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The iPad Turns 6

In two weeks we have the six-month birthday of the iPad (announced January 27, 2010).  A few things have become clear, some aligned with my expectations and some not [see the surprised /not-surprised postscript on each paragraph]:

The tablet category is off to a strong start.  Apple has sold ~3 million units.  All the usual suspects and a host of minor players have announced plans to offer a tablet (the picture below is Velocity Micro’s Cruzer, whose launch was announced today).  Microsoft was talking a huge tablet game at its worldwide developer conference last week, despite being far behind in the reckoning of most analysts. [Not surprised.]

The key application for the tablet seems to be media consumption:  video, games, on-line reading of print media.  Secondarily it’s an extra PC in the home.  The “lean-forward/lean-back” argument is gaining proof:  the media consumption experience is better on a tablet that you hold in your lap like a book (“lean-back”) versus a notebook PC with its protruding keyboard where you put your hands (“lean-forward”).   [Not surprised.]

And a number of people say they use iPads for work (business or study).  I did not expect this because the iPad’s business applications, on-screen keyboard,  and file system are so limiting.  But I can see the it as a nice travel companion on a short trip where keeping up with calendar and e-mail is the main task, and there is waiting time to kill.  [Surprised.]

Apple’s decision to base its tablet on its phone architecture (versus its PC architecture) looks like the right choice.  Google in particular first said it would offer tablets based on Chrome OS (designed for netbooks) and then quickly backtracked and focused on Android, its phone OS.  They are fortunate to have such a good Plan B.  Microsoft’s CEO is claiming that companies are rushing to build tablets based on Windows 7, but most analysts doubt that a Win 7 powered tablet can offer a good user experience or hit a competitive price point.  [Not surprised.]

There are some obvious gaps in the iPad design that are opportunities for competitors:  removable memory card, USB port, a connector-less charge cradle, and multiple user accounts all come to mind.  And, oh yes, what about a camera for video chat?  Much of this will probably come with iPad v2, which is expected Q1 2011 (but what if they dropped it on the market in October instead?).

The Asian ODM industry that is the supply platform for most portable electronics is having a hard time competing with Apple [I’m truly surprised by this].  I think of Apple as the “BMW” of the industry:  great design, great quality, higher price point.  But, as products start to emerge, it’s becoming clear that providing the combination of screen size, snappy performance, and 10-hour battery life that the iPad offers at a price significantly below Apple’s is not easy.  I’ve briefly used prototypes from a couple of the major ODMs.  So far they are sluggish with smaller screens and short life compared to my iPad, and the price points under discussion are a bit high.

So, the market is off to a good start and beginning to take shape.  Apple has no serious competition six months in, and probably will not have much competition until 2011.  Apple is doing a great job leveraging its design experience from the iPhone and iPod touch, its ability to optimize the system gained by providing both hardware and software, and cost advantages from it’s combined iPod, iPhone, and iPad volume (i.e., in flash memory, A4 processors, and ODM relationships).

What comes next?  Android is clearly the competition to Apple’s iOS, similar to the development of the smart phone market.  But Apple has set the hardware and software engineering bar surprisingly high.  B players will not get to scoring position in this phase of the game.  Tablet competitors will need to bring together best-of-breed components and integrate them tightly to beat Apple’s cost/value proposition.   Our portfolio company, “Tap ‘n Tap”, which is focused on enhancing vanilla Android to make it a first class tablet user experience, can help a lot here.