The Apple iPad was announced about 17 months ago and has been shipping for well over a year. Yet, to date, no credible competition has emerged. Now, however, a few companies are beginning to understand how to compete the tablet market.
A modern tablet’s major strength is its portability, simplicity and immediacy. You just pick it up, swipe, and start doing something anywhere you are. No power up and OS boot. No logins. Very little maintenance.
But if that were all there is to a tablet, anyone could compete with Apple, perhaps based on style and price. But that doesn’t work because there’s another key factor that drives the tablet’s success, and that’s infrastructure.
Apple iPad 2
Without infrastructure, a modern tablet is just a glorified DVD player. Or giant PDA. Or a super Kindle. In fact, a tablet must also have considerable infrastructure, both behind the scenes, at the retail level, and at the user level.
While it may not have been conscious, Apple spent a decade building two pyramids of infrastructure. The first is the technical infrastructure of Mac OS X, the developer program, the “Core” technologies (like Core Image), iTunes as first a CD ripper, then as a commercial store, then iOS and Cocoa Touch and then the App Store and iBookstore The iPad rides along on tip of this infrastructure. Developers love the iOS devices, they make money, and Apple makes money. Along with a strong focus on system and user security, this creates a pleasant, productive user environment that the prospective customer can feel, tangibly, as they make a purchase decision. Moreover, Apple protects its developers, as evidence by the recent Lodsys affair.
A parallel pyramid that Apple leveraged from is the retail stores. In those stores, you can see and feel the infrastructure. Retail sales people can show you how to set up accounts, show you how to integrate with your Mac, buy music and books, obtain training and support — and then insure your purchase (in a limited way) with AppleCare.
By the time the prospective customer is exposed to this twin pyramid of infrastructure, the sale is a done deal. Apple’s competitors have had a very hard time duplicating this infrastructure because it’s expensive to build quickly, from scratch. And it’s high risk.
Seeds of Competitiveness
Several companies have already figured out that they already possess a significant infrastructure for tablet support and, thus, don’t need to build it from scratch: Amazon and Barnes & Noble.
Amazon already has a strong eBook, music and video store. They have years of experience with eCommerce and customer support. The have brand recognition. The Kindle has shown Amazon that their legacy infrastructure is a natural fit for a tablet — or at least an advanced book reader. We’re all expecting Amazon to get more energetic with its tablet offerings.
Barnes & Noble may be in an even better position because of its long-standing relationship with other publishers. It’s a retailer, like Amazon, but also a publisher itself. While not as strong financially as Amazon, Barnes & Noble has learned how to do a few things really well: work “nice” with other publishers and develop a low-cost, friendly, Nook series that now includes the “all-New Nook.”
This amazing New York Times story is required reading. It’s chock full of insights in just about every paragraph as it explains how B&N has found a strong niche with women as end users and is also working closely with other publishing partners. Nooks appeal to women as a less geeky, less guy-oriented device. The delivery of magazines without a lot of exotic technology is just fine with many women, according to the NYT findings. Nook sales are booming because B&N has taken the standard business approach with other publishers: “You help me make money, and I’ll help you make money.”
Apple doesn’t think like that, and they can’t afford to. Any compromises that help an equal business partner make money detract from Apple’s vision and mission. As a result, Apple almost always has to go it alone and appeal to the popularity of its products to bludgeon its semi-business-partners into going along. That’s created the legendary adversarial relationship with publishers. The NYT article is a template for how B&N has backed into, apparently, second place by exploiting these Apple weaknesses combined with its own existing infrastructure and a nicely designed, low cost, well targeted tablet. Amazon probably isn’t far behind in this thinking.
You can see this infrastructure virtually bubbling up to the display of these company’s tablets and eReaders.
The Other Guys
Where does this leave Hewlett Packard with its TouchPad and Microsoft, as it must wait until deep into 2012 before it has a tablet-ready OS? Unlike my colleague, Bryan Chaffin, I am not so optimistic about Microsoft. In his essay, “Only Two Companies Can Compete with iPad: Amazon & Microsoft,” he cited Microsoft’s potential but admitted that the company may still not be able to execute. I agree.
For awhile now, many, including me, have been hoping that Hewlett Packard would provide serious competition to Apple with its HP TouchPad. It looks great, has adequate specs, and is being developed by a company with a strong technical background, adequate resources, and some ex-Apple people. But where is the infrastructure? HP has promised a summer delivery of the TouchPad, but has been very quiet about building the necessary infrastructure. The only thing we’ve heard so far are some idle boasts. I am doing my best to investigate the TouchPad infrastructure and will report as I find out more.
Eventually, companies will figure out the tablet secret, infrastructure, and how to compete with Apple. The only question is, will Apple’s lead and its resources guarantee that successful competitors will remain relegated to squabbling over 2nd and 3rd place? With all others falling by the wayside? Or will market forces, great partnerships, and Apple’s mistakes allow a few strong competitors to challenge Apple for dominance? I believe we won’t know for another 12 to 18 months. It’ll be fascinating to watch.