The world doesn't need an Apple tablet, or any other

Apple's rumored tablet computer cannot live up to the hype, which has reached almost ridiculous levels of rumor, speculation and anticipation. The rumored tablet will fall short of expectations, because they are simply too unrealistic. What surprises me most about the excitement and early analyst sales projections: No one is talking about addressable market.

So I'll assert what should be obvious to anyone thinking rationally and not emotionally: Tablet is a nowhere category. For all the hype about an Apple tablet , it is at best a niche product. The world doesn't need an Apple tablet, no matter what the hype about rumored features or regardless of what actually releases (if anything).

As I will explain in this commentary, an Apple tablet -- no matter how innovative -- faces three distinctive market challenges: The greater desirability of smaller devices; overlapping functionality with devices above and below it; and functionality too limited without a physical keyboard. The question everyone should ask: What would you use an Apple tablet, or any other, for? Follow-up: What in the answer to that question is something you can't do on an iPhone (or other smartphone) or laptop? I encourage Betanews readers to answer these questions in comments.

Late yesterday, I asked my good friend and long-time Mac journalist Jim Dalrymple what he would use an Apple tablet for? He didn't immediately answer the question, which was unusual for either him or his famous beard. Eventually, Dalrymple told me that he would carry a tablet on his next trip rather than a MacBook. "You're going to write stories on a touchscreen keyboard?" I asked. Yes -- and he has written stories on iPhone. I internally chuckled, because that answer is one of the fundamental concerns about an Apple tablet.

Dalrymple couldn't give me any good functions that can't be done with iPhone. He can surf the Web, run applications, send e-mail, share digital content, consume digital content and more using iPhone. Apple's rumored tablet -- if there really is one -- can't functionally be all that different from iPhone, which also is a tablet. The UI may function differently, but cool doesn't make a product practical. I don't see how an Apple tablet, or any other, can be practically better than having a smartphone. Just the opposite: The smartphone is practically better because of its portability.

Apple is part of the reason why tablets cannot succeed in the current market. The iPhone already is a tablet, with touchscreen keyboard, always-connected Internet and pocketable size for an affordable price ($99 for the 3G model, subsidized). Sure, an Apple tablet could be much larger -- say, 7-inch or 10-inch screen -- but it wouldn't be easily carried everywhere and likely wouldn't have a constant Internet connection. How many people are really going to spend for two 3G data plans, just so they can carry a smartphone and a tablet? Others could carry a dumbphone and tablet, but they would still pay for extra wireless service. If there is no 3G, why should most anyone carry the device at all when the smartphone provides connected applications and a Web browser?

A tablet functionally lies somewhere between a smartphone and small laptop -- even a netbook. There is too much overlapping functionality between the smartphone and laptop. I call it the middle product (like middle child) syndrome. The overlap won't justify the price, which for the rumored Apple tablet Piper Jaffray analyst Gene Munster audaciously predicts will be $600. What? Are most users going to buy a touchscreen and tablet or tablet and laptop (and no cell phone) -- or perhaps all three? The answer is no, no and no. If you disagree, comments are there for a reason. Use them.

Right now, Apple already sells in iPhone a sensible tablet useful for 90 percent (at least) of what most people might need from a larger tablet. Apple's priority shouldn't be a 7-inch or 10-inch tablet but a slightly larger iPhone with higher-resolution screen, faster processor, more memory and the ability to run background applications. Those improvements describe features available on some newer smartphones, including the HTC HD2 or Nokia N900.

I haven't read any online analysis or commentary seriously asking what an Apple tablet would be used for or what is the addressable market. In our conversation yesterday, Dalrymple asserted that there doesn't need to be one. Apple will create it. I disagreed, using iPod and iPhone as examples, asserting that the company's most successful products pushed into established markets, even if marginally created.

For example, when Apple got into the portable music player market, Sony had been there with Walkman (granted, analog tapes) for about two decades and portable CD players (granted, not all that portable) had been available for about half as long. MP3 players had been around in some form for at least four years before iPod debuted. A category existed that Apple extended, capitalizing on content people already owned (from CDs) or had stolen (from file trading sites).

The cell phone market already had an install base of several billion users when Apple released iPhone in June 2007. HTC, Nokia, Palm and Research in Motion had shipped more media-centric sophisticated handsets for years. Apple slapped a better user interface and user experience (UX) on the smartphone, but the category existed. Sure, Apple did in some ways redefine the category, but handsets sold well without iPhone.

