Sociable

Monday, March 1, 2010

Apple's strategy with the iPad

2001 changed the world in more than one way. The year saw Apple’s i-debut with the iPod. Apple revolutionized the way you listen to, buy and carry around music. It essentially created an ecosystem that led people in swarms to first buy a personal music player and then customize that player via iTunes making Apple the leading retailer of music.

Apple once again played out its magic in 2007 with the iPhone. By designing a smartphone around third-party apps, Apple created the infrastructure for a highly customizable mobile experience. Where the Nokias and the Blackberries of the world solved a specific problem (such as uninterrupted access to emails) and provided apps as an add-on, the iPhone became a general product with an unlimited availability of customization options via apps.

Apple’s adept at creating devices that are the center of your world. Its ingenuity comes from creating generalized products for a world obsessed with customization.

So what’s up with the iPad? An iPhone on steroids? No multi-tasking, no USB, $499 for 16 GB, no Adobe Flash support?? With its namesake, you can safely argue that the product name has absolutely no sex appeal. Has Apple failed to deliver a game-changer this time?

I don’t think so. Remember- measured by absolute sales, the iPhone wasn’t a game-changer until its third generation. With the iPad, I believe Apple’s doing what they have always done – they’re experimenting. 

The world is being overrun with a deluge of information and the most successful content providers will find a way to disseminate information for its target consumers. The NY Times, BusinessWeek etc. – these are the kings, queens and lords of information and the iPad tries to breathe life into these estates of old. 

Apple’s not trying to make a new kind of computer. If they were, they’d be shooting themselves in the foot. Nor is it creating a new communications device. It’s instead creating a generalist product that isn’t really targeted at any one segment of user. The product instead acts as infrastructure for disseminating information.

Interacting with a device like the iPad isn’t new to the user – thanks to the iPhone that successfully broke the user away from the limiting stylus. The iPad therefore doesn’t require the user to learn a new language – Apple’s made sure of that. 

The iPad is simply a bigger and better toy for the world of apps to play with.  To the consumer, it provides two major benefits:
  1. Entertainment: Games, Music, video and e-books- the iPad allows users to carry their content around with them while augmenting Apple’s online retail business.
  2. Disseminating Information: Allowing massive customization via apps, the iPad provides users with a better way to organize the information in their lives than a limited device such as a phone or as sophisticated a device as the computer
The lack of flash support and the limited memory space on the iPad are annoying traits – but Apple’s just trying to figure out what will work when innovative new apps hit the app store. It’s counting on the early adopters, the programmers and the businesses that work on its hardware to tell it what they want.

I believe that the iPad is a game changer and the corresponding increase in sales will occur with the next couple of generations. Here’s how I see it playing out:
  1. Initial iPad sales to early technology adopters, brand loyalists etc.
  2. Apple pushes the Apple bookstore with more partnerships and titles to gain enough supplier enthusiasm in the channel to spur innovative information dissemination techniques.
  3. Release of new, innovative apps that wouldn’t have worked on the iPhone platform – These apps will be targeted to specific user groups. A good example is a presentation app that allows speakers to organize their slides in real-time (i.e. during their presentation) as explained here.
  4. Further push on iPad based games, productivity applications etc. Apple will probably allow programmers to easily migrate their development projects between the iPhone and iPad developer SDKs.
  5. Apple uses this time to determine the features most important to suppliers and consumers – example: Is it Single or multi-tasking? Flash support or HTML 5 support? More storage space? Etc.
  6. Software upgrade or next generation of iPad hardware will be released.
Apple’s Vice President of Design, Jony Ive, probably puts it best. The iPad is just one large piece of glass. There’s no pointing device - you use only your hands to interact with it and you can use whatever orientation you want. There’s no up or down with the iPad - It’s designed to be customizable to its user’s preferences. 

But there may be a thorn in Apple’s plans. App releases on the iPad are strictly policed by Apple’s screeners. For an experimental platform, this may severely limit innovation. On the other hand, it allows Apple to govern the kind of projects that prevail on the iPad. What do you think?


