Analysts' take on iPad as mixed as device's mission

While the “civilian” fanboy response to Apple Inc.’s iPad was as expected the analyst community, which also includes a number of fanboys and girls, appeared more rational.
Most comments were regulated to the embedded functionality of the device with few commenting on its networking capabilities. The device is being sold in both wide area network capable and Wi-Fi only versions, which seems to meld the choice given to consumers looking at either Apple’s iPhone and necessary AT&T Mobility 3G access and its iPod Touch, which sports only Wi-Fi connectivity.
And, even with 3G connectivity available, the device will not natively support voice services. However, the data pricing plans drawn up for the device, $30 per month for unlimited 3G data without a contract, could impact current pricing models for embedded laptops and netbooks. Many carriers, including AT&T Mobility, continue to charge more robust computing devices $60 per month for 5 gigabytes of data transmission and require a two-year commitment. This model could be forced to change with the iPad’s new offering.
On the bandwagon
The most common compliment to Apple’s new device was that its $499 starting point was very aggressive and would give those consumers looking at a netbook a reason to stop by their local Apple outlet. The netbook device was considered by many as the breakthrough technology offering of 2009 with models typically selling for between $300 and $500.
“In terms of features, product design, software and content, the iPad delivered on all its promises,” said Dale Ford, SVP at iSuppli. “And at a starting price of $499, the product even exceeded expectations.”
Others were wowed by the devices possibilities as both a replacement for netbooks as well as for electronic books, also known as e-readers.
“Will it catch on? Based on a few minutes of hands-on playing with one, absolutely,” said Yankee Group’s Carl Howe “The iPad bears the same relationship to a netbook that the original Mac did to DOS PCs: it’s a complete rethinking of the reading and media consuming experience. Apple’s full-color, full motion device makes not only netbooks, but any product with an E Ink display look tired and dated. And if you’re a publisher who lives and dies by what your content looks like, you want to be talking to Apple now; any other digital distribution is going to look very last decade.”
Neat, but …
However, once beyond the pricing and some of its embedded possibilities, reactions to the device were decidedly mixed.
“… with the iPad straddling multiple product categories and with the usage model for the product still unproven, it likely will be a number of quarters after shipments begin before whether we know the product will have a revolutionary impact on the technology world,” iSuppli’s Ford noted.
Ford’s colleague Dr. Jagdish Rebello, senior director and principal analyst at iSuppli, also questioned whether the iPad’s feature set, while diverse, was enough to sway consumers to fork over the dough for functionality they may already possess.
“The question for Apple is what is the usage case for such a product?” said Dr. Rebello. “What does it do that other products don’t do — and what does it have that will make a large number of consumers want to buy the product?”
Other criticisms noted that the device did not really offer any advantage over an iPhone or iPod Touch other than a larger screen. And while the larger screen is expected to provide more real estate to view content, the device’s size takes away any thoughts of mobility and regulates the devices use to either a home or office where an owner is likely to already have either an Apple laptop with more functionality or a desktop computer.
There was also concern that the device’s lack of USB ports, a camera and support for Adobe’s Flash were glaring demerits compared with significantly cheaper netbooks.
“Apple kept it simple in the hardware, likely to prevent the sort of cannibalization and price compression that has occurred in the PC market since the advent of the netbook,” noted NPD. “No camera and no voice forces the experience towards plain vanilla media consumption and allows them to leverage the iTunes store to deliver the content to make this product go. It also seriously separates the iPad experience from the Mac one and hopefully prevents trading down, or more insidiously, price compression. However, with no changes yet to the purchase model of TV shows or movies through the iTunes store it doesn’t appear that this will fundamentally alter consumers’ in-home media consumption.”
e-readers on notice
Comments on the iPad’s impact on the e-reader market was also mixed. While Apple appears to have set up a compelling business model with books being sold and stored in its iTunes storefront, the device will be competing against some established players in the space.
“In the short term, though, I don’t see the iPad demolishing Kindle sales,” said In-Stat analyst Stephanie Ethier. “Today’s e-reader customers are looking primarily for a seamless e-book discovery + purchase + download experience. In other words, they’re buying Kindles to read. Sure, the current generation of e-readers can support a number of other functions, like PIM and other computing functions, but fundamentally, customers are purchasing Kindles and Sony E-readers for a revolutionary reading experience.
Future generations of e-readers are expected to evolve in such a way that the line between e-readers and tablets will blur substantially. The immediate impact the iPad has on the Kindle is that the iPad is going to ignite the tablet market. Therefore, the blur between tablets and e-readers starts within the year, and will impact the outlook for future Kindle, and all e-reader, sales.”
Stephen Baker, VP of industry analysis at NPD, might have summed up the iPad’s potential best.
“Small, slick, typically great looking, and well priced at $499 it is an interesting, but ultimately not breakthrough device,” said Stephen Baker, VP of industry analysis at NPD Group. “In fact it reminds one very much of a netbook.”