Apple iPad: The Right Gadget For The Wrong Consumer

With input from JP Gownder, Mark Mulligan, James McQuivey, and Charlie Golvin

Hello world…I’m back from maternity leave and taking on a new coverage area for Forrester: I’m expanding from covering eReaders to covering all consumer PCs. This makes a lot of sense given the evolving nature of the PC, and the convergence of eReaders with other devices like tablets and netbooks. My colleagues, James McQuivey and Nick Thomas, will be picking up more of Forrester’s coverage of media and content strategy, while I focus on the hardware and software. It’s particularly appropriate that this change coincides with the launch of the Apple iPad—a device that, more than any other to date, blurs the line between device categories.

So in the interest of getting right back to business, here’s our call:

Apple will sell 3 million iPads in 2010. For context, twice as many E Ink eReaders will sell this year.

Walt Mossberg loves the iPad and says it’s nearly a laptop killer. So why are we so conservative with our numbers?

Because the iPad is the right device for the wrong consumer.

We think there’s a fundamental disconnect between the design of the device and the profile of the customer who would most benefit from using it.

  • The iPad’s curated computing experience is perfect for the casual PC user. Mossberg notes that for 80% of his computing, the iPad replaced the need for a laptop. For casual PC users, the iPad is all they need: Its simple, apps-centric OS supports easy Web browsing, email, productivity through iWork, and other straightforward operations like reading or watching videos. The early adopter technophiles can’t wait to get their hands on an iPad, but the consumer who could really benefit from this device is your less tech-savvy mother-in-law.
  • But the hardware assumes that these consumers live in the cloud—and they don’t. Why are there so few holes (literally) in the iPad? There’s a 30-pin dock connector port, similar to the iPhone and the iPod, plus a headphone jack. So there are two options for getting stuff onto and out of this device: 1) through the 30-pin port via dongles that convert to USB or other input/output; or 2) wirelessly through Wi-Fi or, for subscribers, 3G. The first scenario may work for “Applings” (Apple + lemmings, and credit goes to James McQuivey for coining that phrase) who go along with whatever Apple dictates (“If it’s not there, I must not need it!”) but it’s not ideal for the casual PC user, who doesn’t want to buy special docks and dongles to input photos from her camera or to print something (on actual paper). The second scenario assumes that consumers will seamlessly upload and download content from the cloud. This is a pretty futuristic assumption, and it’s not clear that mainstream consumers are ready for this. Does your mother-in-law store her data in the cloud?


But, this is Apple. And if anyone can market a less-than-perfect product as “magical” and “revolutionary,” it’s Apple. They have proven with the iPhone that they are very, very good at showing consumers what to do with a new device. And that’s where Apple’s competitors fall short. Dell, for example, sells a $299 netbook with a built-in TV tuner, and VGA out for connecting to TVs—which is much more “revolutionary” in terms of product features than the iPad, but because it’s Dell, they don’t sell it as a magical product. Apple, too, owns its own retail channel, and the function of the Apple Store and its gurus will be to provide that hands-on teaching experience that Mossberg says consumers will require to really understand the device.

The bottom line: To sell this device to more than just Apple acolytes, Apple will need to teach consumers not just a new way of using this particular device, but an entirely new way of computing. Apple will need to teach consumers to be less dependent on peripherals and more dependent on the cloud. To crave experiences that are less open-ended and more curated. At the same time, Apple will teach consumers to expect more from computing—more visual pleasure, more touch.

The iPad’s cultural impact will far surpass the number of units it sells. It may be only 3 million people that buy the iPad this year, but the number that will reimagine how they use devices will be far greater. And that will be the lasting impact of the iPad. In three years, we’ll look back and marvel not at how many units Apple sold, but at the way Apple changed computing. The iPad may not have GPS (at least in the WiFi-only version), but it’s a road map for where computing is going: Curated, cloud-based experiences that are visual and tactile.


Living in the Cloud

I think the post overstates the challenges of getting new consumers to embrace an entirely different way of computing. Like plumbing, the iPad just works. It's telling that the biggest iPad critics are technologists, while the biggest fans tend to be ordinary consumers. I believe the average user is frustrated by existing PC user interfaces and will readily embrace a different, more intuitive way of navigating information. Consequently, I believe your 3MM number is at least 2MM shy of the actual numbers. I suppose time will tell.

As far as cloud computing: at its launch almost two years ago, Apple's MobileME cloud product was mentioned frequently in connection with an imaginary portable device we now know as the iPad. Apple probably believes that the MobileME experience has finally become robust enough to justify the limited ingress points on the iPad. It hasn't been receiving a lot of attention but I suspect that will change in the months to come. In the meantime, I'm very pleased with the a la carte broadband pricing model. It looks like Apple has learned a lot from watching the Novatel MiFi and other network pricing models.

I worked for Dynamac Computer Products, the first company to make a portable Apple computer, and it has always been interesting that so little innovation had taken place in notebook design over the past 20 years. Keyboard, battery, screen and input devices were always straight-line innovations and therefore manufacturers were limited in their ability to shape future unit costs. I'm intrigued at the possibility that unit prices could conceivably go down to the $100 range (and therefore be affordable by third world countries as well as education) because the iPad manufacturing process is so different than traditional PCs. Here's a link to an interesting blog post that shows off the mines that produce the raw materials behind the iPad, as well as photos of the secretive Chinese industrial parks where the units are made.

iPad isn't very cloud connected today

You need a Mac or PC to manage and copy your iTunes media library on the iPad, plus do software updates.
I agree that in future it will become more independent and connected to online services, but it's far from that now.

