the iPad has become a hit by eliminating many of the problems people have using PCs. As far as hardware goes it isn't much different than a netbook, and the really significant difference is the application distribution platform it offers.
Why does the iPad sell? One of the biggest reasons is how hard it is to use Windows-based PCs.
Fig.1 The Post-Netbook Revolution Continues
Netbooks introduced two revolutionary ideas to the notebook PC industry: price collapse and limited application. Windows-based netbooks, however, inherit all the usability problems of PCs. The iPad resolves most of them.
The notebook PC first appeared in 1989, and brought with it the concept of carrying your PC around with you-portability (Fig.1). The next big evolutionary step was the netbook in 2007. As a machine to browse Web sites and handle e-mail, it leveraged its incredibly low pricetag (50,000 yen or less) to rapidly create a huge market.
The netbook, however, inherits all of the problems inherent in the notebook PC. Unable to escape complaints that it took too long to boot, that battery drive time was too short, and that the user interface (UI) still relied on a non-intuitive mouse or touchpad, it was classified as a hard-to-use notebook with a low price, and market growth began to flatten out in only about two years. According to Hidetoshi Himuro, Director, IT&FPD Market Researchof NPD Japan Ltd. of Japan, "The manufacturers should have been able to make a variety of proposals designed to take advantage of the low price, but in fact they merely tried to sell it as a cheaper PC. That killed netbook growth."
A device that resolved these drawbacks in the notebook PC should sell, the manufacturers though, and proposed a wide range of possibilities that are now called smartbooks or mobile Internet devices (MID). It will not be easy to destroy the near-monopoly of the PC, because of the enormous software resources it possesses, including office application suites.
In the last few years smartphones, like the iPhone from Apple and the Android-based Xperia from Japanese-Swedish joint venture Sony Ericsson Mobile Communications AB, have grown rapidly as terminals for certain PC applications. Smartphones are designed to be carried at all times, however, imposing a variety of restrictions including small, hard-to-view screens. The iPad, on the other hand, sacrifices portability to some extent for a larger screen.
A Generation that Only Knows Touch
Developed as an extension of smartphones, not PCs, the iPad was born with a variety of features including instant-start, a 10-hour battery drive time and an intuitive, multi-touch UI. Thanks to the groundbreaking iPhone that led the way many users were already familiar with multi-touch operation, which was a big assist for the new product.
The iPad is about the same size as a netbook, but it has no keyboard, and as a result it is used far more for browsing (consuming content) than for input (creating content). In that sense, perhaps it is closer to the TV than a PC.
The content that can be handled on an iPad is the same as for a PC, but the iPad provides immense value by being able to access new information very, very quickly. One engineer at a communication carrier says he uses his iPad to check the bio for the actors in an upcoming TV show immediately, without having to wait for his notebook PC to boot up. And he adds that the immediacy of the information is sometimes enough to get him to purchase a film with that actor on digital video disc (DVD) right then and there.
While the iPad is ill-suited at present to business applications like spreadsheets, it does have the potential to almost entirely replace the PC in the future. And it may reach an entirely new user group that has never used PCs. For children who don't have the preconceptions about how to use computers, learning touch panel operation will be a lot easier than learning the keyboard. Kanae Maita, Principal Analystat Gartner Japan, Ltd. of Japan explains "Just like the younger generations today use their mobile phones for just about everything, it is quite possible that a generation in the near future will be 'touch native,' with experience in touch panel operation only."
Same Configuration as a Standard Internet Terminal
The hardware configuration of the iPad is pretty much the same as a netbook in terms of component and cost breakdowns (Fig.2). The biggest difference is that the iPad does not require a Windows license, and instead of using a processor manufactured by Intel Corp. of the US uses the A4 processor developed by Apple. The current iPad models use high-quality LCD panels and touch panels, which account for a big part of total cost, but these costs will drop as production volume rises.
Fig.2 Comparison of Component and Manufacturing Costs for Netbooks and iPad
In the iPad, the LCD panel and touch panel are expensive. Netbook data from Goldman Sachs report entitled "Netbook: Who will benefit - NB, handset, telecom or white box?" and iPad data courtesy iSuppli (http://www.isuppli.com/News/Pages/User-Interface-Focused-iPad-Changes-the-Game-in-Electronic-Design-iSuppli-Teardown-Reveals.aspx).
