The iPad business model

Now that we've all had a few days to ponder Apple's iPad announcement, what are we to make of it? A revolutionary change in the computing industry? More of the same Apple technology, repackaged? A shot in the arm for the publishing industry? A new way for corporations to restrict the free flow of ideas?

Apple's announcement inspired all these reactions, and more. It's clear that the iPad strikes a nerve—several, actually. And that's what makes commentary on the iPad difficult: we're having several conversations simultaneously, sometimes confusing what we wish the iPad to be with what it is (or will be).

It's the business plan, stupid
Obviously, the iPad continues what Apple started with the iPod and iTunes, a combination that defines Apple's real market differentiation. As my colleague Tim Harmon rightly observes, tech companies now compete over their business models more than their technology (or the coolness of their physical design). Other companies developed MP3 players before Apple. What set the iPod apart from the competition was iTunes. Not only did you transfer your music library from your CD collection, but you could buy new music through the iTunes store. 

That's what makes discussions about the competing features of the iPad versus other e-Readers moot. Sure, it's annoying that the iPad won't have a USB port, but in many respects, the iPod wasn't necessarily the best MP3 player on the market. (And, as a player and organizer, iTunes is far from the best of all possible worlds.) The important question is, will consumers want the whole enchilada, buying the content through Apple's store, and then reading it on Apple's device?

At the initial price, the number of early adopters will be limited. As the price drops, however, we'll see whether Apple faces other barriers to adoption.

The difference between movies and books
All media are not alike. For example, there's the question of privacy. Apple keeps information about what music you like, so that it can make friendly suggestions about what else you might buy. But how do you feel about Apple keeping tabs on what you read? (To be fair, this concern already exists with other e-readers.)

Reactions vary when different types of content are unavailable. If you can't buy a particular album through the iTunes store, the consequences are minor. If books you need for your work, or your education, or other important tasks are not available through Apple, and it's difficult to get them into the iPad through other means, how attractive will the iPad appear then?

The difference between tablets and PCs
Jobs took a swipe at netbooks at the beginning of his launch presentation. Unfortunately, the comparison isn't perfect. While the iPad might be a better e-reader, netbooks do a much better job at other tasks. Would you rather take notes during a meeting using a netbook's physical keyboard, or the iPad's virtual equivalent?

Near the end of Jobs' demo, I started to wonder about some of the pre-packaged apps he was touting, such as the address book and calendar. Sure, I don't mind seeing my appointments on this device, but the iPad won't be where I do my work. I may not even bother to sync my appointments with yet another device, if I'm already going to look at my laptop anyway. Chalk up these sorts of details to the compulsion for feature completeness that's an unspoken assumption of many keynote demos.

The difference between appliances and tools
I share the frustration many people have with how much fussing around any laptop or desktop computer requires. Constant updates, complex interactions among components from different vendors, problems that are difficult to diagnose--computers are definitely not appliances. If there's a device that handles many of the same tasks, without these headaches, many consumers might buy an iPad for that benefit alone.

However, there's a reason why we live with the twitchy unpredictability of laptops and desktops: some capabilities are impossible without this kind of technology. If you want choices among productivity applications, video editing tools, games, and other kinds of applications, Apple's business model may not provide this range of choices. Certainly, many of these applications have technical requirements that won't squeeze into the constraints of the iPad.

As long as we applaud fast innovation and broad capabilities in the electronic place where we work and play, we're effectively asking for computers to be toolkits, not appliances. We want to be able to swap hardware in and out, at the same time that we're adding and updating software. The more the moving parts change, the greater risk that the overall machine will break down. Unfortunately, that introduces unexpected incompatibilities, security issues, performance bottlenecks, and other problems.

It doesn't have to be revolutionary to be good
As someone who bemoans the lack of good e-reader options, I'm certainly interested in the iPad. The device definitely has value, and it doesn't have to rock my world to provide it. The business model doesn't have to be "disruptive" to succeed. And we might not want some of the disruptions.

We've heard some very thoughtful responses to Apple's announcement, and some silly ones. (Topping the list: the claim that the iPad's resistance to hacking is a critical problem for its popularity.) The most useful observations have focused on the experience of using the iPad—finding, acquiring, and consuming content through this new device. That experience is the end product of Apple's business model as much as it depends on the device itself.

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re: The iPad business model

Hi

it is very clear to see: they have used a very narrow use case for their development, and basically specified a device which aims at the consumer of written/internet or video/audible information. In this they basically create a copy of iphone/itunes, which removes certain limitations (i.e. small size that inhibits "real" internet surfing, etc).

They intentionally left out other usages, which you might think about as well, such as a drawing pad, or a pad to produce internet content, etc.

So overall the iPad is not "too" innovative. However, I think for its niche it comes with some helpful/interesting features, which people miss, so it is a good example for continuous innovation.

At the end consumers will use it just as another gadget. Lets see if iPad is the final stage, or wether we will see a new sort of device in future.

regards
Andreas Rudolph