Only one day after the "unveiling" of Apple's (NASDAQ:AAPL) new iPad, the naysayers are already calling it an iFlop. Why the harsh reaction?
Simply because in less than 24 hours it failed to meet their self-determined or delusional expectations of what they thought the device would or should be? Ergo, they have already concluded that it is not a revolutionary product and is nothing more than a big iPod Touch or a smaller, less functional laptop that nobody needs or will use. Sounds eerily reminiscent of those, including Microsoft (NASDAQ:MSFT), who prognosticated that Apple's entry into the smart phone market via the iPhone would be an unmitigated failure. Well, that certainly didn't turn out as they expected and I think a similar result will obtain with the iPad.
Those that cannot think beyond the next day or week are probably missing the point as the market for the iPod and iPhone has grown well beyond the expectations for those products when initially released. What really has made those devices spectacular successes -- game-changers in fact -- is that the products continued to evolve as more and more adherents recognized their value.
The initial iteration of the iPod was revolutionary in many respects but not simply because of its architecture. The key to its phenomenal growth lay in its ability to easily access music and video content through iTunes. For the iPod without iTunes would have been a perfectly acceptable product with a sole purpose. But Apple realized that the iPod was more than a music player. While it didn't create the digital music industry, it figured out how to access that market better than anyone had done previously or since. Now, of course, the iPod has been through numerous iterations and configuration and each model has found its own market from the iPod shuffle to the most robust version abounding with music, video and internet access.
A similar story applies to the iPhone. Even though Apple had transformed the digital world with the iPod, there was significant skepticism that Apple could compete in the phone market as that was the domain of the Nokia (NYSE:NOK), Motorola (MOT), Samsung (OTC:SSNLF) and a host of others. What ultimately catapulted Apple to the leading provider in the smart phone market was the incorporation of the iPod experience with a world-class and robust internet experience unequalled in competing smart phones as well as the inclusion of proprietary apps (aside from the fact that it was also a phone with cutting edge features). Eventually, Apple opened up the iPhone to developers for creation of their unique apps, thereby spurring additional demand for the iPhone and the entire Apple ecosystem.
It is no surprise that, concurrent with the growing market for the iPhone as well as continuing upgrades of the iPod models, that many former Windows users abandoned that platform in favor of the Macintosh line of computers -- the most profitable segment in the Apple ecosystem. In other words, as more people became exposed to Apple products, the more they wanted or were willing to try other Apple products. This feat could not be replicated by other phone manufacturers or computer makers because they didn't not possess a competing ecosystem.
So that brings up to the newly-introduced "iPad". Is it just a larger version of an iPod with no apparent target market? Again, it is way too early to make that determination or to bet against Apple given its past success of exploiting numerous market segments with the iPod and iPhone that nobody seem to know existed until Apple created them or, more accurately, expanded and tweaked its lineup to find them.
Just to brainstorm, there are several area that come to mind that could be well served by the iPad. One of the obvious is the medical community and related services. There are already numerous examples where doctors and other medical professionals have figured out how to use iPhones to assist surgeons and to enable off-site doctors to virtually instantaneously receive real-time information to empower diagnoses and review of x-rays and other imaging. The iPad with its larger architecture could become a staple of many operating rooms in the future. There will also be a continuing need to manage electronic medical records. Instead of sitting behind a computer transcribing patient notes, the iPad's flexibility may be a useful tool to ensure accuracy and prompt input.
The restaurant and hospitality business also could be an extensive market for the iPad. Take a simple example: visiting a local eatery. The iPad could become a virtual menu which contain photos or images of menu items so people can actually see what they will be ordering, along with nutritional information and ingredients to minimize potential allergic reactions as well as to simplify and facilitate the order process or to communicate with the server or the manager if there are any problems encountered. It could also be used to display ads or videos or reading material for children and adults.
The iPad could also be used by other segments of the hospitality industry in similar ways and, for example, by cruise ships to easily plan daily activities in real time and by theme park operators such as Disney (NYSE:DIS) to provide up-to-date information regarding attractions and wait times and to entertain during such times. Tour operators could also use iPads for their guests to enhance the travel experience. Essentially, companies could program the iPads for customer use while retaining its basic functionality.
Certainly other uses will be discovered for the iPad based on consumer response and developer innovation. So the fact that at this moment all of the potential uses of the iPad are not known doesn't diminish its potential value.
At a minimum, one could expect iPad specific apps and additional content providers. Given its potential, which is as yet unknown but potentially great or at worst a niche product, the reports of the iPad's impending doom are greatly exaggerated.
Disclosure: Long APPL and DIS, no position MSFT, MOT or NOK