This story originally appeared in the Huffington Post.
Finally, the rumors and
speculation are at an end. Apple has announced the iPad.
The key question now for
investors: can Apple make the iPad a successful new category where others have
failed? Or put another way: do you need an iPad in addition to a laptop and smartphone, which are must-haves for
many people?
Clearly Apple has created a
gorgeous product at a great price point. But to be successful at building this
in-between category, Apple must first rally its faithful, so I’ll look to myself
(a huge Apple fan) as a good example. Here’s my thinking:
As much as I’m intrigued and
think the iPad is a fabulous product, I’m frankly unclear as to whether I’ll
buy one, ever. I didn’t have this reaction with the first Mac, or with the
first iPod, and certainly not with the first iPhone. I knew – upfront, on the
day they were announced, sight-unseen -- that I’d eventually buy each of those
products.
I might consider the iPad as
my next laptop replacement, but only if the available apps allow me to do the
full range of work I currently do on my aging Mac portable. But if it is my
next laptop replacement, Apple will have lost a $1200 MacBook Pro sale, in
favor of a $600-$700 iPad sale. That’s a net loss.
All in all, I just can’t see
having an iPad in addition to my iPods, my iPhone, my desktop iMac and my Apple
laptop. It’s getting to be device overload, even for me.
So if that’s the thinking of
one veteran Apple fan, it can’t bode well for the short-term outlook for the
iPad, which many investors are expecting to be an iPhone-like megahit. That’s
where the short-term disappointment will come for investors. Around late Q3,
when initial iPad sales numbers are revealed, it will become clear this product
is a nice seller, but not a great one. AT&T as the only 3G provider won’t
help. Then the “Apple comes up short with iPad” stories will start to flow.
Now for the long-term view:
Apple has just reinvented portable entertainment and mobile computing. No, it’s
not “magical,” as Apple claims, but it is an elegant form factor that will
engage niche industries to create apps for their businesses. It will likely
become a hit with educators. And don’t overlook the fact that iPad is the first
product with a proprietary Apple-made chip, the A4. Apple wants to be in full
control of its destiny.
Equally important is the
disruptive nature of this product in terms of price: some smartphones cost as
much or more than the entry-level iPad. Are you listening, Nokia? It’s a device
that, while not a netbook, will certainly take a piece of that category.
Whether the iPad will come
at the expense of Apple’s core Mac OS business remains to be seen, but just as
Apple started the decade with the iPod, which grew slowly into an iconic
device, I predict the iPad, after initially underwhelming investors, will also
grow over time and indeed create a new device category. But it will take time.
Apple is planning for the
long haul. This company has moved beyond an e-reader and created an
e-entertainment device. One can only imagine how the folks at Amazon, as well
as the Wintel companies who’ve had tablets out for years, are feeling right
now.
Full disclosure: Frank Cioffi is long AAPL stock.
