Apple’s competitive advantages for the iPad/tablet computer
You may know that in another thread DawnTrader was looking for Apple blogs and encouraged me to start one when I said I might be interested. His idea was to create an ecosystem revolving around AFB (I think). Anyway, I did start one and its purpose is to provide News, Backstory, Analysis and Opinion for the AAPL investor. There’s no advertising on it and its a labour of love. You can find it here. My goal is to avoid just reposts from the sites we know are good quality sites but rather to post original material that nobody else is posting.
So while working out on the exercise bike just awhile ago I was thinking about my next article concerning Apple’s competitive advantages in the iPad and I had a brainstorm that I hope is of interest to you. DawnTrader made the point that the problem with a forum is that ideas and points quickly get buried by the latest threads and posts and that blogs might be useful in that they have a bit more staying power. I hope I’m paraphrasing this correctly DT.
In any case, here’s my idea. I’m going to jot down in a few seconds in this thread my thoughts on Apple’s competitive advantages in the tablet field but I’m hoping that you will either add some ideas or criticise my ideas and that as a result we all will have learned something. Then I’ll write my article for my blog relentlessfocus and reference this thread. This would be a kind of crowd source writing of an analytical article making the best use of many good minds.
Many of you would entertain running a blog but for the work and commitment it takes. So this is a chance to participate in a blog without any of the responsibility or commitment. I think its a unique idea but maybe not. Hope you’ll be willing to give it a try but if you think I have some nefarious hidden agenda feel free to not participate.
Apple’s competitive advantage, the outline:
1) It’s clear that tablet computing first pushed by Microsoft but not successfully is about to take off. I point to today’s post by Jim Goldman, a post by Jean-Louis Gass?e as examples of skeptics who came around. Manufacturers are rushing new product to market. What are their alternatives for OS?
2) Windows 7. HP is said to be developing a tablet that uses Win 7. The problems as I see them are:
a) Win 7 was designed to run on much more robust hardware and will suffer as a result
b) Apps that run on Win 7 were not designed for tablets and will be unwieldy given the absence of mouse and keyboard and the low RAM and relatively underpowered CPU
c) Manufacturers have to factor in the cost of Win 7 in their price, Apple kind of does but at worst its at cost rather than markup. And Android doesn’t cost manufacturers anything but requires Google to foot the dev costs.
The idea behind Chrome is “cloud computing”. While its a neat idea if you don’t mind being bound to Google online Apps and the web, its not possible to have an App store approach. And while it is possible to make web apps, designing them to be functional on a wide array of devices is problematic. Also, a chicken and egg problem, until there are sufficient chrome units out, who is going to programme a bespoke chrome oriented web page app and until these get produced who is going to buy a chrome tablet. Chrome was designed to be competitive against netbooks and may well do well there but its limitation is that it demands being “online”. You can’t run local apps on a chrome tablet.
Like the iPhone OS Android has been developed as a smartphone OS. The iPad is more than an iPhone on steroids and Apple’s implementation of a fledgling touch based menu system in iPad OS using the HUD (heads up display) that apple uses in for example Aperture is an example of how size allows things to be done on an iPad in a way that is impractical on an smartphone. In Android’s current state an Android powered tablet would be just a giant smartphone. Can Google engineers keep up with Apple in developing Android so that it functions as a tablet and still meet the demands of multiple manufacturers’ hardware and deal with Apps written for these different devices without fragmenting the Android market? Undoubtedly they’ll try but they can they keep up with Apple in OS Development?
Tim Cook recently said that OS X was a competitive advantage for apple allowing them to quickly and efficiently redesign the same OS to be usable on multiple platforms. Will this give Apple a competitive advantage in the coming tablet wars? Will the iPad develop into a separate OS from the iPhone OS over time to take advantage of the larger size and greater flexibility? What are Google’s advantages in Android OS over iPhone OS?
Are there other operating systems which would make good tablet computers?
Obviously Apple have first to market advantage and that is leading to product awareness through the extensive media hype. Another advantage that I see Apple having is their integration of design, software and hardware through the entire development stage in such a way that Apple products are exciting to use. Can this be done with Android or Win 7 which are essentially software freebies which various manufacturers get to create various products with. Some may make really competitive products but may not have Apple’s market presence while other companies may turn out mediocre Android driven products which ultimately will disapoint consumers and give Android devices a mixed reputation.
Apple once again have rewritten the scripts and created a new market but how can they maximise their market share against a sea of challengers?
Hats off to you for your willingness to tackle a complex subject, and for the graciousness to include others. I wish you the best. A couple of quick thoughts, for whatever they’re worth ?
? A factor not to be underestimated: Apple’s network of retail stores, with its enthusiastic and knowledgeable employees and the periodic hysteria-inducing product launches for each new iteration of the iPad. The opportunity for curiosity seekers to interact with the iPad inside the friendly confines of an Apple Store cannot be matched by competitors positioning their wares on the sterile shelves of the Staples, Walmarts and Best Buys of the world. Shoppers leaving a big box store with a PC tablet under their arms will head home to decipher its manual and begin the task of setting it up. Apple buyers can leave the store with a living, breathing appliance, already engaged in helpful or entertaining tasks. Ease of acquisition and simplicity of use: Advantage Apple.
