Check Mate: Apple's iPad and Google's Next Move

“I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch,” said Charles Golvin, an analyst at Forrester Research, adding that he expected the iPad to mostly cannibalize the sales of other Apple products. – The New York Times

There is an axiom that the biggest game-changers often result from ideas that, at first blush, seem easy to dismiss. So it goes with yesterday’s launch of the iPad, Apple’s entry into what they call the ‘third category’ of device — the middle ground that exists between smartphone and laptop.

Why is the iPad (seemingly) so easy to dismiss? Well, for one, it is an evolutionary device when conventional wisdom suggests that it needs to be a revolutionary device to find a wedge into a new market.

After all, the iPod and iPhone that came before it were truly revolutionary devices, offering wholly new functionality, delivering new value chains, and fundamentally changing the relationship that consumers had with, first their media (in the case of iPod) and then their communications (in the case of iPhone).

By contrast, the iPad truly does look like a really big iPod Touch, and given its evolutionary nature, it begs the question of who buys this thing and why, especially if you already have a smartphone and a laptop?

Confusing the Tail with the Dog
Thus, a reasoned analysis is that the iPad is to the iPhone & iPod Touch as the MacBook Air is to the MacBook. In other words, a cool product with a devoted base of happy customers, but in relative terms, a niche product in Apple’s arsenal of rainmakers.

In fact, the opinion of the above-referred Forrester analyst is hardly unique. Quite the contrary. Check out the discussion boards across Engadget, AppleInsider, and Silicon Alley, to name a few, and do a twitter search on iPad, and the sentiment is 5 to 1 to the negative, with recurring phrases like ‘fail,’ ‘yawn,’ ‘over-hyped’ and ‘apple blew it.’ Heck, even two-thirds of the audience invited to Apple’s own event look bored, offering only feint applause when prompted by Apple CEO, Steve Jobs.

So is Apple hosed? Did they blow it? Not even close.

But before I get into the ‘Why,’ let me present, to set some contrast, a favorite saying within Google. Google, after all, is Apple’s open ‘ish’ frienemy, and the company who so many cite as being ‘destined’ to beat Apple in the mobile wars (if interested in that fork, check out ‘Android’s Inevitability and the Missing Leg‘). If what’s good for Google is not so good for Apple, then perhaps the opposite might be true, right?

In any event, within Google they like to say that what is good for the Web is good for Google, the premise being that the more the Web evolves as the core fabric from which applications, communications, entertainment, social engagement and information exchange proliferate around, the better it is for Google as the company that organizes it, makes it searchable, and then monetizes it via advertising.

So if what is good for the Web is what is good for Google, then what is good for Apple?

It’s the Platform, Stupid!
125M accounts.png

As I am listening to and watching Steve Jobs deliver what very well could be his last launch of an entirely new product for the same company that he birthed (with Steve Wozniak) 34 years ago (in 1976), I am struggling with two conflicting sensibilities.

One is that some of the heart-stopping, holy-sh-t, gaming-changing aspects of Apple’s tablet creation still lie below the surface, like an iceberg that only reveals a fraction of its actual mass above the waterline. (More on that in a bit.)

In other words, add me to the list of expectant Kool Aid drinkers struggling (then) with a cupful of ‘that’s it?’ punch.

But, far more resonant is a second sense that a rapidly rising tide called iPhone Platform is lifting all boats derived from it; namely iPhone, iPod Touch and now iPad (and I still very much believe that Apple TV is due for a near-term reboot to plug into the same ecosystem).

And here’s the thing, if this was a presidential debate between Apple and Google for the hearts and minds of consumers, developers, media creators, publishers and businesses of all sizes, then the launch of the iPad is Apple’s closing argument for why they should be #1 (watch the full video, and let me know if you agree//disagree).

Consider this: A $50 billion company that is so profitable that in the last quarter alone they dropped another $5.8 billion of cash into their coffers (now they have $40 billion in cash). Assertion one: not only do we build great products, but we run our business the right way (read about Apple’s Q1, 2010 Earnings Call HERE).