The tablet market is different. While established at least as well as MP3 players when iPod debuted in October 2001, tablets are a niche category -- and for good reasons. There is little mass-market use for the category; the middle product syndrome is one reason. I'd argue the market for tablets is even smaller today than 2007 because of iPhone and the dramatic increase in number of competing smartphones released in the past two-and-a-half years. A keyboard could extend the market, but whoops other smartphones and netbooks have got those already.

Microsoft also is rumored to be working on a new tablet concept called Courier. Plenty of other companies -- Nokia and Sony, among them -- have released different types of tablet, each failing to achieve mass-market success. The tablet started out as a niche device and, for the foreseeable future, it will remain a niche device, no matter how innovative is Apple's design or user interface.

Some Apple tablet defenders will write in comments about the publishing possibilities, such as ebook functionality to compete with Amazon's Kindle, Barnes & Noble's Nook or the Sony Reader. Amazon had a great holiday season selling Kindle, which would seem to validate the idea that an Apple tablet supporting ebooks could sell as well or better. But most everyone is looking at Kindle the wrong way. The question shouldn't be "How many Kindles did Amazon sell?" but "How many more Kindles could Amazon have sold if its ebook reader software wasn't available for iPhone?" For many users, iPhone is good-enough ebook reader.

There is something about the rumored Apple tablet and its timing that is eerily familiar. History tends to repeat, which for companies is their repeating past mistakes. In summer 2000, Apple released the ill-fated Power Mac G4 Cube. I bought one. It was a work of beauty. But Cube was a niche PC suffering from the middle product syndrome. It functionally wasn't superior to lower-cost iMacs but cost much more and also couldn't easily be upgraded, unlike Power Mac towers. Apple overproduced Cube, expecting big sales. They never came, but a recession did, forcing Apple to issue a profit warning in autumn 2000.

Like today, Apple's share price was soaring to record levels before Cube came along. In April 2000, the company's stock closed at $121.75, after Apple announced a two-for-one split and strong quarterly earnings results. The day after Apple's Sept. 28, 2000, profit warning, shares plummeted by nearly 50 percent, to around $28 from $53.50 in early trading. On Dec. 6, 2000, Apple issued yet another warning, about sitting on 11 weeks of inventory, instead of the typical three or four. Apple shares slid another 16 percent to $14.31, marking their lowest closing since June 1998, about two months before Jobs introduced the original iMac. On Feb. 9, 2001, following another profit warning, Apple shares plunged another 14 percent.

The point: Apple's stock has once again reached record levels, buoyed on the hype surrounding a product that may not even exist. If there is an Apple tablet, and the announcement is imminent as rumored, questions about market viability must be asked and answered. I also caution everyone that Apple's high-flying stock today ahead of the rumored tablet's rumored announcement remind too much of share price highs nearly a decade ago before Cube debuted. If the tablet can't meet the hype, or turns out to fill a niche market, what happens to the price of Apple shares?

That brings me back to my assertion that iPhone is functional enough, more portable and better connected than could be any 7-inch or 10-inch tablet. Would you buy an iPhone and iPod touch? I expect that for most people the answer will be "No." There is too much overlap in features and functionality and few additional benefits. If Apple's rumored tablet runs iPhone OS (or something close to it) and offers App Store applications, what will really distinguish it from iPhone -- other than better hardware, larger size and perhaps flashier UI? Are these features real benefits that would justify buying an iPhone (or other smartphone) and a tablet? You know my answer. Please offer yours in comments.

Update: After posting, I saw in my RSS feeds that John Gruber rightly asked: "If you already have an iPhone and a MacBook; why would you want this?" He concludes that Apple is "swinging big -- redefining the experience of personal computing...The Tablet, I say, is going to be Apple's new answer to what you use for personal portable general computing." Gruber probably is right about Apple's intentions, but I still say that the "new answer" is already here: The smartphone, a category where iPhone already redefines "the experience of personal computing." The smartphone is good enough and it's affordably priced. In most mass-market product categories, particularly technology, good enough defines success.

It is indeed amazing how Joe Wilcox has changed his tune...

Here is Joe Wilcox's take about the Apple iPhone from a similar time three years ago:

January 10, 2007 12:00 PM

Where's the 'You' in iPhone?

Steve Jobs must have broadcast some wicked reality distortion field yesterday. Even some of my colleagues got caught by it.

