Posted on 01/03/2010 3:35:38 AM PST by Swordmaker
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.
The Middle Product Syndrome
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.
Tablet is a Niche Product, Period
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 has taken three shots at tablets, without much success:
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.
Will Apple Tablet be another Cube?
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.
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.Same goes for the Saturn V booster -- can't do anything with it that can't be done with a bottle rocket available at any roadside stand. ;') The analogy works because the iPhone is already an unnecessarily expensive alternative to an ordinary $30 prepaid cell phone. :'D
Andy is guilty of "hasty generalization", an overly broad comment. What is an American? When we say Japanese or Chinese we know what we are talking about. When we say American it is wide open. There are many Japanese and Chinese Americans.
The difference is the culture in which they are raised. America, at least in the past, admired and encouraged personal freedom and creativity. The other two are more disciplined cultures where conformity is more the norm.
The natural consequence is more creativity in America.
I suspect Andy is just condemning the socialization of America which does indeed depress creativity and encourage conformity. However, we are not done, yet. We will fight these Communists off.
I'd put more stock in that if Apple hadn't spent 20+ years with it's wagon stubbornly hitched to a hardware stump.
>>And flexible. I’m waiting on Plastic Logic’s product to come out. Something I can use as a newspaper, reader, technical manual with a touchscreen and the ability to pickup signal from an anchor is what I’m looking for.<<
And don’t forget the ability to smack a dog on the nose for not waiting until we go walkies... LOL
I think we’re all waiting for UltraDevice (TM), but the author seems to think that everyone uses their PDAs (especially the useless iPhone) for everyday net and productivity use.
He is flat-out wrong.
FWIIW, “Que” means “What?” (or “how?”) in Spanish.
The site is a little light on details but I’ll check back next week.
I always like to see new stuff and to see if anyone has really built a better mousetrap.
PS: I should have put quotes around “useless” for the iPhone — I was referencing his “analysis” of it.
It reminded me of that Mary Tyler Moore Show episode when the theater/movie critic hated beloved and critically acclaimed classics.
If that is what you call the present preservation of an unworkable status quo. What I am condemning is the rife incompetence that pervades our institutions public and private and tying down competent folks like Lilliputians. It is trying to find out who leaked a security memo sent to 10,000 addresses internatioanlly, or who leaked the American Physical society membership roster rather than dealing with the underlying substantive issues. It is the inability to bring a legal action to an efficient close recognizing the legal rights and obligations of the parties in interest. It is belief that the redneck market will keep the largest US auto manufacturers afloat, forgetting that even rednecks like cars and trucks that actually run. It is the view that everything is never ending process, that all accounts can be kept and settled to the nickle, that we can protect folks from the consequences of their own actions, that we can endlessly call people to account, but whatever the waste of doing the accounting, never count that which actually counts.
If that is socialization than so be it. I think it is something more fundamental something that goes to the core of what it means to be an American, the grit and peronal integrity that suggests that socialization is a bad thing and to be resiste and that competence and knowledge and hard work count for something.
Economcally it is the undestanding that sound money is important because it is only by keeping strict accounts in real money that represents real people's labor can we keep track of what is productive and what is waste, what is useful and what is useless. Sound money values land for the value of its economic rent. Unsound money sees real estate as a high leverage means of riding the crest of financial inflation.
We veered of track sometime in the late 1950's or eary 1960's. We have wandered ever farther since, and are now so far off track that few folks have any idea which way to head. Too much debt from too much financial product creation? Solution- create some more. We have to learn to recognize when folks are worth listening to and when they are not. Very few folks are worth listening to, very few of the folks we do listen to anyway. The fault lies in ourselves. We listen to the folks who tell us what we want to hear rather than to the folks who tell us what we need to know.
I think that handwriting recognition is not as relevant as it used to be. I can't even remember the last time I sat down and wrote something out by hand. Other than signing my name to documents, everything is typed out. At the work place, cell phones and email are my primary methods of communication. I input calendar appointments and such directly into Outlook or into my smartphone using a keyboard. In fact, I can type far faster than I can write.
So I think handwriting recognition is not going to be the killer app people once thought it was. Now voice recognition - that's probably where the future lies.
I’ll buy one if it includes the whole OS, not just a closed system like the iPhone.
I’d love to take an iTablet on vacation and run Dreamweaver or InDesign.
Ed
I’m reserving any judgment until Apple finally unveils the thing. It depends on whether Apple builds in some unknown that practically creates a new product category everyone will want to copy, as the iPhone and iPod did.
The OS may or may not be closed, but it will be some subset of OSX as was the iPhone - but certainly not a version of the iPhone OS.
Prediction: AAPL will sell more than 10m units in first year, other competitors (kindle, que, et al) combined won't even come close...
Voice recognition that works and works well has been around for years and has made no difference whatsoever in the sales of tablets that had it preinstalled. Besides, nobody wants to be sitting in a Starbucks or McDonalds dictating a confidential memo to their computer out loud.
Voice recognition that works and works well has been around for years and has made no difference whatsoever in the sales of tablets that had it preinstalled. Besides, nobody wants to be sitting in a Starbucks or McDonalds dictating a confidential memo to their computer out loud.handwriting recognition is not going to be the killer app people once thought it was. Now voice recognition - that's probably where the future lies.
My money is on Sam's point. I agree that VR exists, but it still isn't really ready for prime time; I know someone who needs it badly, and whose speech is easy for me to understand - yet VR performance is bad enough that the system doesn't get used.I assume that the privacy issue is soluble with a mask with a microphone in it.When VR really works I expect it to take off because people who can type faster than they can speak are thin on the ground. And I see no reason why the continued geometric improvement in tech shouldn't reach the goal of VR which is only slightly, if at all, less accurate in a computer than in people.
You have no idea what you’re talking about, apple fanboi.
The G1 isn’t a droid. I had the G1. It got all the upgrades, except may possibly not get 2.0, but if not, only because it doesn’t have enuf memory space for it. I have the droid phone, and it’s a terrific phone.
And if by “droid history” you mean Android history, the Android OS is exploding — about 15 plus handsets running it now, and expanding, plus moving into tablets and netbooks.
I’m glad you like your iphones. Unlike some of you apple fanbois, I don’t have rude, uninformed, and untrue things to say about products that compete with the products I use. I am not personally threatened by a product that competes with a product that I consume. In fact, as a conservative, I believe that competition is good for all consumers, and ultimately brings better products at better prices to the marketplace.
While technically correct, people do not NEED anything but food, water and a relatively warm place to sleep, they have a infinite number of wants. Maybe one of the things they want is this tablet thingy.
I would not bet against it.
Sorry, but the G1 is an Android device. And the history so far is that if you buy a 1.X device, you won’t be getting an upgrade to the 2.0 OS.
So, yes, I do have an idea of what I’m talking about.
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