No less, this same company has been the game-changing innovator at not only the inception of personal computing and not only in transforming the music business, but also the mobile phone. Assertion two: we are the only game-changing innovator who has both stood the test of time and repeatedly matched past successes with new successes.

But, here’s the kicker; in iPad, Apple is presenting multiple levels of leverage that virtually assure that they will be successful with this new entrant. Why? Because even if iPad (somewhat) cannibalizes sales of another Apple device, as the afore-mentioned Forrester analyst proffers, it’s money going out of one Apple pocket and into another.

In fact, far from shying away from this truth, Apple wholeheartedly embraces it, with Steve Jobs specifically noting in yesterday’s presentation that “because we’ve shipped over 75M iPhones and iPod Touches, there are already 75M people who know how to use the iPad.”

A note aside, this premise that existing iPhone and iPod Touch users simply pick up the iPad and know what to do with it is a concept that not only has been affirmed by virtually everyone I know who has played with the device, but is an idea that should be wholly unsurprising to anyone that currently owns either an iPod Touch or iPhone.

250M-iPod.pngNow, perhaps you might argue that that’s fool’s gold, tapping into a mine that is destined to run dry, but that belies the fact that Apple just recently sold their 250 millionth iPod, so I would argue that ‘there’s a lot more gold in them thar hills.’

And that is the key thing that you should take from the iPad launch event; namely, that being evolutionary and doing the same thing over again – by creating a derivative product from the original mastering effort (just as the iPod and iTunes gave rise to iPhone, iPod Touch and App Store) – is good strategy when the strategy not only is working in the market, but also rewards the investment your customers and partners have already made in your ecosystem.

apple-tablet-keynote_088.jpgAlong those lines, virtually the entire library of 140,000 iPhone Apps will run unmodified in iPad (with pixel for pixel accuracy in a black box, or pixel-double running in full-screen), a decision that takes care of both current iPhone Developers and iPhone/iPod Touch Owners. As you might expect, the same is true with iTunes libraries.

I can tell you that when I bought a second iPod Touch for my kids over the holidays, the premise that my entire library of apps and media (not to mention, photos) from my first iPod Touch could seamlessly be re-used in the new device was a bit of an ‘AHA’ moment. Leverage, after all, is a good thing.

Mind you, this is independent of the iPad-specific optimizations that developers can take advantage of within the updated SDK (a note aside, now with two flagship devices that are not phones, calling the platform ‘iPhone Platform’ seems decidedly out of date, and I noticed that in referring to the updated SDK, Jobs & Company referred to it as the SDK, versus iPhone SDK. Expect a developer event, likely tied to the release of iPhone OS 4.0, that brings some order to the naming confusion, in addition to formally conveying clearer constructs for harmonizing development across the two different form-factors).

Okay, one last chess move laid out by Apple yesterday, and seemingly, a more focused shot across the bow of Google, and their loosely-coupled approach, was the assertion that “we’re the only company that can deliver this type of solution with this price and performance.”

This point, which is also amplified on the Apple web site (check out the iPad intro video, which feels in its presentation style akin to getting the co-creators of iPad to sign their name on the product), is bolstered by the fact that the iPad is the first device using Apple’s own proprietary silicon – the A4 chip, the first offspring of the P.A. Semi acquisition – yet another piece in Apple’s proprietary integration chain, including battery technology (iPad touts ten-hour battery life), hardware design, software, developer tools and online services.

Google, your move.

The Good, Bad and (not so) Ugly of iPad
apple-tablet-keynote_050.jpgLet’s start with the good. The consistent refrain from users that have actually played with the device is that it is fast, surprisingly fast. As John Gruber of Daring Fireball notes, “everyone I spoke to in the press room was raving first and foremost about the speed. None of us could shut up about it. It feels impossibly fast.” In other words, unlike netbooks, there is nothing underpowered about this device.

