There has been much speculation on what an Apple tablet would offer, and the company did not disappoint with today’s announcement. Apple introduced the iPad with the core productivity apps an e-reader with and e-book store and 140,000 apps from the Appstore, all at a very aggressive $499 price point. This product will define the tablet form factor for the market, and it sets a high bar for other manufacturers.
Apple is offering a product that is very competitive with a netbook and offers a clear value advantage over the Kindle assuming Apple is able to line up the publishers for its e-book store. At first glance, the iPad offers little incremental value as an e-reader other than being color which has some value. However when comparing a $249 Kindle with this device the additional value is immediately apparent. For $250 more a consumer gets a device that offers productivity software, a media player for HD media, a music player and access to 140,000 cheap applications in the App Store. Seems like a pretty easy decision to me. This product will be very strong at $499.
Additionally the company is offering data plans for 3G connectivity that do not require a contract which are aggressively priced and could attract additional data plan users to AT&T. That said the majority of users will find Wi-Fi adequate for their needs as the product is most likely to be used in the living room, the classroom or the local coffee shop, and Wi-Fi is likely to be available in all these venues.
Aesthetically the iPad is a beautiful product that is a half inch thick with a beautiful display and very intelligent multi-touch controls. This new product is positioned on par with netbooks in price but well below most notebooks in both functionality and capability, so the consumer should find it easy to make their decision between the two It is not hard to imagine a use model where a consumer carries a smartphone and an iPad and leaves the netbook at home.
This is not to say that there are no challenges for Apple in this market. Communicating the value proposition for this new category of device is complex by Apple standards, and it will take a little time for consumers to digest exactly what the iPad offers, but the Apple Stores present a great venue for Apple to do exactly this. Additionally Apple has the challenge of lining up the same variety of content in its iBook Store that Amazon offers for Kindle, and they are not there yet. Additionally, for those customers that have been unhappy with AT&T those challenges still exist with the iPad. In short it is not a slam dunk for Apple but the prospects look good.
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