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  • So the iPad is the Cheaper Alternative

    September 22nd, 2010

    The more I read about the expected avalanche of iPad killers, the more I’m surprised about the miracle Apple has wrought. For a company that is credited — or accused — of charging premium prices for luxury gadgets, the iPad is emerging as a surprisingly cheap contender.

    Consider the expectations before the iPad was launched. The consensus had prices approaching $1,000, as tech pundits wondered how Apple could possibly emerge triumphant against the burgeoning netbook market.

    When the starting price settled in at $499, the critics weren’t silenced. That was still somewhat costlier than an Amazon Kindle, and, besides, you can get a netbook for less than $300. How could Apple possibly compete with that?

    As the more knowledgeable analysts have correctly stated, you can’t really compare the iPad and the Kindle. The former is very much a handheld computer, whereas the latter is essentially an e-book reader. The iPad can serve that purpose, but that’s only a small part of its usefulness.

    When it comes to the so-called iPad killers, it appears that the new entrants from such companies as Dell and Samsung will use sleight of hand to convey the illusion of a lower selling price. As with cell phones, you’ll be tied to a two-year service contract after paying what seems to be a modest upfront cost, usually in the range of $300. But as soon as you calculate the total cost of admission, the iPad emerges as surprisingly cheap. Remember, even if you pay extra for the 3G version of the iPad, you don’t have to order a data plan unless you need it, and then it’s strictly on a month-to-month basis.

    Without a contract, the competitors might end up charging lots more than Apple for less. Less? Well, the first products to hit the market are slated to use the Android OS, which has not been optimized for larger screens. The Chrome OS, originally designed as a Web-based OS for netbooks, is not expected until 2011.

    This isn’t to say that the PC industry won’t get the message. If one product fails, they’ll release dozens more, hoping that one or more will gain traction, or they’ll just saturate the marketplace to confuse and befuddle the would-be buyer. You’ll see the come-on prices widely promoted, and sales droids getting large spiffs from these companies will proudly claim they are all much cheaper than the iPad. After all, isn’t Apple the BMW of the tech industry? Why pay more, when you can get something almost as good for much less money.

    In the end, you’ll also see imitation tablet computers selling for less than the iPad, even without a contract with a wireless carrier. That’s all well and good, but the real issue is whether that will make a real difference. If Apple is selling tens of millions of iPads, it would become more and more difficult for also-rans to get a huge piece of the pie. It’s not the same as the smartphone industry, where there were decent and widely-accepted products before the iPhone arrived, such as the BlackBerry.

    Yes, the iPhone made a huge difference, particularly in making touchscreens credible alternatives to the tiny physical keyboards most smartphones offered. The arrival of the App Store delivered a lot more value to Apple’s mobile platforms, with a far richer range of software than is presently being offered even via the Android OS.

    But the core functionality of a smartphone was already there. Apple just refined it.

    With tablet-based computers, they had gone nowhere for years. Microsoft kept touting the imminent arrival of the tablet revolution, and it never happened. Aside from getting a little traction in vertical markets, such as medical offices, tablets were non-starters.

    Apple changed the rules. It’ll take a while for the competition to get the message and come up with gear that’s almost as good. You might compare it to the digital media player market, where there were lots of entries before the iPod arrived, but nobody cared. The aftermath of the iPod’s success brought with it loads of promised killer products, but none gained traction. Even when Microsoft double-crossed their PlaysForSure partners and released the Zune, a product with a closed ecosystem that was designed to emulate the iPod and iTunes, it went nowhere.

    This isn’t to say that the iPad is the next iPod in terms of long-term success. But Apple has seriously raised the bar, and it doesn’t seem yet that the competition understands how to offer compelling alternatives. A hint: It’s not going to happen by using the bullet point feature method, where they evaluate what the iPad doesn’t do, and add some of those features to their gear. So, yes, some of the announced products may have front and rear cameras, but that doesn’t mean they can take good quality pictures, or that the software behind them is well executed. That is the message Apple’s competitors haven’t grasped.

    But it’s always possible a real iPad-killer will appear, and, as a result, help inspire Apple to work harder and build better iPads. That is the best possible result, but it may take a while for anything of that sort to happen. It may, in the end, be too late for the rest of the PC industry.



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    8 Responses to “So the iPad is the Cheaper Alternative”

    1. Jacob Leeham says:

      I totally agree! I am already using Mac Book, iPhone and iPod, but I when I heard the talk about the iPad costing about 1000 bucks almost bought a netbook. I am glad I reconsidered and go an iPad, although it is not the perfect ebook reader… it is so much more than that. I don’t see how any competitor can get even close.

    2. Richard says:

      ???

      Cheaper than what?

