As my colleague Sarah Rotman Epps so aptly observes: the third generation of iPad is a gut renovation masquerading as incremental innovation. The new iPad looks basically the same but now carries a snappy 4G radio and a much more powerful graphics processor than its predecessor. The big hardware advance lies in the components, particularly in the graphics processor to handle the high-fidelity Retina display and rapid-response touchscreen control. How will an iPad with much better graphics and a faster network connection affect the enterprise?
Some Forrester data from our workforce surveys and forecasts to set the stage:
As my regular readers know, I try to provide something thought-provoking for most of my blog posts. But every so often something comes along that makes me go “wow, I really need to share this.” This is one of those times.
Like many analysts here at Forrester, I have an iPad (my own, not the company’s) which I often use for work — especially when travelling (which we do a lot). And like many people, I’ve grown used to the tactile feel of a real keyboard — so every now and then I’d yearn for a real keyboard to use with my iPad.
Being an Apple fan, I first bought the Apple Bluetooth keyboard. While this is a good keyboard, it has a couple of major flaws for my use. Firstly, it doesn’t actually hold the iPad, so you have to position your iPad somewhere you can see it while typing. For this reason you can’t easily use it anywhere there isn’t a good flat surface near you on which to stand your iPad. And secondly, it’s not very convenient to travel with as it’s so long — who wants to walk around with a sleek iPad and a huge keyboard? I needed something more compact.
First off, let me say this: I hope that Steve Jobs' health improves, and that he comes out of whatever challenges he's going through in the best of health. He's an amazing, visionary leader of a dynamic company -- and he's also a person with a family. Let's all wish him well.
While famously a CEO, Steve Jobs is also, it should be known, a product strategist par excellence. He's clearly been involved, in a deep way, in the development of Apple's product ideas, product designs, business models, go-to-market strategies, and responses to competition. These are the job responsibilities of product strategists. In his (and Apple's) case, product strategy has risen to the very top of the organization.
Product strategists of two different flavors are wondering how they might be affected by his resignation as CEO (and concomitant request to become chairman):
Product strategists who compete with Apple. Product strategists at companies like Microsoft, Google, Samsung, HP, Dell, HTC, and similar firms wonder if Steve Jobs' change in role might benefit them. They actually shouldn't wonder: His departure from the CEO spot won't benefit them -- not for a very long time, at least. Apple's product development road map stretches into multiple years ahead and has been shaped both by Jobs and by the organization he built. Jobs' departure won't affect Apple's product portfolio, quality, or competitiveness for a long time -- if ever.
We talk to product strategists in a wide variety of industries. Regardless of the vertical industry of their companies, they tell us that the release of new, disruptive products -- like Apple's iPad -- changes their relationships with their customers. Oftentimes, nearly overnight.
Whether their product comes in the form of “bits” (content, like media, software, or games) or “atoms” (physical products, like shoes, consumer packaged goods, or hardware), consumer product strategists must navigate a world filled with a dizzying array of new devices (like mobile phones, tablet computers, connected TVs, game consoles, eBook readers, and of course PCs). We call this proliferation of devices the Splinternet, a world in which consumers access the digital world across a diverse and growing number of hardware and platforms. And product strategists have to react by developing new apps, by crafting digital product experiences, and by rethinking their product marketing.
Delivering digital products across the Splinternet isn’t easy: It requires understanding -- and acting upon -- an ever-changing landscape of consumer preferences and behaviors. It also requires reapportioning scarce resources -- for example, from web development to iPad or Android development. Yet product strategists who fail to contend with newly disruptive devices (like the iPad or Xbox Kinect) will find themselves in danger of being left behind -- no matter what industry they’re in.
We'd like to invite product strategists to take our super-quick, two-minute survey to help us better understand how you are reacting to disruptions caused by the Splinternet:
More than 90,000 iPad-only apps are available today. Forrester clients in a wide range of industries — media, software, retail, travel, consumer packaged goods, financial services, pharmaceuticals, utilities, and more — are scrambling to determine how to develop their own iPad app strategies (or browser-based iPad strategies).
Clients are asking us to help them address both challenges and opportunities associated with the iPad: How do I develop an app product strategy for the iPad? Does the browser matter, too? What will make my app or browser experience stand out from the competition? How will an iPad app complement my smartphone and Web properties?
If you are navigating these sorts of decisions, I'd like to invite you to a very exciting event being hosted by an analyst on my team, Sarah Rotman Epps. Sarah's holding a Workshop on July 27 (in San Francisco) to help clients like you separate the hype from the reality and take concrete steps toward developing a winning iPad app and browser strategy.
The Workshop: POST — Refining Your Strategy For iPads And Tablets
This Workshop focuses on refining your strategy for reaching and supporting your key constituencies through iPads and other tablets. We'll take you through the POST (people, objectives, strategy, and technology) process, helping you to:
Understand where the tablet market is going based on Forrester's latest data and insights.
Apply what other companies have done to your own tablet strategy.
Sarah Rotman Epps is the senior analyst on my team who leads our research on tablets (and consumer computing) for product strategy professionals. She’s written extensively about the future of tablets but also about the characteristics of software and media experiences that succeed on tablets. (Forrester clients can read “Best Practices for Media Apps,” for instance). At the same time, I have written about how mass customization is finally the future of products in an age when customer-centricity reigns.