? Apple has put together a decent moat on pricing, so much so that Asus declared no intention of jumping into the tablet market. I don’t know if it has since changed its mind, but the fact remains that Apple has constructed a barrier against which competitors may well bloody themselves in an attempt to break through. Others here could speak more expertly on Apple’s ability to secure favorable contracts for components vs. the other players in the field. Affordability: Advantage Apple.
? Also, you mentioned the integration of software. The presence of dozens of killer apps, downloadable immediately ? or in many cases, already in the possession of the owners of iPhone or Touch devices ? give iPad users a vehicle to exhibit the “magical and revolutionary” qualities of their new gizmo to family, friends and co-workers. I’ve seen it happen with my iPhone, but even more than the iPhone, the iPad’s social qualities (sharing videos or games between two or more people) lend it to viral marketing on a grand scale. With Apple’s first-mover advantage, the playing field will remain clear of competitors for at least the next four to six months…... and in that time an army of amateur salesmen will unwittingly evangelize the masses, just by enjoying their iPads under the curious gaze of nearby onlookers or by using them in productive manners in the enterprise. Unmatched Marketing: Advantage Apple.
The early adopters demonstrated an imagination of what the iPad can be. Those who follow behind will see ample proof of what it is.
"You are coming to a sad realization. Cancel or allow?"
Thanks for you comments rale. Appreciated.
Here’s an article over at O’reilly by Mark Segal in a speech he gave to Standford’s Graduate School of Business which mentions some of the same points and contains others.
Here’s an excerpt:
Having built hardware and software platforms since 1994, this thought process has led me to harp endlessly on why the iPhone platform (and its derivatives) is such a game changer. By contrast, I would argue that the long-term success of Android is anything but a given.
It’s human nature to look to the past in an attempt to understand the future. As such, I was unsurprised when I was asked during my presentation if Apple and iPhone vs Google and Android in mobile computing is “destined” to play out as Apple and the Mac did when confronted by Microsoft and Windows in the PC wars.
As I have provided “big picture” analysis on this topic before in other posts (here and here), I want to share what I see as the five “little picture” reasons Apple vs Google isn’t destined for the same outcome as Apple vs Microsoft:
Another huge advantage Apple has is familiarity. Every iPhone and iPod Touch user (millions) already knows how to use an iPad. I see this as one of the biggest advantages over Android-based tablets. Why use a tablet with an unfamiliar OS if you’ve been using an iPhone/iPod Touch for years? Just as many see the iPod Touch as a gateway to future iPhone users, both of those hand-held devices are (IMHO) similar gateways to the iPad.
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Agreed, great idea and well thought out points. I hope you get something in return (even though that isn’t your aim).
There are 3 main, huge advantages as I see it.
1) Apps: The ease of development and potential for usefulness and profit will make the production of iPad apps go ballistic. There will be so many fun and functionality offerings that appeal to individuals and businesses of all kinds, that everyone will absolutely have to have one (or 3). As with the smartphone market, the apps developed for other platforms will likely pale in number and quality. The iPad will be the Swiss army knife of technology. Apps=usefulness
2) The near-complete apple product ecosystem: iPad, iphone, ipod, iMac, macbook, iTV, X-serve, all connected by awesome software, applications, apps, itunes, and soon, some sort of cloud storage and intercommunication system. Other companies only have small parts of this complete package. I don’t see them catching up. The iPad is the perfect instrument for enjoying many of the products of these other parts of the ecosystem, and vice versa.
3) Apple vision and hype: Who knows what their current vision is. What we are seeing today was imagined (and unimaginable) many years ago. Its finally getting to the point where even the average Joe and nay-sayer are starting to understand the genius and vision at Apple ? enough already for hype to take care of a lot of Apple’s marketing with just a little clever pushing on their part. They’re about to take complete possession of our households. Businesses are surely next, and the irresistible iPad is the perfect tool to spearhead the process.[ Edited: 27 April 2010 12:45 PM by macProf ]
One other thing I forgot:
e-reader: Apple has already made arrangements and helped co-develop reader interfaces with a number of publishers. As with Apps, we’re probably seeing the tip of the iceberg. This advantage puts the iPad front and centre in journalism, education and mainstream publishing. It will be hard to compete with the early advantage, expertise and iPad numbers that Apple already has.
Nice idea here and good points everyone.
I think the only point I’ll add, is that I hope Apple doesn’t underestimate the power of “Good Enough” these days. All of the tablets in production or design right now by the other manufacturers may end up being “good enough” for a lot of people, assuming of course they can be sold cheaper than the iPad (and being cheaper is their only chance). Windows reigns supreme still because it’s good enough for a lot of people and windows computers are generally cheap. “Good Enough” is strong and consuming entire industries. Ever been in a tract home built in the last ten years? Terrible build quality and design, but good enough to pass inspection. Want something of quality and well designed? Well, you have to pay for it. Sounds familiar.