      I have a hard time believing that an iPad would withstand the rigors of daily use by a bunch of elementary school students. It is an expensive option when one considers the probablility of a high percentage of them being broken in the course of a school year.

      Is the iPad an interesting device? Yes, but I do not think it a likely choice for the lower grades of public school.

      • Tim says:

        @Richard, you can always see the progress of a school in Scotland that’s doing just that. Fraser Speirs has been blogging about the process. He’s found difficulties based upon how the app store works, but aside from that, it seems like it’s been a positive experience. Google him and you’ll find his blog entries. Don’t just assume it won’t work.

        • Richard says:

          @Tim,

          Thanks for the reference to the Scotish experience. (I apologize for not yet having read all of the blog at this point, but a quick scan of the entries lead me to some interesting conclusions. The parents are charged a fee for the iPad rather than it being purchased with tax funds. This is interesting because it places an “ownership interest” in it to some extent, though it is unclear whether the parents bear the burden of damage to the unit. The other is that I do not think a fee based system is workable in the U.S. public school system. There are simply too many school districts in which the parents lack the means to pay what I expect the fee would be for a $600 device.

          Although Mr Speirs referenced the first hardware failure (a screen defect) which was easily dealt with by transferring data to a spare unit, I am still of the opinion that the iPad would likely have a very tough life in the U.S. public schools, especially the elementary schools. That is an opinion which is without “study data” to back it up, but my experience with such things leads me toward that conclusion. At the very least it would be desirable to have a ruggedized educational version to deal with the inevitable drops and such. I do recognize the benefit of not having a rotating drive to give out from the expected “bumps and bruises” of youngsters using them.

          All that said, just what is the purpose of these things? If it is to function as an eBook reader, there are less expensive implementations. If it is to be a “computer”, I wonder if it is as useful as some people think. It seems clear to me that the majority opinion of the iPad, at this point in time anyway, is that the iPad is a content consumption device rather than a device for the creation of substantial documents.

          The bottom line will be simply that, does this implementation save money when compared to conventional books? (I do recognize the benefit of being able to update eBooks more frequently than conventional printed material.)

          Cheers

          • Tim says:

            @Richard, the “screen defect” was a problem with the iPad and the spare iPads are for replacements while the problems get repaired. That way, they don’t have to wait for the repair/replacement procedure.

            They’re not just e-book readers. How they get used depends upon the teacher. Yes, they’re being used as a computer. They’re replacing laptops, but they never had enough laptops which caused problems. You’d have to read his entries to see how they’re being used.

            He’s been interviewed on the new iPad Today episode. It should be episode 12. It hasn’t been posted yet, I watched it live.

    3. DaveD says:

      As Steve Jobs once said something about the whole widget, putting together good, easy-to-use hardware and software in a distinctive, attractive form.

      Going down memory lane, I googled “whole widget” and came across this article dated November 12, 2001 by Fortune Magazine writer, Brent Schlender. A well-written piece about the “new” iPod and its potentials. It’s amazing to see how accurate it was. Got a little smile reading about the “$4 billion cash hoard” which has now grown to 10 times.

      http://money.cnn.com/magazines/fortune/fortune_archive/2001/11/12/313342/index.htm

    4. dfs says:

      An iPad could probably withstand the rigors if it were put in a sufficiently sturdy case (but of course that would drive up the cost per unit for school districts).

      If I had to market a rival tablet product, I would consider making one aimed specifically for K-12 education, stripped of every feature not necessary for educational use. That way I could probably hit a significantly lower price point than the iPad. Developing an all-around “iPad killer“ would be hard. Developing specialized tablets for specialized markets might not be so difficult.

    5. VaughnSC says:

      Interesting discussion:

      The iPad is already amazingly sturdy, IMHO. ‘Ruggedizing ‘it cannot be much more than adding a rubber case, which can be had for relatively pennies from manufacturers in China; unless you’re going for immersion-proof, which would then require some reengineering of switches, etc.

      As far as parents being invested/responsible with the equipment, charging a fee (or perhaps a security deposit, refundable in whole or in part) of $60-$120 is not unreasonable; although I realize that not every parent can afford it, even if it is less than the cheapest of netbooks.

      As far as stripping down hardware, to wit “stripped of every feature not necessary for educational use”; what exactly would you strip out? Removing Wifi is not an option, the iPad has no camera in its current incarnation. You might be able to halve the storage of the base iPad down to 8GB or even less to support just apps and not media (à la AppleTV2), but otherwise, you can only gut the software, which is pointless.

      At best, given that a new AppleTV2 with minimal iOS guts can sell for US$99; a smaller, ruggedized ‘ePad’ could probably be sold for $250, based on component prices; but then, these never account for amortizing R&D expense.

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