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I watched the live blog introducing the iPad Mini this past week. I already knew pretty much everything about it from the rumors that are now common prior to an Apple announcement. Then came the pricing. I was stunned. Seriously?? $129 premium over the Kindle Fire? I was supremely disappointed.
The genius of the original iPad was that no one else could build one for less than what Apple was charging for the iPad. As a result, almost three years later, the iPad owns the 9+inch tablet market. So the competitors sought refuge in the 7 inch market niche instead and Apple seems to have given them a gift by overpricing their 7.9″ tablet by at least $79 ($250 for a comparably equipped Google Nexus).
But the iPad platform has three things going for it which, I believe, will continue its market dominance. I also think the $200 7 inch market will thrive. If I were buying a tablet today, that’s what I would buy. More later. Here are the iPad platform’s three advantages:
- Apps. Apps. Apps. It can’t be stated enough. Buying the coolest looking tablet is useless unless you have beautiful apps to run on it. Android may have almost caught up to iOS in terms of number of apps but quality is a whole different matter. Amazon has a curated Android store with about 50,000 apps on it. Windows Surface and app store are just getting started and we all know it takes Microsoft at least three releases to make a product usable. Two more releases to go.
- Retail Stores. Remember what I said earlier about beautiful craftsmanship leading to increased sales? Well, the only way to appreciate the craftsmanship is to hold one in your hands. That’s where Apple’s ubiquitous retail stores come into play. If you want to compare it against a Google Nexus or Kindle Fire, where can you go to try out one of those tablets? Not too many places anymore. Walmart and Target won’t sell their competitor’s (Amazon) product anymore. And most retailers don’t want to be showcases anymore for things that can be purchased cheaper online. The proliferation of Apple Stores was a genius move at least a decade ahead of its time.j
- Timing. Apple is absolutely the master of timing. Remember that Microsoft introduced a tablet, eReader, MP3 player and a number of other products over the past decade that failed either because they were too early or too late to the market. Apple’s introduction of the iPad Mini legitimizes the market. Apple is now the 800 lb gorilla the way IBM and Microsoft once were. Apple has lofty profit margin targets to maintain. And Apple needs competitors to build the tablet market into an industry. I’m confident that the iPad Mini will come down aggressively in price in a year or two. Or, they might introduce an iPad Nano which could undercut everyone else.
Did Apple just pull the ultimate judo marketing move on Microsoft? Did Apple just trick Microsoft and its ecosystem partners into putting all its marketing muscle behind tablets and smartphones while ignoring the much larger PC and laptop market with the release of Windows 8?
I was blown away and completely surprised by the new Mac announcements this past week. The superthin iMac looks amazing. The svelte Macbook Pro with Retina Display is drool-worthy. I don’t know about you but if I were on the market today, I would skip the tablets and just buy a 13″ Macbook Pro.
The tablet market is a tricky one. Apple took great pains (ie great timing) to portray the iPad as a large iPhone. I love how it does everything that an iPhone does but so much better merely because of the greater screen real estate.
But Microsoft is blurring the lines and they are marketing the Surface tablet as a stripped down PC. Why would I want that? I can buy a Windows laptop for about the same price as a Surface.
I clearly understand that an iPad is iPhone’s bigger brother. Is Surface a stripped down Netbook? We all know how that failed experiment went down.
The thing to remember is that Apple is no longer selling to the early technology adopter. They are selling to the mainstream consumer. Apple has done a brilliant job of making sure people understand the limitations of the iPad vs a PC. Is Microsoft about to learn that painful lesson the hard way?
The real innovation with the iPhone5 is that it was available for sale in 30 countries one week after its introduction. With all the tariffs and carrier agreements involved, that is an awesome achievement. The iPhone and the iPad will continue to lead the market because of its sheer presence. Radical design updates may no longer be needed.
The real innovation with the Mac is that the beautiful design and state of the art manufacturing techniques increases resale value so that people can sell their old model and buy the latest version.
There was a time when marketers described Apple as “fashion.” In other words, the *fanboys* would line up to buy the latest iGadget even if they didn’t need it. Call it the “I-don’t-know-what-it-is-but-I-want-one” demographic.
I think Tim Cook has wisely realized that he needed a different strategy in the post-Steve era. So he has turned Apple from a “fashion” company to a “luxury” company. For example, Gene Munster of Piper Jaffray said, in a recent note to clients:
“We view the iPhone 5 as the Rolex of smartphones in terms of quality and build…while the majority of other phones are dominated by lesser quality plastic and feel more like Timexes. Why would someone buy a Timex when they can have a Rolex for the same price?”
So in conclusion, luxury, combined with relatively aggressive pricing (comparing fit and finish) combined with ease of buying (via Apple Retail Stores) ensure that Apple will continue to call the shots for years to come.