Winners & Losers 2010: The game-changer – iPad

We didn't see a need for it — until we got our hands on it. Now, Apple's tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

We didn’t see a need for it — until we got our hands on it. Now, Apple’s tablet may change how we define a computer.

See also, ‘ Can anyone catch up to the iPad‘ for a roundup of the products chasing the market leader.

&#9650 When Microsoft first got into tablets, Bill Gates predicted that within five years the devices would be the most popular computing products sold in America. Unfortunately for Gates, he was about a decade too early. The Windows-powered tablets that appeared as early as 2000 — chunky machines operated with a stylus — are instead footnotes in tech history. The tablet era is only now beginning, and Steve Jobs at Apple is the one defining it.

Jobs unveiled the avidly anticipated gadget on Jan. 27 at a highly choreographed event in San Francisco. Onstage in front of a rapt audience, he coyly asked if there was room for a new computing device that fell somewhere between a smartphone and a laptop. “We think we’ve got something,” Jobs said. “We call it the iPad.”

With those words, Jobs sent nearly every major consumer technology company scrambling to create its own version of the iPad. Apple was already the innovation leader in mobile hardware thanks to the iPod and the iPhone, but the iPad has cemented that position. The media tablet market, which research firm Gartner Inc. projects will grow by nearly 700% over the next three years, is one Apple essentially enjoys all to itself for now. More significantly, the iPad’s success is a growing threat to the companies that dominate the personal computing industry, such as Microsoft, Hewlett-Packard and Intel.

The iPad phenomenon has surprised almost everyone. At release time, the tech community was underwhelmed. “I think this will appeal to the Apple acolytes, but this is essentially just a really big iPod Touch,” Forrester analyst Charles Golvin told The New York Times. Another analyst wrote in a research note, “On balance, we view the iPad as a modest disappointment.” There was no camera, no Flash capabilities, and it could run only one program at a time. Worst of all, it wasn’t clear why anyone would pay $500 or more to carry it around. It was sleek and futuristic, sure, but what was it really for? Those rooting for Jobs to produce something revolutionary, as he had with the iPod and iTunes, were let down.

Such criticisms were forgotten soon after the iPad appeared in stores in April — and sales exploded. “Our initial thoughts were that Apple would sell 3.5 million iPads in the U.S. in 2010,” says Sarah Rotman Epps, a consumer electronics analyst at Forrester Research. “That was really, really wrong.” She now estimates between eight million and 10 million will be sold in the U.S., and more than 15 million globally. In the first 80 days alone, Apple peddled roughly three million iPads, more than triple the sales pace of the iPhone when it debuted in 2007. That gives the iPad the fastest adoption rate of any tech gadget in history, according to New York’s Bernstein Research. And users really, really love it. Last month, Apple received the highest-ever score for a computer company on the American Customer Satisfaction Index, largely because of the iPad. “The iPad isn’t behaving like other consumer devices,” Forrester’s Rotman Epps wrote on the company’s blog soon after its release. “It has a steamroller of momentum behind it that indicates incredibly strong demand for this entirely new form factor.”

In seeking an explanation for the iPad’s success, it’s natural to point to Jobs’s uncanny instincts. If Apple operated like other companies and conducted focus groups to gauge demand, perhaps there would be no iPad. But Jobs pursued his own agenda, and it was only after the iPad appeared that the public realized they did indeed want such a device. “To create a brand new product category, it takes a pretty ballsy company,” says Andrew Brown, director of the wireless enterprise group at U.K. research firm Strategy Analytics.

And Jobs struck at the right time. Computing today is more about accessing content and tools via the Internet than running software locally on a hard drive. Increasing wireless connectivity allows us to get online just about anywhere, and the iPad, lightweight and always connected, is ideal for this.

The unprecedented levels of speculation around Apple’s tablet prior to its unveiling also helped drive sales, as did the aggressive evangelism of early adopters. Many quickly realized that the iPad could replace other products, such as e-readers like Amazon’s Kindle, as publishers rushed to adapt content to the new device. The tablet’s ability to play high-quality video may preclude some consumers from purchasing extra TV sets. The iPad is tailored to web browsing, e-mail, and even viewing work documents, and so can take over some functions of a laptop. Indeed, notebook and netbook sales slowed after this spring, and many analysts fingered the iPad as the culprit.

Meanwhile, a huge network of application developers, already writing software for Apple’s iPhone, were eager for another outlet. To date, there are roughly 35,000 apps for the iPad, and new uses are constantly emerging. A handful of restaurants, for example, are toying with iPad wine lists. Programmers are creating speech-therapy apps for children that may cut into demand for specialized devices. At the Ottawa Hospital, chief information officer Dale Potter is equipping doctors with iPads so they can instantly access patient health records. “This is going to be a big revolution for health care,” he says. The hospital’s basement contains what he calls a “museum” of discarded portable devices staff experimented with in the past but found either too slow or awkward to hold.

