Digital Directions : Tablet Pioneer Picks Wrong Horse to Ride
iPad poised for a scalping in 2012?
January 2012 By Andrew Brenneman
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It is ironic. As we enter 2012, a year that is by all accounts setting up to be "The Year of the Tablet!" we are likely to see the dimming of the preeminence of the iPad, the device that created the category in the first place.
We tend to forget that many jaded pundits scoffed at the launch of the iPad: "How can an iPhone that does not make calls, and is too big to fit in one's pocket, be interesting to any customer, particularly if said customer already has an iPhone and a laptop—and when the price of the iPad is precariously close to the price of a laptop?"
The rest, as they say, is history: The alchemy between ultra portability, 3G/4G connectivity, Wi-Fi, a vivid display with gestural touchscreen capabilities—and a computing platform capable of running applications—proved to be intoxicating. The whole was greater than the sum of the parts, and customers showed a surprising lack of price sensitivity. In the words of its late visionary, Steve Jobs, the iPad was and perhaps still is "insanely great." A new product category was created, one that is continuing to redefine not only the mobile product landscape, but also the computing landscape as a whole.
And yet, as the impact of the tablet continues to emerge in 2012, the iPad seems almost certain to lose market share. Threats are coming to the iPad on many fronts.
Kindle Fire and Nook Tablet
The clearest threats are the new tablets that compete with iPad directly, specifically, Kindle Fire, Nook Tablet and Nook Color. The iPad will find it challenging to defend against the following:
Price. The price points are not close: $499 for iPad2 versus $199 for Kindle Fire. The Kindle Fire and Nook Color hover around the magical $200 price point, above which are so-called "considered purchases" that typically involve extended research—and lengthy discussions with spouses.
Content Trumps Services. Tablet offerings attempt to distinguish themselves with more than hardware alone. In the case of Apple, this principally comes in the form of innovative technology and services, made largely possible through its mobile operating system, iOS: iCloud storage, iTunes-based e-commerce, Wi-Fi-based iMessage, and (for iPhone, but not yet for iPad) Siri, the intelligent assistant. Cool stuff.
Cooler still: Free content that Amazon Prime customers get on the Kindle Fire. This includes a monthly quota of free front-list titles, and some b-list streaming content to boot. If a Kindle customer has been buying, on average, two e-books per month, and is subscribing to streaming services like Hulu or Netflix, the $199 is paid off in less than a year. The customer comes out ahead.
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