Fig.3 Touch Panel Netbook from ASUSTeK
The ASUSTeK Eee PC T101MT can be used as a notebook PC or a tablet (top), and offers a unique UI (bottom).
There already are some netbooks with component configurations somewhere between traditional netbooks and the iPad (Fig.3). One is the Eee PC T101MT from ASUSTeK Computer, Inc. of Taiwan, which mounts a touch panel allowing it to be used as both a clamshell and a tablet. It sells for about \55,000.
The iPad's hardware does have some unique features, but fundamentally it's just an Internet terminal. The key is the software. The onboard iOS has been optimized for multi-touch operation and offers an excellent UI. Functionality can be added freely to support new applications, just like a PC. The most important difference from a standard PC is that the user can easily hunt down and install new apps. What makes this possible is the App Store, the application distribution service provided by Apple via its iTunes content distribution platform.
Perfecting the Platform Over a Decade
Apple first announced iTunes in January 2001, and at the start it was only capable of loading tracks from music CDs and managing them. That changed in 2003, however. Apple opened the Music Store music download service linked to iTunes, driving a surge in market adoption of its iPod portable music player. Music Store opened in Japan in 2005. In the United States, it was joined by new services handling video, such as Movie Store and Movie Rental.
The next step was in 2007. Apple announced the iPhone in January that year, and dropped the word 'Comuter' from its company name to clearly mark its transformation from a PC manufacturer to an appliance manufacturer. The first-generation iPhone released in the US in July that year, however, was merely a multi-function mobile phone, lacking the ability to install apps.
The iPhone 3G, supporting app installation, shipped in July 2008, and App Store opened for business simultaneously. App Store serves not only the iPhone, but the iPad as well. When the iPad was released in 2010 the iBooks e-book reading application was made available, and the iBookstore e-book retail site was launched.
Apple has invested about a decade into its content distribution platform... the success of the iPad was not something out of the blue.
The PC Paradigm Just Doesn't Apply Anymore
When you compare the business model Apple has had such a success with to the one used by the PC and Japanese mobile phone industries, the differences become obvious.
In the PC industry, manufacturers had a problem because they were never forced to think about what to provide their users, which is clearly a very basic point. Most of the PC's usability was dependent on Windows, direct from Microsoft Corp. of the US, making it impossible for manufacturers to address users needs even if they had wanted to. The situation is much the same in Japanese mobile phones. Handset specs and the app/content platform were controlled by the mobile phone carriers, so manufacturers could only develop hardware and software to order.
The iPad has demonstrated that firms hoping to enter the tablet market cannot succeed using business models from the PC or mobile phone industries. The key point is not hardware alone, or software alone, or even service alone. The sum of the parts is crucial: the value that the customer receives. And the only way to ensure that the sum is correct is for a single firm to control all the elements.
Problem-Rich iPad
Fig.4 iPad Problems
The iPad dominates the tablet market currently, but has a number of problems that leave plenty of room for competitors to get a foot in the door.
The iPad has an overpowering presence in the market today, making it difficult to even try to compete. The iPad is not without its problems, though (Fig.4). It is too large and heavy to use comfortably standing on the train, for example, and it offers no camera or universal serial bus (USB) port.
It would be hasty to say a competing product would be successful if it just offers these features, though. "What looks like a weak point at first might actually be a strength in the iPad," warns Hideo Kasuya, Senior Manager, Digital Products Management Div.of Toshiba Corp., who spearheaded development of the Android-based dynabook AZ. He explains that battery drive time is probably quite a bit longer because USB consumes a lot of power, adding "If you try to do everything you might end up missing the target entirely... it would just be the same as a PC."
Before a decision can be made about what to include and what to cut, though, the manufacturer has to determine just what value it wants to provide to the user. And if that's done right, says Akira Minamikawa, Vice Presidentof iSuppli Japan K. K. of Japan, "Manufacturers other than Apple have a real chance."