This flexibility may be iPad’s true appeal. With an intuitive touch interface, portability, and a screen large enough that readers need not squint, it’s a malleable tool that developers and users are shaping to suit their own needs, finding applications that Apple itself likely didn’t consider. As a result, the iPad may prove more disruptive than anticipated. With newspapers, magazines and textbooks moving onto it, for example, it’s already helping to hasten the decline of print.

The iPad’s success has made the already self-assured Jobs even cockier. He made a surprise appearance on Apple’s earnings call in October, trashing the many competing tablets slated for release in the coming months. He reserved his strongest venom for Google’s Android operating system, which hardware vendors such as Samsung and Dell will use on their tablets. “His competitive mojo was in high gear,” says Gartner analyst Van Baker of the call. “He obviously feels the heat from Android and is ready for battle.”

With serious competition expected soon, Apple’s tablet dominance may not last. Google offers Android to manufacturers for free, allowing a host of companies that don’t have proprietary operating systems to get into the tablet market. Comparisons to the early days of the personal computing market are not far off. Microsoft licensed its Windows operating system to any interested PC maker, while Apple maintained strict control over both the software and hardware of its Macintosh computers. Windows proliferated, leaving Apple with a tiny, if high-margin, piece of the market. Android may well prove to be the Windows for tablets.

Jobs pilloried this notion during the conference call, noting that Android and applications that run on it have to be tailored to each device, diluting the quality. The fact that Apple controls the hardware, operating system, and market through which apps are sold creates a better overall user experience, Jobs argued.

Consumers will ultimately decide. Certainly, Android’s fragmentation has not hurt it in the smartphone arena, where it will surpass Apple’s iPhone in market share this year, according to Gartner. By 2014, the firm estimates there will be twice as many Android phones as iPhones. Brown sees potential for a similar pattern to emerge with tablets. “If you make them cost-effective, accessible and give people rich content, there’s no reason why tablets running other operating systems shouldn’t stand a good chance.”

Apple, however, has a considerable advantage by virtue of being first to market. The prospect of rival tablets, even cheaper ones, hasn’t curbed demand for iPads, either. Sales of the device may have come in slightly below expectations in the last quarter, but that was due to manufacturing constraints. Apple couldn’t produce enough iPads to satisfy demand. That is a good problem to have.

Can anyone catch up to the iPad?

Apple’s device has sparked a race among tech companies to get their own tablets — pegged to be the fastest-growing segment of the personal computing market over the next few years — into consumers’ hands. Here’s how the competition plans to take on the iPad.

Research In Motion

RIM’s PlayBook

It may be losing smartphone market share to Apple, but RIM is determined to stop the iPad from gaining traction in the corporate tablet market. In September, it showed off the PlayBook, aimed at the company’s core business user. It won’t be released until early 2011, however.


Dell’s Streak

Faced with slowing PC sales,Dell is looking to mobile devices for continued growth. One of its first efforts, the Streak, is a smartphone-tablet hybrid. The format may prove challenging, however: too big to be a smartphone and too small for a tablet, it could have a tough time finding an audience.


The Cisco Cius

Tablets present an opportunity for Cisco to play up one of its strengths: video conferencing. Its upcoming Cius tablet, billed as a “mobile collaboration device,” is centred on video calling and targeted at the corporate market, where Cisco is a well-known name.


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Nokia struck a partnership with chip maker Intel in February to work on a new operating system for mobile devices, including tablets. But while many competitors have already debuted tablets, Nokia has yet to detail its plans to combat the iPad.


(operating system)

Nearly 20% of the world’s smartphones run on Google’s Android operating system, a success that could repeat itself in the tablet market. Many manufacturers (including French company Archos) are using Google’s product on their devices, and some analysts predict Android-equipped tablets will together surpass the iPad’s market share.


The Samsung Galaxy

Samsung is a powerful force in most areas of consumer electronics, and it wasted no time in entering the tablet market. Its Galaxy tablet, on sale later this year, is being heralded as the first true competitor to the iPad. And it allows users to do something the iPad can’t: make phone calls.


HP’s Slate

Since the spring, the market has been waiting for HP to release a tablet running Palm Inc.’s operating system, exploiting its surprising US$1.2-billion acquisition of the smartphone maker. Instead, HP debuted a Windows-powered tablet in October, to little fanfare.