iPad iPhatuation

I listened and watched the flood of reporting on Apple's "latest creation" this morning. Unless you've spent the day in an electromagnetically shielded cage, you know by now that all the tablet rumors were true, and the new device is called the iPad. (insert your own joke about the name here...)

So, what is it?

As the picture shows, the iPad is pretty much a supersized iPod Touch (or optionally an iPhone sans the phone part). I wasn't alone in wondering why Jobs went on & on about how the device has all the "latest in wireless" (were the 4G rumors true?) when all he was talking about was 802.11n WiFi. It was wise not to feature up front that the only 3G network option for this "creation", as for the iPhone, is still AT&T.

Jobs started his presentation by stating that

"All of us use laptops and smartphones now. The question has arisen lately: is there room for a third category of device in the middle?"

So, here's the 1st problem: there is a LOT in that middle already (and oh... by the way... smartphone adoption is still less than 20% of all cell phones). What may have looked like a gap for Apple is a fragmented and increasingly overcrowded space for the rest of the industry.

Jobs went on to say that this gap called for:

"something better than a laptop for watching video, browsing photos, enjoying your music, reading ebooks, playing games. If there’s going to be a third category it has to do better at these tasks than your laptop or smartphone."

He then went on to arrogantly attack netbooks, (which just happen to be the fastest growing segment of the PC market), by saying "they're not better at anything, they're just cheaper".

Oh really? I can almost hear another "iDon't" campaign starting now:

• iDon't run your PC programs (or your MAC-OS programs for that matter)
• iDon't have a keyboard (though you can buy one as an add-on)
• iDon't multitask
• iDon't have a built-in camera
• iDon't have a hard drive
  
• iDon't let you change the battery
  
• iDon't know what to do with Flash media
  

What can it do? Well, it can run your iPhone apps, because it has the iPhone OS.

It's not a netbook killer, because netbooks are PCs (even if they are used mostly for web browsing). This is an entertainment/media device. Nothing wrong with that, but this is a different category. The iPad adds to the fragmentation of the market between smartphones and laptops, it doesn't eliminate it.

This same point is often lost when people ask whether Android smartphones are iPhone killers. They're different! If you are in love with iTunes or your iPod Touch, and no small number of folks are, you may just love an iPhone too. I have one, but if I was choosing today it would probably be an Android phone. All the "iDon'ts" really do drive me crazy.

There were a multitude of tablet computers shown at the recent Consumer Electronics Show, so this is nothing other than Apple's entry. Let the competition begin.

Some were floored when Jobs dramatically dropped the price on them. I think he deserves an Oscar nomination for that performance. Apple's marketing department also deserves an award for successfully seeding the press with the notion that the price would be around $1000. Chris O'Brien at the Merc has even fallen for it, writing in Why Apple's iPad will change gadget world.

Whatever the price, though, my gut reaction was this: "Apple may have just killed the netbook market." Let me also add: This is probably a Kindle killer. Sorry, Amazon.

Here's the deal on the price: (hint.. think iPod tiered approach)

• 16GB WiFi model: $499
• 32GB WiFi model: $599
• 64GB WiFI model: $699

• 16GB 3G model: $629
  
• 32GB 3G model: $729
• 64GB 3G model: $829

Still look cheap? I don't see how the iPad competes with netbooks at all. Not from a price standpoint, and not from a functionality standpoint.

What about ereaders? Apple also announced a new iBook store.

Well, first of all, the Kindle sells for just $259. The Kindle also doesn't require a wireless data service contract. Oh, did I forget to mention that? Much of the press was all agog that the iPad will use a pre-paid monthly service on AT&T. No 2-year contract required. Woo hoo!

The service contract will add $14.99 per month for up to 250MB of data, or $29.99 per month for "unlimited" data. That is cheaper than AT&T data plans for netbooks: $35/$60 for 200MB/5GB per month, but it makes for a pretty expensive ebook reader. And oh, don't forget, there's a Kindle app for the iPhone, and it's free! Any reason to think it wouldn't work on the iPad?

If you want a color ebook reader, there will be many on the market this year. But $629 vs. $259 looks like a pretty steep price to pay to upgrade from the equivalent 3G-equipped Kindle.

So, where does that leave the iPad? Not a netbook killer, not a Kindle killer, and not a gap filler. It's something else, which is just like Apple isn't it?

I don't doubt that the Apple cult will probably eat up the iPad. There will be more cool apps for it. But check back in one year, and you will see Apple's tablet competing against Windows 7 tablets and Android/Google-Chrome tablets. There will be Apple fans and those who aren't, just like Macs versus PCs. Apple fans may think of Steve Jobs as god, but he isn't the only one working on new "creations".

-Mike