iPad mini = iPod Nano. It’ s mp3 players all over again. With Android as no-name alternative and Microsoft Surface Zune
Looking at the evolution of things in tablet market, it is amazing how similar they are to the development of mp3 player/digital music market.
Apple wasn’t the first to invent an mp3 player. It only was the first one to understand what digital/portable music is about. Putting a huge chunk of your music library on the device to always have it with you. Great user interface for “navigating content” – finding and playing any song you own and getting rid of complicated stuff. With enough battery life to last you a day. And with easy and cheap way to buy any song you want.
Hence came the iTunes and iPod, and Apple ran away with digital music market. Both in devices and services.
After mp3 player market, largely created by iPod, exploded, there came the countless competitors trying improve on it. There were cheaper mp3 players, there were more functional mp3 players. Some had bigger hard drives, some used flash memory. Some came with FM radios, others added video playback. Big player, a household name in consumer electronics, the inventor of a portable music player concept with its own music/entertainment empire –Sony – got involved. Then PC software juggernaut – Microsoft – came out with Zune. They never made a dent.
More than a decade after its creation, iPod still dominates digital music player market and iTunes is the biggest music store in U.S. All through that time Apple was calmly watching its competitors fight for scraps with array of useful and not so useful features and technologies to improve on iPod. And when the right technology and market demand got there – Apple came out with iPod version of its own, and brought all competitor efforts to naught. iPod Nano, video iPod, iPod Shuffle, iPod Touch…
Some may say it was Apple losing its innovator chops, and following competitors instead of creating new markets, as they do now with iPad mini. But all I see is the company with enough confidence in itself not to pay much attention to market noise and knee jerk competitor moves. With enough self-awareness to understand that it may never be able to go after every nook and cranny of the marketplace. And not to care about it. Being sure enough to take its time, to find a way to leave rivals in the dust where it matters most to Apple and its customers.
And here we go again with tablets and iPad mini.
Apple didn’t invent a tablet. Microsoft was there a decade before. Nokia 770 Maemo based Internet tablet came out in 2005. One of the first Android tablets – Archos 5 – was announced months before iPad.
And yet, it was Apple who finally figured out what the tablet computing is all about, and ran away with the market. With interface just right for the user needs – like on iPod. And with ecosystem/content offering in the form of App Store. A service much more defensible than iTunes were in 2001, and which no rival will be able to best anytime soon.
It’s been 2.5 years since the first iPad shipped. Apple sold more than 100 million of them already. With much more formidable and determined competitors than anything iPod faced in its first three years of existence. Yet, we are still waiting for any competitor to make a dent in iPad’s dominance. Google has been trying it with Honeycomb, ICS, Jelly Bean, myriads of OEMs and now Nexus 7, without much luck. Amazon has a bunch of low-priced Kindle Fires lined-up, moved a few million of them, never really mattered to anyone except Google. Microsoft is coming out with its Zune like effort called Surface…
And Apple comes out with an iPad mini and update to iPad 3, kneecapping all the competitor efforts before they even get underway. Who cares how cheap Amazon Kindles are, or how low Google brings Nexus 7 price down next week? iPad mini at $329 is an answer to at least 50% of potential customers who were looking for cheaper and more portable tablet. And, with 4th generation iPad – Apple just made all Google’s upcoming tablet spec and performance gain claims sound like a joke. With Microsoft Surface looking nowhere near as good as it looked just yesterday.
Are all high-tech device markets where Apple decides to play hard are gonna end up this way? It certainly looks so, today.
We may have been fooled by rapid Android gains in smartphones. But that was a very special case. There really is no true competition in a huge and most lucrative part of mobile phone/smartphone market. It is controlled only by a handful of carriers. Who, much more often than not, decide who will win and who will fail. And hardly anywhere that market power is as strong as in the U.S., where you don’t get an option for a cheaper post paid plan, even if you pay a full price for a device elsewhere.
Apple is an exception to that rule. They created a truly revolutionary highly desirable device in iPhone, that hardly any carrier could refuse to have and subsidize. And when, because of exclusivity contracts, those carriers that didn’t have one, started bleeding best customers to those who had iPhone – they had to create an alternative. And Google was very lucky to have it, at the right time. With a huge kickstart from carriers they’ve first got a foothold, and now are where they are.
Apple is also not without fault here, be it due to carrier subsidies, or limited manufacturing capacities in early iPhone days, I have no idea. But they’ve got a really lucrative business arrangement in smartphones. The one with huge margins, and which, in just 5 years, accounts for half of their profits. And they do not seem to be ready to step up their game, for now.
But the last 2 other (truly free and competitive ) markets Apple went for show, that they can be much more nimble and fast than anyone else. In fact – in those markets created by Apple and were they really play hardball, with no impediments – no one’s even able to touch them for years.
So no matter what Microsoft gains, or what Google or Amazon does, I’m pretty sure we will still be talking about 50% iPad market share in 2015.
[Update: My collegue Hillel Fuld strongly disagrees with me about iPad mini and thinks that it was a very stupid thing to do. Check out his post here: Apple iPad Mini: We’re Desperate and We Know it ]
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