Tablets and configurators – the typical tool that consumers use to co-design customized products – are a match made in heaven. They share a number of characteristics that product strategists should consider when developing mass-customized product interfaces. For example, they both:
That's right, I said eReaders. True, it looks like a tablet, runs like a tablet, and delivers a lot of the value that tablets deliver, but the Nook Color's 1.2 upgrade (which is actually a step up to Android 2.2; don't let the numbers confuse you too much) is really a foreshadowing of the future of eReaders, not the future of tablets.
First, the facts. With the new upgrade that will be gradually pushed out to all existing Nook Color devices for free over the next few weeks (or you can download now at www.nookcolor.com/update), the folks at B&N have added some very useful features: an integrated email client, Flash 10.1 support, a curated Android app store (see sidebar), and an improved user experience through a myriad of tweaks. These upgrades make the Nook Color look more and more like a tablet, with a very attractive $249 price point to boot.
Must the iPad now cower in fear? No, not really. Because even at this price point, the Nook Color remains a smaller, less powerful tablet than the iPad. And as we've seen, the range of competitors coming in after the iPad's territory are coming in at higher prices with more powerful features (for example, last week I dropped $529 for an LG G-Slate from T-Mobile with 3D video camera and 4G data plan). The tablet market is gradually moving into higher-power features, not lower-power experiences.
Tablets are a red hot topic since the launch of Apple’s iPad more than a year ago. Tablets are the most visible aspect of a broader topic on the minds of vendor strategists – the consumerization of IT. Consumerization is defined variously as using personal devices for work, pay-per-use payment models, spending personal money for work-related cloud services, and employee self-provisioning of IT capacity outside the oversight of IT. In our annual Forrsights Hardware Survey, Q3 2010, we asked IT infrastructure buyers responsible for supporting end user computing about a variety of topics related to consumerization of IT and learned that:
The IT organizations in 26% of enterprises (firms with 1000 employees or more) were planning to implement or had implemented general purpose touchscreen tablets such as the Apple iPad. Of that total, 4% reported they’d already implemented, and 17% were already piloting by Q3, 2010, approximately 6 months after the launch of this brand new category. SMBs, firms with 999 employees or less, were lower at 18% planning or implemented.
Only 2% of firms, large and small, reported implementing or piloting bring-your-own-PC models, despite several years of hype among the desktop virtualization software vendors about this model. We expect this PC deployment model to grow, but it’s not a broad trend yet.
Firms are using more consumer-style Web applications on PCs, with 84% firms increasing their use of Web applications. But they’re not abandoning locally installed applications. 55% of firms are increasing or staying the same on their use of installed applications, while only 4% are seriously reducing use.
The most important outcome of this week’s emerging tussle between Apple and Google is that we are about to have an intense and financially difficult conversation about what a fair price is for delivering customers to developers, publishers, and producers. Economically, this is one of the most critical issues that has to be resolved for the future of electronic content. Very soon, a majority of consumer experiences (that which we used to refer to as the media) will be digital. But not until the people who will develop those experiences have unambiguous, market-clearing rules for how they can expect to profit from those experiences.
The question comes down to this: Is 30% a fair price for Apple to charge? I must be clear about my intentions here. I do not employ the word “fair” the way my children often do. I am not whining about Apple’s right to charge whatever it wants. Apple may do whatever is best for shareholders in the short- and long-run. I argued yesterday that Apple’s recent decision does not serve its shareholders in the long run. Google announced One Pass yesterday – hastily, I might add – in order to signal to Apple and its shareholders that monopoly power rarely lasts forever. But none of that questions the ultimate morality of Apple’s decision or its rights.
I use the word “fair” to refer to a state of economic efficiency. A fair price is one that maximizes not just individual revenue, but total revenue across all players. Such revenue maximization cannot be achieved without simultaneously satisfying the largest possible number of consumers with the greatest possible amount of innovation.
Yesterday Apple announced its intention to tighten its hold on the payment for and the delivery of content through its successful iTunes platform. (I’ll leave off the I-told-you-so; oops, too late.) Apple will require that all content experiences that can be paid for in an Apple app must be purchasable inside the app, with Apple collecting its 30% fee. The app can no longer direct you to a browser or some other means for completing a transaction. Crucially, the in-app purchase offer must be extended at the same price as the same offer made elsewhere. Though the announcement of the subscription model was the triggering event, the policy extends to all paid content.
I do not believe this is where Apple will stop – I personally expect them to eventually deny the delivery of content paid for outside of the app without some kind of convenience charge. But my personal expectations are irrelevant here, because what Apple has done already is sufficient to make providers of content aggressively invest in alternative means to reach the market.
Subscription content services are the lifeblood of the content economy. A full 63% of the money consumers spend on content of all types comes through a renewable subscription (I’ll be publishing this data from a survey of 4,000 US online adults as part of a bigger analysis next month, hang tight). Most of that subscription revenue goes to pay-TV providers, but 17% of it goes to newspaper and magazine publishers, including their online or app content experiences.