The iPad Unlikely To Be Another Newton

The announcement of Apple's latest device, the iPad, was met with cool reviews and a fall in Apple’s stock price, but the Apple team may be onto something. Granted, the new device is not going to be perfect, but it could be the next step in the growing market for larger handheld devices.

Handheld devices have experienced a spiraling evolution over the past couple of decades. At each stage, new devices have generally had one specialization or strength, but very few have successfully performed more than a few functions particularly well. Currently, there are some devices that manage several tasks fairly well, and plenty that manage one or two tasks very well, but virtually none that handles many tasks very well. The iPad may be the first device that will fill the role of several specialized devices, and perform each function as well as those more specialized devices.

Handheld devices perform a number of core functions – communications, Web browsing, gaming, entertainment and content storage – but within each of those categories there are a number of different subsegments. It used to be that business customers were more concerned about communications and work-related functions while casual consumers were more focused on features like entertainment and gaming. However, as consumers become increasingly wired, the needs of these two customer sets have become less distinguishable.

Communications and contact management are core functions of any handheld device. The earliest devices were simply for contact management and, possibly, scheduling. The first really big success was the Palm Pilot, which efficiently helped users manage their increasingly computer-centric life from the palms of their hands. As mobile e-mail became a priority for customers, the Palm devices lost ground to BlackBerry, which became the industry leader for basic, work-related functions, including phone, e-mail, scheduling and contact management. Almost any smartphone can now manage these functions, and clearly the iPad does not look to replace cell phones, as it does not offer mobile calling. However, as more and more communications are done over e-mail, the iPad does offer the advantage of a larger screen and keyboard than any cell phone can offer, which makes reading and writing e-mails easier for users.

Web browsing, and the related functions of mapping, Web-based chat, etc., also are readily available in many smartphones, but screen size continues to be limiting factor when using a device that fits in your pocket. The growing popularity of netbooks speaks to users’ frustrations with the small screen and keyboards of mobile devices when it comes to Web-oriented functions like browsing and e-mail. While the iPad does not offer the document editing and creation functions of a netbook, it also does not have the complexity of a PC, which makes netbooks less appealing for many users who are not computer savvy or don't need to manage complex tasks. iPad will face the same mobile bandwidth limitations of other devices, but will offer a much better user experience, particularly when coupled with a faster Wi-Fi connection.

Gaming has become a massive industry that is driven by adult consumers as much as by kids. Mobile gaming devices have been around for a long time, and some of the current offerings are impressive – even to those who aren't interested in gaming. Moreover, the explosion of the cell phone game market proved that users do not need gaming-specific platforms to enjoy mobile gaming, and they also have increased the market to include users who would not buy a gaming-specific device. With its large screen, longer battery life and processing power, the iPad certainly will outperform any cell phone when it comes to gaming, and perhaps even many gaming-specific devices, which also suffer from limited screen sizes and graphics.

Entertainment is really a broad category, and there are a number of specialty devices that currently address this market. The most obvious is video, be it movies or TV, which many people now watch on laptops, or portable DVD players. The second is music, which is available on the iPad, but existing platforms like the iPod are really more practical. More recently, printed material has been a very hot market, with explosive sales of e-readers like the Amazon Kindle. While many Americans don’t spend much of their time reading, those who do have embraced digital readers, and customer satisfaction with devices like the Kindle are extremely high. While the iPad is larger than the Kindle and other competitors in this market, its high-resolution, full-color screen offers readers more than just text as it opens the door to full-color magazine or text book reproduction. On the key fronts of video and print, it seems the iPad will match or exceed the quality of experience offered by existing products.

Lastly, most handheld devices deliver some form of content management, such as photos and personal videos. While very few people have handheld devices specifically for this purpose, the value of this function in a mobile device will be appealing to customers, and clearly the iPad offers a tested interface and appealing viewing platform for such content.

While the first-generation iPad is certain to have shortcomings, if it performs all of the offered functions at least as well as its smaller cousin, the iPhone, it will certainly have mass appeal to consumers. Starting at $499, the iPad is certainly not cheap, but the breadth of functionality may justify the cost to consumers looking for a multifunction platform. Many customers that would not pay $259 for a Kindle, or $249 for a Sony PSP, or $400 for a netbook may pay $500+ for a device that performs the function of all three. If consumers are willing to make room in their purses for a device that offers a better experience than the cell phones in their pockets, then the iPad, backed by Apple’s vast content and application resources, holds the potential to be more successful than many are predicting it will be.

Fedor Smith is president of ATLANTIC-ACM, a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools. In addition, he has authored several studies on telecommunications industry growth and opportunities. Prior to joining ATLANTIC-ACM, he worked at Alloy Media and Marketing in New York developing youth-oriented marketing programs around the evolving technology consumption and adoption habits of high-school and college-age consumers. He holds a degree in history and economics from Hamilton College.