The right gadget for most consumers

It's an interesting question to ponder, but I think you're wrong on two things: a) you give my mother-in-law too little credit; and, b) you assume that "the cloud" is somehow too complicated for average people.

I personally know lots of people that never owned a computer until they were old enough to join AARP, and today they are using cloud-based photo storage/sharing, making VoIP and video calls, using social media applications and many other advanced technologies. They don't know how these things work any more than they can explain the automatic transmission in their car. But all of these technologies are very consumer-friendly today, and the grandchildren have no problem teaching the old folks how to use it all.

The iPhone never fit my personal requirements so my direct experience with the whole app ecosystem is limited, but I expect that Apple will have done a great job of integrating MobileMe into the iPad so there's no difference, to the user, between saving a document on a local drive or iDisk. In any event, calling such consumer use of the cloud a "futuristic assumption" doesn't make sense.

I'm looking forward to receiving my iPad on April 3. Only time will tell whether it becomes a big hit, but my friends, who are all tech-savvy and clearly understand the "limitations," can't wait to get theirs.

I think you've under-estimated

I tend to be in the "iPad will change the world" camp. I believe that it is a harbinger of a new software architecture. The two "old" architectures are: 1) Microsoft's "Big executables on the desktop" model -- e.g., Office, and 2) The SaaS "Everything in the cloud" model. The iPad, with its "Executables in the Cloud and executables on the device -- and they work seamlessly" model signals the beginning of the end for the two old models... And that's why Apple will sell a lot of iPads.

you're going to love my next report!

Thanks, George, for your comment...I agree that the cultural and technological impact of the iPad will be huge, far surpassing the impact of actual units sold. But I think you will like my next report--a Big Idea on "Curated Computing."

Nix Cloud Computing. AppStores are the future!

Thanks for the interesting post. I am replicating my response to George Colony's post here because it refers exactly to the same subject.

The importance of the iPad is not about being a magical device! It is about business to consumer models. I am taking it a bit further and propose that cloud computing will never be as dominant as it is proposed now. That's what I wrote on my blog a month ago:

"Therefore, it is the customer ownership through the iTunes Store that is Appleā€™s dominance and not the devices as such. The compatibility of the apps from the iPhone gives the iPad the largest library of applications a device ever had at its launch. The concept of the AppStore is simply genius. I have been asking for something like that for ages from Microsoft and IBM. The concept of the locked-down AppStore that links the software developer securely with the user, will change the software world! ... That concept ensures that there are no malicous apps and no viruses. More than anything does the concept ensure that every licence sold is paid for. There is no further intermediary. There is no media to be created. The user can get much more direct updates and bug-fixes. The development and testing environment is by a magnitude easier to use than any other mobile device. Therefore software can be much cheaper than in any other environment or infrastructure! ... AppStores are the future! Nix Cloud computing! Everyone will have his own application after all."

What does that mean for businesses? A lot! But it is not the end, because neither cloud computing nor AppStores empower the user with peer-to-peer and app-to-app collaboration and user defined functionality. The CLOUD integration will not be in the cloud by connecting web applications but it will be in the device. Users will after all want to own their information, while they may back it up to a service provider. That is where I the see the next necessary step but it is not something that came to my mind now.

It is the core concept of the Papyrus Platform that I conceived in 1997 and first installed in 2001. The Papyrus model to distribute applications to users from a central repository provides what the AppStore does for consumers for business. In difference to Apple, Papyrus runs on all major PC and server operating systems and also includes mobiles such as iPhone, Symbian and Windows Mobile.

iPad market

I think the iPad is the next widget that is in the long trend of moving the power of computers from the geeks to everyman. Consider the trajectory of computers, from IBM mainframes on the 60s, to the desk-size PDP UNIX machines of the 70s, to PCs, Macs, smartphones... At each step the use of the device becomes more emancipated. The iPad is the next step, and my 89 year old mother is loving sitting in her recliner to read the kids' blogs and play solitaire. Steve Jobs just saw it, and executed the platform before anyone else.

D'oh! Are you all crazy?

I think you are all really optimistic!!

The iPad is a great new gadget, really cute, nice done, because Apple always do nice and cute device, but, people will quickly find its gaps... And I think it is major gaps!!

- Firstly, when I'm sitting in front of a table to use a computer, you now that the surface is horizontal, so if I am sitting in front of a table I must put my iPad on the horizontal surface, so I cannot naturally raise the iPad to be in the same angle of my eyes... a Laptop or Netbook simply do that... With the iPad you must buy a little stand to support the ipad in angle. (first accessory for the iPad, Laptop and netbook don't need this accessory)

- Secondly, to type long text, most user prefer a physical keyboard!! We see that people prefer Cell phones that have sliding keyboard... iPad is not different in this so what people do, the buy a Blue Tooth physical Keyboard for their iPad to resolved the problem... a Laptop or Netbook simply do that... (second accessory for the iPad!!)

- Thirdly, Tablets are made to be used upright. But, do you try to use your iPad of 1.6 pounds upright in one hand to give one hand free to touch the ipad screen? After 15 minutes my arm is dead!! Do you really think my old mother and father or my grand m'a can use it upright in this context? D'oh... NO!!! Laptop and net book ar made to be seated on upper legs or on a table... It is really more realistic for most consumers!!!

No seriously iPad to be as usable as a Laptop or a netbook must be used with 2 separated accessory minimum... but when traveling, these accessory are separated parts that you have to manipulate ... In contrast with a netbook or a laptop which integrate these accessory at internal of the device ... So...

Sorry but I prefer my laptop and my netbook ... and it is good chance that most people will prefer laptop and netbook two ... will at least, when they discover the iPad gaps... Maaaaajor gaps...

Sorry but i think Apple is just really really really good in marketing but... that's it!!