It will be interesting to see if Android can adapt to the tablet model. I think it will probably be more successful in the short term as a phone OS.
Less is More (more or less).
Just wanted to chime in because I’m so disgusted with Android tablet offerings thus far (iPad owner & N1 user here) and I wouldn’t even consider an HP Slate (Windows tablet-been there, done that-FAIL). One would think that other tablet makers might have something good on the market by now. No dice. Apple has them eating their dust.
iPad:[ Edited: 27 April 2010 02:14 PM by bobwolfe ]
—built around a smartphone OS, but not just a smartphone OS
—an on screen keyboard you can type on almost like a real keyboard
Todays analytical data from AdMob shows that Apple may be already winning the platform wars.
These are the essential platforms fighting in the mobile space that have could serve to power future smarthphones, MIDs and tablets:
- iPhone OS
- Web OS
- Windows Mobile
There are two very interesting statistics:
1. Percentage of the devices in the platform running the latest OS
- iPhone OS - 95% (3.x)
- Android - 35% (2.1)
- Symbian - ??? (it has to be a low one)
- Web OS ~ 99%
- Windows Mobile 6.5 - 75%+ (just a guess)
2. Percentage of current devices by manufacturers upgradable to the next major OS:
- iPhone OS 4.X - 96%
- Android 3.X - 8% (92% have CPUs running bellow 600Mhz)
- Symbian^3 - 0% (Only the N8 seams to have the guts to do that)
- Web OS 2.X - 50% or less (The first Pre seams slow on 1.4 already)
- Windows Phone 7 - 0% (Microsoft is starting from scratch)
It is clearly visible that the iPhone Platform is the only one actually moving forward as a Platform. All other except for Palm (which is still on 1.4) are not maintaining the integrity of its software on the newer generation of devices. Every time they outmake one of their own devices with a better one they are destroying its own platform.
Palm is in a great software position but was just a few months late and with almost no cash left. MIcrosoft got the idea right with Windows Phone 7 but is years late into the game and only its desktop monopoly and cash will grant it a chance with such a late entry. Google will need to invest huge money into keeping Android development fast, with little profit in return.
Apple’s iPhone is already the most profitable business of the company and they have huge incentive to develop it even faster.[ Edited: 27 April 2010 02:47 PM by lantinian ]
Thanks everyone, this is most useful, keep these ideas coming. I won’t start writing until Thursday and I will reference this thread with thanks for the help and support.
Here are my thoughts from more of a big picture view. First, the often discussed fact that the iPad is primarily a content access device as opposed to a content creation device is, I believe, a huge point. This means that literally millions of users who are casual computer users, or don’t use one at all, could find this device attractive enough to buy one.
Second, so much talk focuses on the personal, entertainment use of the iPad with only snatches of discussion about business and education applications. Personally, I believe the business and education markets are going to be huge. I would love to hear more discussion about those possibilities.
Just as an aside I’m also in photography and my web site relies on flash. I’m also be thinking about my options for when I ditch the flash.
Great post, RF. I hope you do more of these.
Agree with the many preceding posts.
One other advantage I see, which is distinct from the more generic hardware creation advantage, is that the CPU powering the iPad is Apple’s own. This is a substantial advantage, not only in how it may be adapted to suit future iterations of the iPad and its evolving functionality, but that the supply line is secure (owned by Apple) and predictable (no competing demand from other vendors/manufacturers).
Interesting points and analysis.
The future also bring som unexpected turns. How about Linux? Why coudnt the Linux community put down a properly downscaled OS for a tablet?
Main problems is perhaps touch and Linux developing for existing hardwareplatforms - not designing new ones.
I’m so sad I didn’t see this excellent post earlier - all the good answers are already taken! :D
I’d add another: the cloud.
From Apple’s perspective, we are at the beginning of the cloud. Mobileme is decent enough…but think about what’s possible when Apple unleashes the cloud onto its existing infrastructure and family of products.
All our media can live in the cloud - to be streamed, sync’d, consumed as/where we like. Or robust document storage (i.e. iDisk on steriods), al tied seamlessly into the iOS platform.
Great things to come in this regard methinks. Google leads in the cloud currently, but lags on the hardware/software integration side as has been pointed out. Android = the ‘good enough’ risk brought to life.
Wherein I ponder a world using my iPad as my primary computer
Another competitive advantage—- Apple buys Siri
a company that has developed a free personal assistant application for the iPhone and iPod touch. Selected as the Most Innovative Web Technology in a contest at this year’s SXSW festival, Siri offers automated personal assistant services by integrating a rapidly growing number of third-party services such as OpenTable, FlightStats, and Google Maps with voice-recognition technology from Nuance Communications.