The Inquirer published an article written by Nick Farrell titled, “Why Apple might regret the iPad” which claims that the iPad has DOOMED Apple. The only smart thing about this article is Farrell’s inclusion of the word “might” in the title.
You can always smell an erroneous iPad article coming your way when you see a comment along these lines, “many have perhaps missed the true implications for Apple if the oversized Iphone does succeed as well as some fanboy media claim it will.” Anytime I see the “oversized iPhone” dig I think a few things. First I think, “Oh, you haven’t really spent much time with the iPad.” Secondly I think, “really? You couldn’t come up with anything more original?” And why aren’t people calling the iPhone an undersized iPad?
I’m of course being flippant but this point speaks to Farrell’s complete misunderstanding of the iPad and how it not only won’t DOOM Apple but it will launch Apple to new heights.
Now, Farrell’s thesis is based on a lot of “facts” from “analysts” who have done “research.” Okay, that’s not fair. The analysts didn’t deserve the quotation marks. They’re legit. Morgan Stanley and Piper Jaffray. Look them up if you don’t believe me. The problem with their results is that they aren’t based on using the iPad. They are simply based on market research and surveys. And there are a lot of holes in their conclusions.
Based on one of their surveys Farrell concludes, “It seems the buyers of Ipads would normally have got a more expensive Macbook or an Ipod Touch…” This is a bit of a sneaky statement because surely Farrell realizes that iPod Touches are less expensive than iPads. Sure, Apple might be losing out on some some profit when someone buys an iPad instead of a Macbook. But Apple is also gaining some profit when a customer buys an iPad instead of an iPod touch.
The thing to think about is that the iPad is not discouraging customers from owning any computer at all, in fact you really need a computer in order for the iPad to fully function (or a friend who doesn’t mind you coming over to sync and back up your iPad through his computer). Most iPad buyers are not first time computer buyers. They already own a computer. And probably most of the early adopters were already Mac owners. So yeah, Apple missed out on a few Macbook sales because people bought the iPad instead. But current Mac owners aren’t Apple’s intended target audience.
What is Apple’s intended target audience? Anyone who doesn’t already own a Mac. Apple loves repeat customers and customer loyalty, but Apple wants to grow. I used to work for Apple Retail, and let me tell you what our mantra was. “5 down, 95 to go.” That was a quote Steve Jobs said quite a while back referring to Apple’s market share and what their goal was. Since then Apple has gained some ground on the market, but their goal stays the same. Apple wants 100% market share.
How will Apple gain 100% of the market? With products like the iPad. Let’s take a little walk down memory lane, shall we?
iPod: People said it was a stupid idea, it would never work, and Apple would suffer for putting so much effort into it.
iPhone: People said it was a stupid idea, it would never work, and Apple would suffer for putting so much effort into it.
iPad: Nick Farrell said it will doom Apple.
Are we seeing a trend? What did the iPod and the iPhone do, besides make gazillions of dollars for Apple? It’s a little something called the halo effect. The iPod and the iPhone both introduced Apple and the Mac to new customers who had never used one before. I started working in an Apple Store months before the iPhone was released and I can’t tell you how many customers told me they were buying their first Mac because they had an iPhone. After seeing how amazing the iPhone is, people just have to see what the Mac can do. And after experiencing award winning customer service that is unparalleled in the industry, people just had to have a computer that gets the same kind of support. (Am I a bit biased about that last point? Maybe. But check out Consumer Reports for an unbiased confirmation)
So the iPad costs less than a Macbook. Now, because the iPad is such a revolutionary product, people are buying it rather than it’s slightly more expensive counterpart. Man…Apple really didn’t think this through, did they? You know how Apple is. They just never seem to have a plan. They’re just this company with billions of dollars in the bank because they never quite think through their products. Classic Apple sloppy strategy. (Did you pick up on my sarcasm there?)
But here is what will happen. Every PC user who got an iPad and is currently realizing that yes, the iPad is better than their PC laptop, will eventually need to buy a new computer. Remember, you do still need a computer for the iPad to be fully functional. And let’s be honest, while I personally only use my Macbook Pro a total of 20 minutes a week now (that’s down from approximately 10,000 minutes) there are still some things I need a real computer for (like syncing my iPad). So those PC using iPad owners will start to think about getting a new computer. And they’ve been in the Apple store a bunch of times looking at iPad accessories and visiting the Genius Bar. And while they were there they noticed the iMac. Maybe they even asked a few questions about it or saw a Specialist demonstrating it’s ability to run Windows (in case your job uses software that requires Windows). Now when it comes to shopping for a new computer, the Mac seems like an extremely viable option. Before owning an iPad they would not have even considered the Mac.
Thus Apple gains not just the sales of repeat loyal fans, but the sales of a new audience which helps their market share grow so they can develop a larger number of repeat customers. That’s the halo effect.
Farrell made another point that further discloses his misunderstanding of the iPad. He says, “Customers that were not Apple product owners told the Morgan Stanley team that Ipad ownership would discourage them from buying e-readers, notebooks or handheld video game systems. Jobs may as well forget launching an Apple version of a Kindle or a PSP, then.”
Ahem…the iPad IS the Apple version of a Kindle or a PSP. I know this is hard to understand because the usual business model is to create a lot of individual devices that all meet their own individuals needs. This sure does make a lot of money for the company since the consumer has to keep buying more and more junk. That is, until the consumer realizes there’s a better way.
I have to take issue with another comment that Farrell made. He says, “Since many of Apple’s sales are to repeat customers the Ipad is likely to cause that company more harm than it would other firms.” Farrell says that “many” of Apple’s sales are to repeat customers. Not “most.” Many. There might be some sort of market research out there that says otherwise, but in my experience selling Macs for almost 3 years, approximately 8 out of 10 buyers were new to Mac. Even at the end of my time at Apple I was always surprised by how often I had to explain, “Yes, the entire computer is IN the screen. There’s no tower.”
Apple really isn’t into doing business as usual. At every turn Apple has done something that has made all the analysts and the market researchers doubt them. And every time Apple surprises them all. When will we stop being surprised and just realize that Apple really knows what they’re doing?
Finally I will refute one last point made by Farrell. He says, “We are still sticking to our belief that pretty soon people will realise that the Ipad is not really better than any of the devices it is replacing. Users will chuck a bit of gear that is only really useful as a heavy drinks tray.”
I’m a blogger. I live my life on my “computer.” Writing. Internet research. Social networking. Photo editing. Posting. And watching the Mission Impossible trilogy. I do it all, and more, on my iPad and I don’t miss my Macbook Pro one little bit. That being said, my next desktop computer will be an iMac.
There are plenty of articles out there from well known respected tech bloggers who are saying the same thing. The iPad is a very powerful computer and with such an amazing product in their line up, Apple is about to become more successful than ever.