Apple's CEO was in near-perfect form during the Macworld keynote, as he unveiled the long-anticipated iPhone. Apple is getting tons of rave responses--and for a product that isn't scheduled to ship for six months.

Colleague David Morgenstern rains praises on Apple's approach to user design: "Apple's team in Cupertino has stopped the market with this product." David makes some astute observations about Apple's approach to details that matter.

But I see some glaring oversights when it comes to other details that are going to matter more, basics like battery life and durability. I predict some big problems for the iPhone, once people start using it for more than 5 or 10 minutes with Apple executives expectantly standing close by.

The phone is beautiful, the user interface is breathtaking and Jobs is ever so charming and convincing when the sell is harder than it appears to be.

David knows the problem: "I admit that it can be hard to check reality while in the bubble of a Steve Jobs Macworld demo. He is the master of such demonstrations and the Mac-phile crowd hangs on every word from his gigantic projected mouth seen on the tall-and-wide screen in the Moscone Center."

So, what's wrong with iPhone--a device I admittedly haven't seen close up? Distance may be why I have clearer perspective.

It's a work of art. What's that saying about how looks can be deceiving? The iPhone looks good, but it may not be rugged enough. The beautiful iPhone, with one full side the screen, is sure to be marred by everyday use. But the user will expect the beauty to remain, not fade. Apple took huge flak over the original iPod nano, because it was easily scratched; surely the iPhone would receive no less reaction.

People hang masterpieces, not put them in their pockets or purses.

Even if the iPhone proves to be scratch-resistant, which I strongly doubt, fingerprints and smudges will leave impressions. Sure, they can be wiped away, but who would want them? Mmm, I wonder what will be the long-term impact of stubble or full-grown beards rubbing against the touch-screen.

More troubling are user expectations about ruggedness. Most cell phones are pretty tough. How often are they dropped? It's not hard to imagine what could happen to the iPhone's screen when dropped on the pavement from someone's pocket or purse.

The battery is fixed. It's my understanding that the iPhone's battery is not removable, which bucks against sensible cell phone manufacturing convention. Battery life is important in a mobile. Heck, Cingular supplied two batteries with my Samsung BlackJack, and I easily get about 5 hours of talk time.

Battery life is complicated by functionality. By branding the device a phone, Apple made telephony the core functionality and user priority. The other functions are going to sap battery life. I agree with David that Apple gets the small usability details right, but that's an approach that could work against the iPhone. There are plenty of multifunction phones out there, but usability limitations restrict realistic usage beyond a couple features. The iPhone's great usability will make several, battery-draining functions appealing to use. The cross-country plane flight that drains an iPod battery is going to be a liability for a telephony device with fixed battery.

It's not a phone. Whatever iPhone is, it's not a mobile phone, nor should it really be marketed as one. The marketing should have been as a fifth-generation iPod. Apple kept the focus on the primary functionality of music, positioning video as an extra benefit; it's not primary. Better marketing would have been: It's an iPod with a touch-screen--oh, and it's a phone, too. As a phone, the main expectations will be around telephony, with music and other stuff as extras.

The device concept is brilliant and trend-setting for an iPod or a versatile and affordable pocket computer. A small computer carries different expectations about durability, which could have benefited user expectations about iPhone. Even the roughest users surely must treat their laptops more gingerly than their cell phones. The laptop screen is understandably breakable.

The features are all the same regardless of the positioning: phone, iPod or mini-Mac. But the user expectations change based on which function is marketed as primary.

The price is high. The iPhone costs too much for most people. Even the overly energetic and enthusiastic Macworld audience seemed to silence at the price. In the United States, people expect free or nearly free phones.

As example: Cingular only sells two phones for more than $250, the Cingular 8525 and Palm Treo 750. Both phones sell for around $400, after $100 rebates. The iPhone will sell for $499 or $599, depending on whether it's a 4GB or 8GB model.

For a mini-Mac, $600 is a bargain. Usage creates different expectations about price.

My former JupiterResearch colleague Michael Gartenberg and I discussed the phone this morning. "As you know, no one pays for expensive phones here, but they do pay for expensive iPods," he said.

His comment supports my earlier contention that Apple should have positioned the device as a touch-screen iPod that also is a cell phone. That said, Gartenberg disagreed about initial response to the pricing.

"The masses with $500 are going to not care at all," Gartenberg said. "They'll see this thing and make it the must-have item for 2007." He added that Apple was "brilliant to price it high."

