Apple calls it a “magical” and “revolutionary” device for browsing the Web, reading and sending e-mail, enjoying photos, watching videos, listening to music, playing games, reading eBooks and more.
But is it truly “revolutionary,” and if it is, how do you deem it so? If Apple sells XYZ number of the devices, does that make it revolutionary? Or can it be a revolution without hitting specific sales targets?
Of course, it all depends on who you ask.
Yes and No
John Jackson, vice president of research at CCS Insight, says Apple is uniquely positioned to “put this category on the map,” and in that sense, yes, it’s revolutionary.
Direct comparisons with iPhone sales volumes aren’t relevant, he says. “I don’t think Apple has any illusion the volumes should be correlated. Fundamentally, this is just Apple extending its business model across vacant space in the device landscape right now.”
That Apple sold 300,000 iPads on the first day says nothing. It’s all about what it does for Apple’s bottom line, which is a combination of revenue from hardware and increasingly, revenue from all forms of content distribution and advertising. Apple is pursuing a two-sided market model, he says, and points to Visa as probably the best example: It makes money from the consumer who buys something and the merchant that has to pay a transaction fee.
Ken Hyers, analyst at Technology Business Research, asserts that tablets have been around for a while and nothing is revolutionary from Apple. “I can’t think of any notable new technology in the iPad. It’s a departure from Apple’s other products and from other vendors, but it’s not revolutionary,” he says.
“They just do it better,” he adds. “It’s already proven it’s a significant winner for Apple… I don’t think there’s anything wrong with something being evolutionary. That’s how I see nearly all of Apple’s products – they evolve an existing platform – substantially.”
Iain Gillott, president of iGR, agrees the iPad doesn’t do anything new. But it doesn’t have just one use case, either.
He received his iPad over the weekend but didn’t have much chance to use it because other family members got a hold of it. His wife found it to be a great eReader; his son used it to play games; his daughter found books assigned for high school reading; Gillott himself (finally) managed to watch movies using Netflix. “The power of the iPad is it is multiple things to different people,” he says. “If you ask five people, you get five answers.”
Most would agree the iPhone was revolutionary even though phones were around for 20 years before it came out and it didn’t do anything that couldn’t be done before with a phone. But Apple made it easy to use, he says.
Sales = Revolution?
What of all the sales projections? Do they correlate to making a device “revolutionary”? iSuppli expects worldwide iPad sales will reach 7.1 million units in 2010 and sales will double to 14.4 million in 2011. UBS Equity Research analyst Maynard Um estimates Apple will sell 2.1 million iPad units in fiscal year 2010 and 4.6 million in fiscal year 2011. Piper Jaffray analyst Gene Munster puts the number at 4.3 million for 2010.
Being what it is, Gillott says nobody really knows what comprises a good sales target. It’s a safe bet that if iPad sales fall somewhere between what Apple is seeing in iPhone sales and what it does with the Mac, it’s doing OK. But, he quips: “If they sold 300,000 on the first day, I think they’ll do fine with it.”
No mater how many units sell, Jackson says, content and media companies know they can’t ignore what Apple does, and in that way, they have to recode their content to suit the device. Apples takes steps to funnel innovation, content and services through a central point of control, which, in turn, reinforces demand for hardware and increasingly, it can layer on new ways of making money.
The iPad is “perfectly complementary,” and it doesn’t in any way replace the laptop, Jackson says. But that’s not the aspiration, either, he says.
Who else can do what Apple is doing? To be sure, scores of tablet product launches from other vendors will come throughout 2010 and 2011. Most vendors already have new tablets in the queue or on the drawing board. The hardware may even be sexier than what Apple produced; however, “it’s not clear to me that anybody is well positioned to catch Apple” on brand, distribution, apps, content and overall consumer cache, Jackson says.
Maybe part of the definition of “revolutionary” is it has to come from Apple. At least, that would seem to be the message from Comedy Central’s Stephen Colbert, who pointed out that not only can it do some of those “amazing” features like surf the Web, but you can turn it on its side and make salsa too.