he noted, the apps might not prove compelling enough. OK, so I can read books on it, but Amazon has reader applications for iPhone, Android, netbooks, Kindle and other e-readers and laptops, he said. I think Apple left the door open yesterday for others to position themselves well against it.
As for the overall market, ABI estimates that about 4 million media tablets, including the iPad, will ship worldwide, up from 100,000 last year. Thats a nice increase but its still a small percentage compared to 24 million netbooks and many millions more smartphones, said Orr. They will be focused on Western Europe and North America and Japan and South Korea key markets, but a small portion of the world overall.
Bottom line, he notes, the iPad launch didnt settle any questions about the tablet market. There is still no one clear winner, country, way of use or business strategy. He added that the majority of other media tablets that will soon be making an appearance will be in partnership with a wireless carrier, following a subsidized model.
The category will grow, he said, but it remains to be seen where it will find its niche and whether Apple will come out on top, despite all the hype.
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