Apple’s big challenge

I have to write about the iPad, the most anticipated launch of 2010.  I waited a few days for the dust to settle, but it hasn’t really.  The world still divides into Apple fans and Apple detractors.  The tech blogs remain confused between those who see it as a phone with a bigger display and those who see it as an under-equipped laptop.  What, no camera?  No handwriting recognition (like a “real” tablet).  And worst of all, no Flash?  Therein lies Apple’s big challenge—what exactly is the iPad?    They claim it is a new category.  Building a new category is a challenge Apple has not faced since the Newton, where they failed.  On that occasion they left the market to Palm, which arguably had stronger grasp on customer needs and hence better arguments for building the new category in customers’ minds.  However, to be fair, Palm came after Apple (and Motorola and Tandy) and so had the benefit of learning from their mistakes.  What were these mistakes?  Two come immediately to mind.  First, failing to identify the right group of early adopters.  Second, not finding a point of differentiation that would change the status quo.  In contrast, Palm focused on road warriors (remember those) and synchronization with office systems.  And the rest is business history as Palm went on to create a great success out of the rubble of the three previous attempts at creating a “PDA” category.   

Faced with a “new” category, most customers try to classify the innovation into a category they already understand.  In this case, a phone or a laptop.  Either would be disastrous for Apple.   The iPad makes web browsing or emails easier than a smart phone but is too big to be a phone replacement.  And as a laptop or tablet the iPad (or at least the first version of the iPad) is under-featured.  To succeed Apple needs to target a group of customers who have a real need for an in-between device and then give them a compelling reason the iPad is better than the status quo.  Can they do this?  I think the answer is yes (which is not the same as saying they will succeed—I am not privy to Apple’s marketing strategy, and in any event execution is more difficult than strategizing).  To me the target group is most likely teenagers and the compelling reason is that the iPad is easier to carry around and use.  The teenagers I know live on Messenger and Facebook and in a totally different social environment to the one I grew up in.  If they use their phone it is to SMS rather than talk (and they complain loudly when they reach their monthly limit).  And they find lugging a netbook around a chore, let alone a laptop.  The iPad is thus a great solution for Generation Z (the net generation—born from the mid 1990s).  So I think most of the tech bloggers have (yet again) missed the point.  Moreover, if Generation Z starts to adopt, then the rest of us will fall in line, perhaps not to adopt but at least to accept the new category as valid.  My only reservation is the lack of multi-tasking.  The teenagers I know are good at multi-tasking and really value it.  So Apple will need to fix that in the next version, along with the lack of a webcam (some people say this is already provided for in the design).  But I’m sure Apple has a product roadmap.

The last point to make is, of course, that the iPad is not just about product innovation.  It has the same powerful—App Store—driven business model as the iPhone.  Who knows what value may emerge from that in the next 12 months and how this will enhance the chances of success.

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