9 comments:

  1. Anand, nice post! But your basic assumption is there's indeed significant iPad sales by brand loyalists, do you thihk the Apple brand loyalists are some what limited to their own product categories? like iPhone fans will buy new iPhone, Mac fans will buy new Mac, etc. iPod is a breakthrough from MP3 players, Mac is a breakthrough from notebook/desktop, iPhone is a breakthrough from both smartphone and iPod... All these are blue oceans in red oceans. So what is iPad? Tablet? Netbook? Steve Jobs has the power to create GUI with Apple, is iPad another Jobs' miracle? I have my doubt.

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  2. Interesting Post.. liked your insight on apple's strategy.. Bottom-line, learned so much about Apple.
    Shailesh

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  3. @Ramiel
    I like the phrase 'Jobs miracle' - It sort of gives him an aura of untouchability doesn't it?
    Truth is no one's going to buy the iPad unless it solves a specific problem for him/her. The kicker with the iPad is that it allows the user to determine what problem he/she needs to solve. For example: It may be primarily an e-book reader that can also play games for one person while being an organizer, gaming device and dvd rental unit that displays ebooks for another person. If you look at Jobs' keynote and the iPad's marketing as of today, it's sold as a very generalist product i.e. Apple tells you what the iPad can do - it doesn't tell you what to do with it. Core Message - This is a magical device, you can use it as you see fit !!

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  4. @Shailesh

    Thanks bud - appreciate it!

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  5. hi dude..

    I disagree that iPad can revolutionize like the ipod or the iphone.. there r many equivalents which r better in the market.. of course they may not be able to compete in terms of looks but they do offer features that iPad has yet to offer..

    the absence of flash will be major setup.. becoz most small games that people play to simply kill times use flash.. infact facebook, and other games site use flash .. no multi tasking? now why wud I pay so much to do only one task at a time.. I would want to hear music while reading a book.. not possible rite... so I doubt this will be a game changer..

    it does hv the potential to kill the ebook reader like kindle but the ebook reader never took off in the market..

    iPad unlike the iPhone or iPod doesnt offer anything fresh.. besides the apple brand it has nothing to offer.. atleast Iam not convinced this time that iPad can pull an iPhone or change the trend...

    I think I just hurt an apple fan.. dude.. Iam u r talking to an linux enthusiast.. :D

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  6. Fashionistas and douchebag hipsters will buy the ipad whether it did anything or was just a slab of glass. My 2 cents.

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  7. @ivarrian

    Sorry about the late reply dude - I doubt it - I think the iPad will be way more successful even with techies in its second generation. Initial sales have shown crazy highs, but that includes die-hard fans and all the shipped orders. It should decrease heavily over the coming days, but you'll probably see a spike through more marketing.

    The problem that I see with the iPad is that the apps are locked into the iPad. For example: You can't access the iBookstore through itunes or iphone (ipod). Apple's making the consumer buy a very expensive product to get a very cheap, easy to market service. There's a major disconnect there.

    @Arun
    You're right, the absense of flash and multi-tasking is a huge bummer. My guess is that Apple is waiting to launch that in the second version. Apple may not kill the ebook reader, but it will take away a significant chunk of market share. Infact, I wouldn't be surprised if Amazon comes up with a kindle app for the iPad and drops the price of its own hardware - remember its core contribution margins come from the sales of books.

    I'm not really an Apple fan - I just think they have really good product launches - they may have stumbled here by locking the bookstore to the iPad - the next few weeks will tell.

    @Arun @ivarrian - look for an article in the NY Times - It reviews the iPad from 2 different perspectives - Techies and everyone else - remember the iPad hasn't completely positioned itself yet, its still a very generalist product - its very important to look at different user segments to gauge how successful the iPad will be - http://www.nytimes.com/2010/04/01/technology/personaltech/01pogue.html

    cheers

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  8. The iPad does what it does brilliantly...at least from the reviews I've read.

    With all my hatred for the smugness that is Apple, I still wanted to buy one for my Dad. But, being as expensive as it is, I don't think I can. But can't say I didn't see that coming, most Apple products are expensive. You got it right about the disconnect, you pay too much for essentially what any notebook can do. Also, the notebook does much more.

    I'll wait for 2nd gen like most people are probably doing. iPhone 0S 4.0 may just sneak in multitasking if rumors are to be believed.

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  9. My mistake - iBookstore is coming to the iphone with the OS 4.0 release

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