Apple's iPad: Is There a Business Here?
UPDATE: Now that the iPad has launched, let's fill in the blanks below as to whether it looks like a winner.
Sitting here a few hours before Apple launches its tablet computer, we can safely assume:
- It will look great, and demo even better.
- Steve Jobs will make many of us want to buy one -- today. Even if we're not sure why we want it.
- Critics will say, "Well, why doesn't it do X?"
If we are to believe the pundits, this device will be a 10-inch touch screen that serves as a mobile electronic book, a newspaper and magazine reader, a TV and movie player, and an innovative platform for social networking.
But to understand whether this new class of device will actually capture the public's imagination, I'll be looking to the answers of four questions about the business model underlying it.
- Will it provide enough value to persuade buyers to lug around yet another device -- a notebook-sized one at that -- that sits somewhere next to our laptop and smart phone? I'm not sure the Kindle has made this case convincingly. ANSWER: No. Rather than creating a new type of product that fills a need, the iPad comes across as a product extension, an overgrown iPod Touch with a nice book reader, but without the functionality of a laptop.
- Who pays for the built-in, high-speed bandwidth? Apple's tablet will be moving a lot of bits very quickly -- games, social networking, video. Someone has to pay for that bandwidth. Will users, especially early adopters, spring for what some say is a near $1,000 device that also charges for Internet access? Or will Apple be able to package some sort of deal with carriers to mitigate the costs? Answer: You do. You'll want 3G to take full advantage of this machine, and that's an additional $30 a month, or $360 per year to AT&T. Oh, the 3G model costs $829, versus the bare bones $400 for Wi-Fi only. Hmm. I already pay monthly fees for my iPhone and for high-speed Internet for my MacBook. Enough already.
- What are the platform possibilities? Apple is into platforms, not single products. Just look at all of the offshoots of the iPhone/iTouch/iPod families. Can the iPad iTablet, or whatever it's called, be audience-segmented in the future? Answer: Yes. You can imagine lower-costs versions that scale back on features -- maybe even a solo e-book/publications reader to compete with the Kindle.
- Can Apple persuade enough publishers to adopt its pricing scheme? Recall that the 99 cent price was key to the success of iTunes, but music companies still grumble about agreeing to that deal. Answer. Details not yet available.
Update: At first blush, I think Apple has missed the mark with the iPad. There is little new here (just bigger and fancier), no killer app, and the cost puts it closer to a laptop than an iPod Touch. What is my compelling reason to put down my MacBook and buy an iPad? None, that I can see. Yet.
Let's hear from you!
Related Reading:
Harvard Business School faculty consider the iPad
(Stone tablet image by Mendhack, CC 2.0)