Sunday, September 19, 2010

The Apple iPad: A Transcendent Device

The Apple iPad Transcends The PC
In June, in a blog post I titled Bunkum and Balderdash: The iPad Is Not A PC,  I commented on a Forrester Research report that suggested the Apple iPad is a PC in tablet form. The Apple iPad is not a PC or a PC replacement. The Apple iPad is a device that transcends the PC and it's a product that will hasten the PC's demise. The Apple iPad is a revolutionary device that is sparking an evolutionary change in the way we access information and communicate with the world around us and with one another. 
The Apple iPad's Impact On Notebook PC Sales
On Friday Philip Elmer-DeWitt published an Apple 2.0 column citing data from the NPD Group that was included in a report from Morgan Stanley's Katy Huberty indicating domestic notebook retail PC sales have decelerated since the release of the Apple iPad. The deceleration in sales has been so dramatic, it's estimated in August notebook PC sales experienced negative domestic sales growth. 
There are several factors, including the iPad's early success, that might be contributing to the negative growth in notebooks sales at retail. Among these factors are a possible slowdown in sales or sales growth following the release of Windows 7 last fall, the popularity of Apple laptops on America's college campuses and a change in consumer preferences about personal digital devices. 
Absent data on Apple iPad sales, it's challenging at best to accurately determine the direct impact Apple's tablet-sized digital device is having on domestic retail sales of PC notebook computers. But for Windows PC OEMs the early success of the Apple iPad may force an acceleration of plans to release competing tablet products in an effort to recapture revenue migrating to Apple due to the iPad's popularity. Until now the iPad's domestic distribution has been limited. As iPad distribution expands and competitors enter the tablet market it may quicken the pace of decline in notebook PC sales.  Retailers will chase this change in consumer preferences.

Why The Apple iPad May Be Causing A Decline In Notebook PC Sales
In all of the discussions about the Apple iPad as a replacement PC or as a cause of the deceleration of of netbook PC sales, there's a point that hasn't yet been raised or at least has not been frequently mentioned: The netbook may have been (past tense used without prejudice) a transitional product. It's not that the Apple iPad is a replacement for the notebook PC but a new product class that transcends it. 
The mass consumer migration to smartphones, including the Apple iPhone, is indicative a change in consumer preferences. The Apple iPad is an expansion or an extension of Apple's vision of the handheld product paradigm much more than it's representative of what had been expected in a  tablet PC. In other words the Apple iPad is much more like the iPhone and the iPod touch than it is similar to a Mac or PC in a tablet form. 
Consumers do not need a notebook PC for Web surfing, email correspondence and social networking. Those tasks can now be accomplished on well-appointed smartphones.  The Apple iPad is an enhancement and an extension of the smartphone model. It's not a PC in tablet form. 
The Apple iPad's Impact Today and Tomorrow
The Apple iPad's early success may have far reaching impact for the future of personal computing in its many forms. Google may need to reevaluate its approach to both the development of Chrome and the further development of Android. Microsoft may find itself in a far more disadvantageous market position than it expected due to the long delay in bringing a new mobile OS to market.
Device makers that approach the tablet market as an effort to build down from the existing PC paradigm rather than an effort to build up from the consumer experience with smartphones may not find success in this new market. 
The iPad Chronicles
Over this weekend I set-up a companion presence to this Posts At Eventide blog. It's called The iPad Chronicles and the content will be focused primarily on uses of the Apple iPad at work, at home and when away from both work and home. 
Please join me here as I continue to analyze Apple's performance and forecast the movements in the share price of the company's stock. Please join me at The iPad Chronicles as I journey into the wild of everyday life and demonstrate the Apple iPad is not a notebook PC replacement. It exemplifies a change in consumer preferences that is rendering the PC as we know it functionally obsolete. 

Robert Paul Leitao


  1. DT I think your in a rush to place the iPad in an existing category. The data aggregators like to place things in nice little boxes, but the iPad is a paradigm shift in how we consume and use data. An average knowledge worker sends the majority of their time in data consumption, so why should we send all the effort on creation. The desktop is creation focused from a fixed point, the laptop makes compromise to add mobility. We now have a device which excels at 80% of what we really do and needs inprovement for the last 20%. I think Apple will growth the interface to deal with the 20% but the initial focus was on where we spend 80% of the time

  2. Patrick:

    Make no mistake. I do not attempt to put the Apple iPad in any kind of a conventional box. By the way, I'm typing this reponse while away and using the device as a road warrior's all-in-one tool kit.

    My point is the Apple iPad transcends anything we've seen before in terms of an ultra-mobile solution. The iPad extends and expands upon Apple's iOS product paradigm. By comparison efforts to cram a PC into a tablet form will not find success.

    In addition to its versatility, the Apple iPad is refreshingly ease to use. The PC complexity has been left behind by design. There isn't a an existing product category in which the Apple iPad will fit. But it's clear its genesis comes from the same source and the same design theories as the Apple iPhone and the iPod touch.

  3. Speaking of the commonality among iPhone/iPod touch/iPad etc., I've read this analysis that Apple has an upper hand in terms of "scalability" that they can make a huge upfront bulk purchase of flash memory and other components from those manufacturers. If so, do you think there's a way to quantify the effect in the GM estimates?

  4. Anonymous:

    Apple's ability to procure needed components is a distinct competitive advantage. Peter Oppenheimer guided GM to 36.5% for the September quarter. I'm working with 38.5% based in part on what you mentioned.

    In my view component availability as demand for products soar is the first and most important objective. Apple has the financial resources to enter into strategic partnerships for component capacity. Apple's flexibility is no doubt impacting component prices as well.