Analyst Opinion – If anyone else was bringing out a 10” tablet based on a Smartphone platform this decade, I’d bet on that company to be disappointed. But Apple isn’t anyone and there is a better chance to make this a hit. However, the iPad reminds us of the problems Apple had with AppleTV – and AppleTV was one of Apple’s rare failures. Even though it is arguably the best product in an otherwise generally disappointing class.
The problem with the iPad, and the smaller iPod touch, is that in a smartphone world these products tend not to get much interest. Typically, we live to be connected and putting cell phone technology into something that has a 10-inch screen seems kind of nuts to most folks. This is because people just can’t picture putting something this large against their heads and despite a huge amount of pressure to get folks to use headsets they generally don’t.
If you just connect a product like this to a WAN service, the new problem becomes the cost of the service. If you have a smartphone, it means you are now paying for a redundant service for the device and if you don’t, the data plan for the device will make what you are paying for your cell phone look cheap by comparison. Most of us covering wireless seem to think that this problem will go away once LTE and WiMax become prevalent, but that won’t be until after 2012 and that’s three long years off.
Apple could tether it to an iPhone as an iPhone accessory and I still think that would be an interesting way to go. However, AT&T has been rather reluctant to allow tethering and has indicated they want a premium for that service, possibly a large one, to enable this feature. Tethering allows you to use your cell phone like a high speed wireless modem and not pay for another entire wireless service.
Content is a bitch as well. The AppleTV is, I believe, the best in its class of Digital Media Extenders (DMEs) but the entire class has been plagued by a lack of subscription media services, an inability to move purchased programming from one room to another, and a lack of good, current, programming. It isn’t from a lack of trying, but the rights that surround movies and TV shows make music rights a look like child’s play and it took years for that industry to get rid of a major portion of the DRM screwing up that market and providing large enough libraries to be interesting unprotected.
Books, if anything, are actually worse, even though you’d think the rights would be vastly easier. Even in the market leading Kindle you can’t get top titles like Harry Potter and the Kindle actually has a better library than most. A 10” iPad, to be successful, will need a library of both books and video content and if Apple can’t pull this off, it will be another Apple TV.
The iPad: Opportunities
Done right this could be the “It” device for the next 5 years and it amazes me how often Apple shoots for the stars. Most companies simply wouldn’t take the risk, because there would be too much fear of failure, and even if they did, would so under-fund and under-resource the effort that a failure would be a foregone conclusion. Apple will resource this and if it fails, it will likely not fail because of a lack of trying from Apple.
With a 10” screen, this could be the portable email, web browsing, media viewing, eBook reading, game playing, wonder device that replaces a bunch of struggling eBook readers, game players, micro TVs, and the remaining few PDAs that haven’t yet died in market. Ironically, this is likely the one device Palm should have understood how to do right first.
In many ways, this would be Apple’s spin on Google’s Chrome OS idea (showcasing Apple’s hardware roots) and they could take the high ground a year before Google could even launch. Google hasn’t been much of a threat yet on Android either as Apple has continued to out-execute them. But this iPad seems to be vastly closer in concept to the Chrome OS than the Mac and it would be ironic if Apple, in what is clearly Google’s space, got it right first.
If Apple can get it to market in the critical fourth quarter, it would be very disruptive, but most see this as an early 2010 device and it appears that while Apple is scrambling to move it forward, it may not arrive until then. I’m having a bit of trouble with the rumored $800 price, because even with a massive margin they should be able to sell one of these for under $600 and there is an opportunity for a subsidy dropping the price even more. I think the price should be closer to an iPhone than it is to a Mac, but we’ll see.
Wrapping up
The odds are against Apple pulling this off; the degree of difficulty is through the roof. But then, the odds against Steve Jobs turning Apple around were astronomic, the odds against the iPod were colossal, and against the iPhone were immeasurable. For Apple, impossible odds don’t seem to be much of a bother and that is why I’m looking forward to the iPad and may actually buy one myself.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.
