There's Another Apple Revolution Coming
No-one is going to dispute that Apple created a technology revolution with the iPhone. The device impacted the business model of every company in the mobile communications market, both the carriers and the device manufacturers – and it has impacted a few other companies that weren’t really in that market, like TiVo, Netflix and Amazon. We recently had Nintendo saying that Apple was impacting its market. Since when was Apple a games company? Well – since it launched the App Store .
The iPhone was disruptive beyond being a rethink of what a smart phone is. It disrupted whole industry business models. Ten years ago the mobile carriers were riding high. They were anticipating the revenue they’d generate from image traffic, video traffic, games traffic, etc. They were hoping to set up portals which users would access for music or video or games and they’d put a charge on every kind of transaction. Those dreams are dead. The twin assassins were iTunes and the iPhone.
Instead the carriers are now reduced to charging usurious rates for voice and text messages. Some of the carriers are dining well on this diet, but it’s temporary. They are bit part players in someone else’s movie.
Well. It’s all about to happen again.
The iPhone By Other Means
Apple is planning to introduce a tablet PC in the coming months. What isn’t certain is whether it will be announced in September or later. Apple can be expected to announce new iPods around September time, but if it announces a tablet PC at that time, there’s a risk that it could cannibalize its own laptop sales. However that’s only if the tablet can be a laptop replacement. The laptop sales we’re talking about here are the back-to-college sales which traditionally cause a spike in the sales curve.
So expect Apple to do something to lock in the current laptop purchases before the new Apple tablet is available. As a business, Apple is too savvy not to do that – but Apple will not want to miss sales for its tablet in the last quarter of the year, which has always been its best quarter.
While we know for sure that Apple is going to introduce a tablet of some kind, from rumors out of Taiwan, we know very little else, so everything that follows is speculative. The main point is this:
Apple will disrupt the Netbook market in the same way that it disrupted the smart phone market.
That means completely. Here is how:
- The Apple tablet will not be anything like a Netbook. That means “not in price, not in use, not in capability, not in any way.” No-one will compare it to a Netbook.
- The Apple tablet will not be a laptop wannabe – it will be an evolution of the iPhone and the iPod Touch. It will have a touch interface, no keyboard, screen that works in both portrait and landscape mode, memory only storage. It will run the iPhone version of OS X.
- The Apple tablet will be extensible via Bluetooth. If you want keyboards and a head set or ear piece that will be via Blueooth. Naturally WiFi will be fully supported. There will be lots of opportunity for third party add-ons – stands to put it on, etc.
- The Apple tablet will be a category killer. Therefore it will be a video player, a music player and an ebook reader. Those categories don’t make much sense any more as separate categories. It will also do anything a NetBook can do, except run Linux or Windows.
- The Apple tablet will be a media device. The iPhone/iPod Touch is not a sophisticated media device. The screen is too small. We need not expect anything sophisticated here, except for video playback. The camera and video capability will probably be an improvement on the iPhone.
- The Apple tablet will be fed from the App Store and iTunes. Well, duh. But note that this makes it a different beast from a laptop. The tablet will start life with a whole inventory of possible applications. There are currently over 65,000 applications that run on the iPhone, some of which won’t make much sense on the tablet, bot most of which will be fine.
- The Apple tablet will sell in the $500 to $900 price range. Apple will fill the price gap between the iPhone/iPod Touch and the lowest priced laptop. The price won’t matter, because there will be no other device like it. Nevertheless the price will seem high on introduction. That’s how Apple plays the ball.
- The Apple tablet will come in two distinct versions, comparable to iPhone and iPod Touch. One will emphasize 3G/4G and the other will emphasize WiFi. There will be carrier deals bundled in with the phone version. There will probably also be memory options along the lines of; lower price (too little) higher price (enough).
There is no possibility of Apple not disrupting its laptop market in the long run. Apple will either know that already or come to realize that very quickly. Either way, its reaction should and probably will be to eat its own laptop market in the long run.
