128GB iPad: Why the price won't matter and Google's cloud strategy is flawed (for now)

128GB iPad: Why the price won't matter and Google's cloud strategy is flawed (for now)

Summary: Pundits are all over the high price and incremental update for Apple's latest 128GB Retina iPad. But guess what? These things are going to sell. And there's a lesson for Google here, too.

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Yes, $799 is a lot of money for an iPad. Or any tablet for that matter. One of the more appealing features of most tablets is that they provide a lot of computing utility for less than many notebooks, none of which can match their portability. And if you talk to the folks at Google, there's not much need for the 128GB of local storage that the price tag on Apple's latest incremental update to their iPad line buys you. After all, isn't that what the cloud is for?

In many ways, Google is 100 percent correct. When I bought my Nexus 4, I opted to save a few dollars and just buy the 8GB model, since the majority of the content I access lives in Dropbox, Google Apps, and various other components of Google's cloud-based ecosystem. I'll occasionally watch a movie or catch up with Game of Thrones on it, but it's primarily a tool for business communications. My next tablet will most likely be a 16GB Nexus 10, and I've never regretted buying an 8GB Nexus 7. I am Google's ideal consumer and business user, and guess what? I'm not the target market (or markets) for Apple's latest iPad.

So who is and what does this have to do with Google?

I live in the middle of nowhere and pay dearly to ensure that I at least have a reasonable connection to the Internet, bonding satellite, and DSL to do my job (and keep my kids happily surfing, and only complaining a little bit when Netflix buffers). I'm surrounded, though, by people who have a second (or third) home out in the country. As they sit out on their porches during the warm New England summers, an iPad loaded up with high-definition movies will be a welcome companion. On their intercontinental flights? Same deal. If Internet access is at all spotty (and, contrary to what folks who live in the big city believe, it's spotty or non-existent in lots of places that are still desirable places for the elite with disposable income to spend their time in), locally synced content starts looking a lot more attractive than streamed movies or music.

So the new iPad will appeal to luxury buyers in ways that no Android tablet will. But this isn't just about watching Avatar in full HD at your remote cabin in the Alps or on your yacht beyond the range of Wall Street 4G. There are vertical markets that will be very well served by a portable high-resolution display and a lot of local storage. Although Apple has made a point of not being an enterprise player, this is, in fact, an important enterprise play. Health care is the easiest example of a market primed for tablets with lots of storage. The pagers we see on TV's medical dramas have long been replaced by smartphones and notebooks, and tablets have eaten patient charts for lunch, especially in large teaching hospitals.

A single digital CT study, for example, can be half a gigabyte, and the realities of even fast networks require doctors and staff to pre-fetch such large files for review. Well-funded hospitals and the doctors they employ would gladly trade a less expensive Android tablet or iPad for one that can give them more immediate access to these sorts of files.

On-site engineering applications, oil rigs, remote geological surveys, and more also lend themselves to as much storage as possible, as much resolution as possible, and the best form factors possible.

Perhaps these are all markets that Google is happy to leave behind in favor of low-cost, cloud-centric hardware for mass consumer audiences. But the luxury market is important. Health care, science, and engineering, and even media and production markets are more important. Google has only brought its ultra-fast broadband to one city, and expansion of fiber networks from other carriers has ground to a halt. 4G has a long way to go before it even approaches ubiquity, and in-building cellular is a growing market at best.

Until then, no matter what the cost, Apple is going to make money on these things. Will they sell in the volumes that less expensive iPads do? No, of course not. But Apple is bumping up against a nearly inelastic good with its high-end devices in specific markets, and they're smart to make this option available. For Google to ignore these potential markets and rely on the cloud, a set of technologies that won't be universally available (or available at adequate speeds) for some time as infrastructure catches up to technology, is a mistake.

Chances are, Google's cloud strategy will win in the long run. The potential benefits are clear, and many consumers and businesses are already leveraging the cloud to their significant advantage. Our telecommunications, though, aren't nearly as robust as Google's cloud yet. Apple, clearly, has upped the ante in the meantime.

Topics: Apple, Broadband, Google, Health

Christopher Dawson

About Christopher Dawson

Chris Dawson is a freelance writer, consultant, and policy advocate with 20 years of experience in education, technology, and the intersection of the two.

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108 comments
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  • Why the price won't matter

    That is where I stopped reading, because the price does matter. The Mini is just one indication, as are all the low cost Android devices outselling Apple.
    D.T.Long
    • Amazon Kindle HD comes to mind.

      n/t
      Ram U
      • Do you have the sales data?