If price and beauty are the definition of chic, he could be right. But the "masses with $500" may also have great expectations about the iPhone staying crisp and scratch-free.

Data speed is insufficient.. As a mini-Mac, the iPhone offers many data-centric features. But the device only supports Cingular's EDGE network, rather than 3G. The aforementioned Windows Mobile-based Cingular 8525 and Palm Treo 750 are both 3G devices. While Wi-Fi makes up for some of what's missing, EDGE diminishes the iPhone's appeal compared with 3G devices. Connectivity is probably the least of the iPhone's usability shortcomings.

Users expectations will be too high. Apple's iPod success, rumors leading up to the Macworld announcement and the device itself foster unrealistic expectations about the iPhone experience.

Even if Apple delivers an exceptional experience--the "Wow" Microsoft touts in Windows Vista marketing--expectations could be even higher. Durability, ruggedness and battery life are fundamentals Apple should have given greater priority. New features like the face-proximity sensor are only as good as basics like battery life. One or two fatal flaws can cripple an otherwise breakthrough device.

Time to market is another consideration. June is so far away, even for Apple, which tends to announce closer to product availability. Apple's fanatic product secrecy and insistence on controlling all messaging are the real reason for such an early announcement. The FCC approval process would have disclosed the iPhone--before Jobs could do his show and tell--unless Apple announced it many months before availability.

Six months is an enormous amount of time for a device people want today. The hype is now, so the time to sell is now. Motorola announced the breakthrough Q a long time before its availability with Verizon. The Q didn't look as breakthrough when released, because other manufacturers responded and consumers' memories are short. Today's rock star is tomorrow's geriatric rocker.

Better stated: The reality distortion field will fade. People will come back to their senses and ask what really matters to them in a mobile. The answers will be basics, like good telephony, long battery life, small size and low price. Which of these attributes apply to the iPhone?

And even closer to the iPhone's release when more people had hands on experience with it, Joe Wilcox's take was still almost completely negative:

June 11, 2007 3:57 PM

An iPhone Skeptic Speaks Out

Apple's iPhone generates even more buzz with today's Apple World Wide Developer Conference kickoff. Behind the buzz, is anyone really asking who will—or perhaps won't—buy iPhone?

It's time for a reality check, assuming the effects of Apple Kool-Aid ever wears off. Many bloggers, financial analysts and reporters are absolutely giddy with anticipation and predictions about iPhone's enormous success. As anticipation about the product reaches escape velocity, gravity may yet pull it to earth. How's that for a mixed metaphor?

I'll preface this post by saying that I haven't held or used an iPhone, which might help my impartiality but limits any first-hand knowledge. On paper, the iPhone isn't a sure thing, and there are some fundamental problems that Apple Kool-Aid drinkers have ignored.

In January, I laid out six problems with the iPhone. I'll reaffirm those after offering some fresh perspective.

Market out of synch?
Apple's sales pitch is all mass marketing, but the iPhone is not a mass-market device—at least in the United States. Some overseas markets are quite friendly to multifunction phones but, for now, Apple will only offer iPhone in North America.

Who will buy iPhone? Based on a Solutions Research Group study (PDF), the iPhone will appeal to the same buyers as other pricey, high-tech gadgets: young men. In a survey of 1,230 people, those "who are definitely interested [in the iPhone] at $499" are:

72 percent male

Average age: 31

Living in households with average income of $75,600 (or 26 percent above the national average)

58 percent college-educated (43 percent is the average)

Most likely to live in California or New York

Unlikely to own an iPod (48 percent)

Now, seeing as how the iPhone is a pretty device, I assume—and I assume lots—that the most likely early adopters will be the group of so-called technosexuals.

I haven't seen other analyst reports, but based on Apple's marketing and CEO Steve Jobs' comments, the iPhone's buying demographic is unexpected—or maybe not. The demographic nicely fits other high-tech toys, even the original iPod. The iPhone is a high-end, high-tech ego-boosting gadget for the young jet set. That is no mass-market demographic.

Last week Peter Burrows of Business Week predicted that the iPhone would be a $10 billion business. Burrows' commentary is just one example of the many blogs and news stories that presume the iPhone will be a huge success and that everyone will want one.

On the contrary, the initial market looks to be quite limited, if the SRG report is remotely indicative of buyers—even if Apple sells 3 million units this year, as some analysts have forecast.