Rethinking the Laptop
The Apple tablet wont just be a rethink of the Netbook, it will also be a rethink of the laptop. As with the iPhone, the laptop makers will be forced to follow suit in time. Peripheral markets like ebook readers (including the Kindle) and video players will be badly hit by it. If Apple gets it right it will be a huge success, comparable to the iPhone. Apple will sell these devices in large numbers – much greater than the numbers of laptops it sells.
The fact is, that all technology like this will eventually gravitate to a hybrid of the Star Trek communicator/tricorder. We already have GPS, communication, computing, etc. Now all we need to work on is sensor reading and analysis hardware/software that will let us know if the GPS object coming toward us is animal, mechanical or something else.
Salient points.
…and the tablet will never, ever run Office. It will come with iWork Touch however. This will enable it to be a platform for producing and editing content, rather than just (primarily) consuming it, as the iPhone/Touch is.
Giving away a platform-optimized Office suite with the device will be a huge percieved value-add. “It comes with everything a college student needs – no extras required”
“Nevertheless the price will seem high on introduction. That’s how Apple plays the ball.”
THANK you. I don’t know why given Apple’s history that this fact eludes so many analysts when they predict future device prices.
I still think it’s going to be a tricky sell since the majority of its audience I believe will be iPhone owners, and they’ll need to justify shelling out for something closer to $1000 than $500. It’s almost certainly going to be a pure “internet” device, and given its size it should be able to get a good sized battery in there for decent life. I’m most curious as to whether Apple’s deal with AT&T excludes any device other than the iPhone. If not, Verizon is going to have a lot of new business coming their way, and AT&T is going to have to start enticing customers to stay NOW before their first wave of defectors come (presumably) this summer.
I agree… see a similar post I just published before reading your article…
Remember when Apple struggled because end users did not have access to software for it, not to mention the limited choice of software that actually existed? Yes, I know the internet (and Steve Jobs… and the iMac… and the iPod… and iTunes… and the iPhone…) saved Apple. But does anyone see what Apple has REALLY done? Apple did not only revolutionize the music, music player and cell phone markets. It has now revolutionized the way software applications are being created, distributed and purchased and used!
It is rumored that Apple will be be selling larger versions of an iPhone that will have the capabilities of a full fledged laptop. Great you say? Others can do this too. Yes, BUT Apple already has done it. And others will not have the leverage that Apple has in the way software will be distributed for their units , not to mention the price point and how intuitive those apps are for mobility, lifestyle and efficiency: the iPhone and iTunes way.
A whole separate economy of apps is maturing around the iPhone. App developers are having a blast and getting rich. End users simply click install right on their iPhone. Next question. How much for an app? Hmmm, most are only about a buck, many under $5 and well look at all the freebies! No messy installer files, worry about viruses, and best of all if you purchase an app you can always retrieve it from a single sources later. WOW! Now imagine that on a computer! AWESOME!!!!!!!
Single source? Oh yeah, the MacBook Tablet and itunes would make Apple the guardians AND the gate for software. Very impressive. They have already accomplished this logistically with the iPhone. Now all they have to do is implement the same thing with a computer. Very smart!
So now more people will need a “Macbook Tablet” in their hands. Many have been reluctant to switch from PCs but that was when software was bought, downloaded, purchased in stores, etc and at higher costs and with many cumbersome installers. Things will be different. Do you see this new revolution coming??
I see a name change coming. No more i”Tunes”. No more “i”Mac. Just forget the identifiers following the i? How about just plain “i”… “The Apple i.” Now how revolutionary is that?
By Ben Preisner. 8/29/09
impressive article. particularly impressive in retrospect.
That’s a nice astute observation. Thanks.
I think you’re right about this. There will have to be an office capability, so a version of iWork would make sense. Microsoft would then have to build something for the platform.
Yes, you raise an interesting point. The question is “how much of a phone is the new tablet is going to be?” – and that may depend on the small print in the AT&T contract. Clearly Apple has some wiggle room. I personally doubt whether Verizon is going to get the wonderful deal that AT&T got. Exclusivity for 5 years? I think not.