Secondly, is the fact that with over 1,000 sensors in the touch-based user-interface, Apple is effectively doubling down on the core belief that they have found the future of personal computing, and it doesn’t involve a mouse and a physical keyboard.

apple-creation-0337-rm-eng.jpgIn fact, noteworthy is that not only did Apple deign to completely re-design it’s iWork productivity suite for the iPad (it looks very functional,), but a number of the demos spotlighted how having a larger touch-based user interface facilitates all sorts of interesting innovation around virtual controller schemas, since you simply have more real estate to play with, and the level of sensor density translates to a high degree of responsiveness.

For example, EA’s re-work of their ‘Need for Speed SHIFT’ racing game showcases the ability to quickly toggle between the inside and outside of a race car, and the ability to change gears from the inside of the car, something unimaginable in the much smaller iPhone.

MLB-overlay.pngSimilarly, MLB (Major League Baseball) showcased their MLB app, which overlays graphics, information feeds, video clips and live game programming in a way that is simultaneously immersive, interactive and highly entertaining. It is both suggestive of a media-centric killer app for the IPad and a bellwether for the future of TV Anywhere, yet another reason that I believe Apple’s ambitions with respect to Apple TV remain very much alive.

Anecdotal, to be sure, but also pointing in the Apple TV direction, is the fact that iPad applications will be able to display content specifically targeted to an external display connected to the iPad (via the Dock connector), a capability that was never allowed with the iPhone SDK.

But the final bit of noteworthy, and compelling, good about iPad is that this just feels like the device that real people (read: non-techies) are going to flock to. For one, the intimidation factor of a tiny device, something that held back Baby Boomers, like my parents, suddenly becomes a non-issue, and, of course, there is the matter of the price.

At a $499 entry point, mass consumer is an achievable goal in due time (plus, no pricing overhang for competitors to swoop in).

So what’s not to like? Well, for starters, Apple was slim on the details behind their vision for tablet-optimized applications, although it’s worth noting that the iPhone SDK didn’t actually launch into beta until a full eight months after the release of the first iPhone. In other words, the developer side of the iPad story has a second act that is forthcoming, no doubt gated by the extreme secrecy leading up to the device’s launch.

hero7_20100127.pngSimilarly, while iPad lays clear Apple’s ambition to pursue the e-book market aggressively (they demonstrated a nice iBooks player and added an iBook Store to complement the iTunes and App Store marketplaces), they demonstrated virtually nothing that harnesses the touch, tilt, rich media and programmatic elements that they can bring to the re-invention of print media.

This could be gated on the aforementioned developer’s event or on difficulties with the print media industry, but it’s worth level setting that what they launched is, more or less, iterative to the Kindle’s value proposition (Jobs even gave props to Amazon in the presentation) than a complete disruptor.

Other random quibbles are the lack of a camera in iPad (for video conferencing, augmented reality apps and plain old photo taking); a lackluster carrier value proposition on the 3G version of the iPad; and for some, the continued (and I assume permanent) lack of support for Adobe Flash. But these are quibbles, not what I consider showstoppers that stand in the way of iPad’s eventual success.

Netting it out: The best way to think about iPad is as the device that inspired Steve Jobs to create the iPhone and the iPod Touch. It’s the vaunted 3.0 vision of a 1.0 deliverable that began its public life when the first generation of iPhone launched only two-and-a-half years ago, and as I wrote about previously HERE, it is a product that is deeply personal to Steve Jobs, and I believe the final signature product on an amazing career. I would view yesterday’s launch in that light.

Related Posts:

  1. Rebooting the Book: One iPad at a Time
  2. iPad: The ‘Boomer’ Tablet
  3. It’s in the Bag! The Apple Tablet Computing Device
  4. The Chess Masters: Apple versus Google
  5. Holy Sh-t! Apple’s Halo Effect
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