Cheap or free phones define the U.S. market. AT&T lists about 90 phones on its Web site, 10 of which are free, and 20 others that cost less than $30. Only one phone costs more than $300 and none cost anywhere close to the iPhone's $499 or $599 price, unless the carrier should offer a significant subsidy.

No Real World Test Yet
How early adopters respond to the iPhone could affect all-around sales. There are several technical hurdles Apple will have to clear for the iPhone experience to match the hype. Apple's challenge: expectations, which the company and all those Kool-Aid drinkers have set very high. As such, even small flaws will be noticed and magnified—and the subsequent degree of disappointment will likely be equal to the intensity of the early excitement. The iPhone has the potential for a high disappointment level because of the high expectations. Unless, of course, Apple gets everything right.

Potential usability problems relating to expectations (some I highlighted in January):

Ruggedness: Cell phones are pretty tough devices, and there is plenty of user experience to create the expectation that the iPhone should still look good after a day's or year's use. The device is all screen and the back metal, both of which are plenty scratchable on Apple's iPods. Will the iPhone really be better? I can't say without seeing the so-called protective shield for the screen. What happens when the user drops an iPhone face down on the gravel, or the mobile slips out of a pocket or purse for a bounce across the pavement? Beauty marred is more noticeable.

Battery life: The iPhone battery is fixed, meaning that it can't be replaced. One plane ride watching videos on the device could sap the battery, which means no phone until the device is recharged. Apple pushes the iPhone as a multifunctional device, and the SRG survey reveals intended buyers that are most likely interested in such a product. But will their geek toy demands push the iPhone's battery life limits? We will see.

Multi-touch: Apple's touch-screen demos well, but how will it hold up for continued use? Except for maybe text messaging, most other cell phones are one-handed devices, including most smart phones. The iPhone is a decidedly two-handed device. It's easy enough to find out whether the device will be convenient by practicing using two hands on one's own phone.

No physical keys: Like multi-touch, the touch-screen numerical keys may become tiring over prolonged use. Jobs is a brilliant marketer who takes great pains to emphasize product strengths. His demos focus more on the broader features rather than on telephony. A cell phone should be great at telephony before anything else. The touch-screen, while conceptually a great user interface, may be limiting. I can't say either way, because Apple has the iPhone locked up until June 29. Even then, early adopters will have to use the device for a while to see whether no keys will be a hit, a miss or something in between.

Crowded market: The Kool-Aid drinkers seem to forget that 1 billion cell phones are sold each year, the majority with Symban OS and a huge number outside the United States. Apple says it has a better cell phone and lots of people seem to believe the company's marketing. Sight unseen. Apple's market will be limited by consumer buying habits (that's free phones in the United States); North America-only distribution; entrenched and successful cell phone manufacturers; and all the logistical problems of entering into a new product category, such as availability. Let's say Apple has some good U.S. success and sells, say, 10 million iPhones in 2008, that's a tiny percentage of 1 billion devices. You do the math; it's easy enough.

I don't suggest that iPhone will flop, although I am skeptical about its long-term prospects compared to the current inflated expectations. But I do mean to throw a little cold water on the Kool-Aid drinkers and wake them up from their dream state.

He also claims that the iPhone has no chance of winning the smart phone wars, based on a prediction by Gartner that Symbian and Android phones would sell 196 million and 95 million smart phones to a mere 71 million Apple iPhones in 2012 as though numbers pulled out of someone's nose were real, accurate, proven numbers... and ignoring the drastic drop in Nokia's market share:

iPhone cannot win the smartphone wars

By Joe Wilcox | Published October 27, 2009, 3:00 PM
I'm going to make a bold prediction: Apple's iPhone will lose the mobile device wars. Such statement will send some iPhone fans howling -- perhaps appropriately so with the full moon days passed and Halloween days away. :)

Put another way: iPhone is to Android -- and somewhat Symbian OS -- handsets as Macintosh was to the DOS/Windows PC in the 1980s and 1990s. The Mac's rocky start in 1984-85 gave way to great success because of several killer applications, with desktop publishing being among the most important. But by the mid 1990s, Windows PCs pushed down Mac market share. The iPhone is poised to track similarly. Gartner predicts that Android OS shipments will exceed iPhone OS by 2012 (see chart). I'm a believer. . .

Read more complete idiotic prognostication in the original article.

With a track record like this, I would not put to much credence in Wilcox's predictions on Apple's potential for the iTablet/iSlate/iPad...

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