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Tuesday, May 04, 2010

Why I think the iPad won't change anything

At last week's Telco 2.0 summit in London, I crossed swords with financial analyst Richard Kramer of Arete Research.

He has a view that the PC industry (and specifically laptops) has failed to innovate for much of the last 10-20 years, and will be overturned by newcomers, particularly Apple's iPad and more generally a new wave of tablet-style competitors. He was less definitive about the role of telcos in supporting these devices, but definitely felt that they represented a step change in how people engage with the web and various forms of content. He singled out the newspaper and magazine industry as being a prime candidate for iPad-isation in similar fashion to the iPod and music.

I disagree strongly. I believe that the iPad is a side-show, albeit a glamorous one. I also have extremely grave doubts about the massmarket viability of next-generation tablets (or MIDs, or smartbooks or mobile computers etc) based on Android, Meego or Chome OS. I'm even less sanguine about the possibility that there could be a telecom operator model underpinning those ecosystems.

My belief is that the PC industry is guilty not so much of a lack of innovation, but a lack of cohesive marketing strategy. There is no "Windows PC Community" estimating the incremental GDP arising in the developing world from PC-based Internet access and software industries. There is no glossy marketing pointing out that sharks haven't bothered evolving for 300 million years, because they are essentially perfect for their niche.

Instead, the PC industry has gleefully taken the GSMA's shilling, hoping for a few extra crumbs of operator subsidy and extra retail outlets during the recession. At the time when banks and credit card companies were taking a dim view of incremental consumer purchases, mobile operators cleverly managed to disguise loans under the guise of "free" laptops. They have been complicit in pretending that "embedded 3G" was going to be pervasive, despite knowing full-well that most netbooks are sold through ordinary channels to people wanting a cheap PC for use on WiFi at home or in school, or clogging up the 3G networks with commodity traffic supplied via commodity dongles.

Let me switch to the iPad, and by extension other tabletty-type computers that might come next.

Yes, it's pretty. Yes, it's sold to quite a lot of the usual star-struck Apple-istas already. Yes, I'm sure there are plenty of uses for it. But there are plenty of uses for many cool gadgets which make them appealing to gadget-lovers. And I guarantee that every single one of them will own (a) a mobile phone and (b) a computer (PC or Mac) already, and wouldn't give them up if you paid them.

You'll notice that the iPad has been cleverly positioned by Apple so as to avoid any risk of competition with its Mac range. Jobs clearly believes that people will want a fully-open computer as well as at least one locked-down device. How many Macs would he sell, if he prohibited them from running Flash? Or only allowed apps or content that had been vetted by his censorship team? Or restricted the use of external media like SD cards?

Now, I certainly can't blame Apple for trying to create a potential new pool of profit from a cool gadget betwixt Computer and Smartphone. If it takes surplus cash away from people who'd otherwise be buying electric can-openers or new TVs, then fair enough.

But to claim (as some people do) that it either:

- a) renders netbooks and laptops obsolete, or
- b) heralds a mass switch-over from print media

sounds ridiculous to me.

Yes, netbooks are *mostly* used for web-based applications [such as my writing this post on my Samsung], but I definitely want a full suite of native applications as well, which I choose and install myself, not subject to the vagaries of Apple's appstore. I cannot imagine myself with an iPad writing this - with my email, streaming music, Skype and Yahoo Messenger running in the background, working on a number of office files as well.

Now that doesn't mean that I couldn't ever use an iPad myself as well - I already browse the web a fair amount on my iPhone, even though my netbook is just downstairs. So there is an argument that Internet usage will become more segmented by task type. If I want to move pictures from my camera to my hard drive, and selctively upload a few to Facebook, I'll use my desktop. If I'm on a plane, I'll use the netbook. If I'm in bed and want to check my email and overnight SMS's first thing in the morning, the phone.

So maybe it's a device for the 10-20% of Internet usage time when you don't have anything else to hand.

The print media thing is a bit different, and clearly is outside my main domain of industry coverage. And I understand that there's a whole world of pain in that industry at the moment. But I'm unconvinced the iPad is the answer for more than a tiny fraction of readers. I buy a fair number of magazines, a fair number of books, and I read a fair number of newspapers (some of them free and disposable, like London's Evening Standard). I'm expert at folding them to read on the Tube. I usually have reading material for flights. I've got a stack of old Wired magazines around home, and a few copies of Top Gear for anyone desperately in need of reading material in my bathroom. I have a bookcase full of Lonely Planets and Rough Guides - my traveller's equivalent of a trophy cabinet.

Yet I don't have a Kindle, nor have I seriously considered getting an e-reader. I've only ever seen three people with them in London, one of them a semi-famous TV celebrity who was in my local Starbucks, hoping people would first notice it and then recognise him.

I simply cannot see a situation where a large bulk of the world's readers of the FT or Cosmopolitan or Harry Potter go digital *in substitution* of their usual print media. It's not like music, for which the move from CD to MP3 reduced the fallibility and bulk of moving parts, and for which headphones insulate you from the vagaries of the environment. People read in places with no power, bright light, risk of theft, or where comfort and tactility are all part of the experience (armchair + book + whisky, or cafe + cappucino + newspaper in the sunshine). They may want to avoid carrying a bag - or baulk at the need to carry both tablet and PC together.

I can understand the appeal of interactiveness of a connected tablet for media owners and their advertisers. But I am just unconvinced that the user experience and intangible benefits of print has been given as much thought.

In summary, I can see a market for iPad-type devices of a similar scale to (say) personal navigation devices - maybe a worldwide target audience of perhaps 50m people. There are some fascinating niches - perhaps education, or gaming, or a few video applications. But I cannot see them replacing PCs (or Macs or netbooks), nor making a meaningful dent in the consumption of newspapers opr magazines. And outside a few metropolitan hotspots, I can't seem them heavily impacting operators' revenues or their networks either.

[Note: if you represent a company in the mobile industry that wants a contrarian view of device strategy and its impact on business models, please get in touchwith me via information AT disruptive-analysis DOT com]

3 comments:

Anonymous said...

Dean,

Agree with you on the PC argument.

Disagree with you on the impact to the publishing industry, but it won't happen nearly as quickly as futurists predict simply because the device costs so much. Definitely not a mass market price point. However, over time (5~10 years) as the pricing comes down I think the publications will be producing their papers and magazines for digital consumption only. The reason? Advertisers can do so much more with a multimedia device than they can with print.

pk de cville said...

Dean,

Thinking outside the box, would be us thinking about this:

"Is the iPad the 1st 'really personal' mobile computer?"

And, if it is, then ask, "What's the future look like if we have a world with 1B to 2B really personal mobile computers?"

And finally, "Will Apple dominate that future?"

Seems like you're coming at the iPad (and iPhone) from a particular area of interconnected thoughts, perhaps a pitfall of being an expert.

Don't want to be argumentative, but I think the iPad might be HUGE, just as the Mac was.

Regards,

Curt Carmack said...

Dean,

I might have agreed with you 5 weeks ago. After using the iPad daily since it came out, I'm finding that I do about 40% of my computing on it. The percentage might be higher but for limitations at the office.

Of course many types of content production are not suitable exercises on the iPad. However, it is such a superior device for consuming content, and does such a great job with mixed activities and lighter content production, that I find myself using it more and more. It outflanks my desktop, laptop, and mobile for many of my most common activities.

I was very skeptical, but some persuasion from my family got me started and now I'm a convert.

You really should live with one for an extended period and see if it changes your mind as it did mine.

Curt