        Where is it? I'd love to see it.
        athynz
        • No I don't

          but that isn't what the media saying all along. The largest Android tablet seller is Amazon. and I thought I was a bit sarcastic there, but I think I failed. :(
          Ram U
    • RE: D.T.Long

      No kidding Android outsells iOS devices. Apple in ONE company Android in used by multiple companies! You're a genius!
      Ruubikon
      • the number of Android vendors is immaterial

        It's the platform, not the company.
        balsover
        • Really? So every sale of the Android

          platform takes that money and puts it in a joint account where all android vendors can draw on it as desired?
          baggins_z
        • It's the price, not the platform

          The vast majority of those Android devices are being sold at a loss (Amazon) or barely over break-even rates (Nexus).
          Vulpinemac
          • And yet the companies still make money...

            What's your point? That Apple gladly accepts money from the same people through multiple channels...

            Ok... No one is saying that Apple isn't profitable, but it becomes less profitable with every purchase or give away of a competing device.
            fatodubs
          • The point is that they're sacrificing profit for market share

            Amazon gets the advantage by making it easy to buy through their devices, Google doesn't get that advantage, but takes advantage of its built-in cookies for targeted ads. They could each make more money (profit) by upping the price as little as $50 and still be well under the price of any Apple-equivalent device--but they'd lose in total number of sales to their lower-priced cousins. You then have to ask where the price/numbers breakpoint is for maximum profit.

            Apple seems to have found their best pricing points as even with Android selling far more units (numbers) iOS has the most profits (price). Why? You can't claim marketing because obviously with the exception of tablets the Android platform clearly sells far more devices. You can't claim "fanboys" because Apple's iOS sales continue to grow.
            Vulpinemac
      • But with so many Android devices like phones selling for

        $29 to free, Yes price does have a factor.

        If all those Android devices where $199 and up, like iPhones and iPads, would it really "outsell" iOS devices?

        Yes, Android in used by multiple companies, and the carriers are giving many of them away.
        William Farrel
        • Thank you for confirming what has been said for some time now

          but dismissed by Apple haters. The largest factor in Androids growth over the past several years has been the low cost offerings, not the top of the line units. Price most definitely matters. Which market you are talking about determines how much it matters but in the consumer market where the vast majority of smart phone and tablet sales come from price is a big factor. I would love to see a break down of sales by price range then OS. I would suspect on the high end we would have a fairly even division of market share between Android and iPhone but in the mid and low end is where Android would shine market share wise with the (currently) iPhone 4S being in the mid range and the 4 being in the low range. This is not an attempt to disparage Android in any way. Even though I prefer iOS, Android is a great OS. Wonder if anybody has ever attempted to do that comparison.
          non-biased
    • This tablet is not for you...

      It is for someone who NEEDS the 128GB...
      RainyDayInterns
    • Android tablets

      What Android tablet even comes close to the sales of the iPad?
      runenfool
      • Hmm

        Kindle and Nexus combined are the only two that are needed but, all of them combined are about to take the lead.
        slickjim
        • Since Amazon isn't releasing Kindle sales information

          it's interesting how you got the actual number of Kindles sold last quarter. I'm not sure adding all the Android tablets together is going to get you anywhere near 22 million.
          baggins_z
        • Based on what, your dreams?

          Amazon does not release sales figures which isn't exactly promising and Asus has stated that Nexus shipments had grown since release to have reached 1 million a month. That was in December but lets be generous and say they were shipping 1 million a month through the whole last quarter, that is 3 million. I am also considering those as sales even though Asus specifically said shipments. Since Apple sold over 22 million iPads in that quarter you are claiming that Amazon sold at least 19 million Kindle Fires. Pretty sure they would be releasing sales figures if that were the case. Of course this is based on facts and I know you don't like those so will probably ignore all of this.
          non-biased
      • iPads wouldn't sell like iPads if ...

        multiple companies made them because there would be market fragmentation. If you want an oranges-to-oranges comparison, it would be better to aggregate the sales of all Android tablets and compare them to the combined sales of iPads/iPads minis.
        bkshort9
    • Huh?

      When it comes to the normal iPad, I really doubt the price will matter much (unless they price it at 900$ or above).

      They will still sell very well.
      Michael Alan Goff
    • So

      When did Android individually or collectively outsell Apple as far as tablets? I'm aware of the gap being slowly closed but as of right now there is no Android tablet outselling the iPad nor are Android tablets collectively outselling iPads.
      athynz