Apple Wrap: iPad Onceover

Includes: AAPL, MSFT, T
by: Yankee Group

By Carl Howe

I’ll be publishing a detailed analysis for clients about the Apple iPad and its effect on connected devices (i.e., it’s a big deal) in the next day or so. I have also posted photos that I took of the press, VIPs, and tablets we saw today for those who are interested.

However, I also had some takeaways from the event that fell somewhere between the immediacy of my tweets and the detailed analysis mentioned above. As I look toward the iPad shipping in late March/early April, I see some changes coming. Specifically:

  • iPad will knee-cap the netbook market. Despite the millions of units sold, netbooks deliver a lousy user experience; in fact, some netbooks have return rates of 33% or more simply because of that poor consumer experience (see the October 2009 Yankee Group report, Little Netbooks Can Sink Big Brands for details). Unless you’re an analyst or other traveler who has to spend much of your time writing, iPad will be a better investment. Oh, netbooks will survive, but they’ll be in the traditional race to the bottom of the price ladder, while Apple (NASDAQ:AAPL) scoops up all the profits from the segment. Said another way, if you know that a device like the iPad will be available, why would you ever buy a netbook?
  • Consumers will struggle with whether to buy the 3G iPad. iPad is the archtype Anywhere device: its broadband connection and its links to networked apps and content are what make it special. But given that adding a 3G connection adds more than 26 percent to the iPad’s purchase price, consumers will have trouble deciding whether it is worth it, even before the prepaid broadband connection.
  • Prepaid iPad broadband will win over consumers. Apple’s announcement of AT&T’s (NYSE:T) mobile broadband pricing for iPad just told the consumer world that they are paying too much for mobile broadband on postpay plans. Most of the rest of the world already has some sort of prepaid mobile broadband; it’s just a matter of time before the U.S. gets with the program.
  • iPad represents the beginning of the end for the PC desktop metaphor. Windows, mice, title bars, and open-save dialogs have been mainstays of PCs for more than 25 years; in fact, the introduction of the original 1984 Macintosh made them cool. Yet the iPhone and iPad use none of the software elements of these 1980s, opting instead for a full-screen multi-touch experience that makes smarter use of screen real estate. Once someone figures out how to integrate multitasking with multi-touch (10/GUI perhaps?) without dramatically increasing the consumer’s cognitive load, consumers may well decide that these graphical elements no longer serve any useful purpose and finally let them die a natural death. At the very least, they are unlikely to ever be cool again.