As part of the refresh of its iPad lineup on Tuesday, Apple reportedly could release a new Smart Cover that includes an integrated keyboard. That would be a welcome development for many business professionals, albeit one that likely comes with a premium price tag. However, Apple is not going to let accessory makers walk away with all the revenue from this high-end add-on forever, and it's also not going to want to stand by and get out-innovated by Microsoft on this front.
In light of Microsoft Surface's recent struggles, it's easy forget to what a tizzy the tech press made about the Surface when Microsoft first announced it. I was skeptical because I had covered the highs and lows of Microsoft's Tablet PC debacle during the previous decade, but the one thing about the Surface that blew me away was the keyboard cover. I called it the most innovative thing about Microsoft's homespun tablet.
While Surface sales have been slow and the product reviews have been tepid at best, the Surface's Touch Cover has been almost universally praised (the Type Cover isn't bad, either). In fact, every person I know who actually uses and likes a Microsoft Surface tablet uses it with a Type Cover (or Touch Cover) and praises the keyboard cover as one of the product's most important features. These are all business professionals and most are former iPad owners.
Of course, there are many third-party keyboards for the iPad from leading accessory makers like Logitech, Kensington, and Belkin. Apple even carries some of them in its stores. Even though none of these keyboards are as good as Microsoft's Touch Cover for the Surface, there are far more of them sold than the Microsoft keyboard covers.
James Kendrick and Harry McCracken have written extensively about using the iPad as a laptop replacement by pairing it with a keyboard. Their experiences reflect a lot of what I've heard from professionals who love using the iPad as a primary computing device and not just for reading and viewing content. However, I've been seeing the Microsoft Surface Pro started to win converts among some of these users (especially those with ties to backend Microsoft systems). But, the integrated keyboard cover is one of the main attractions that these users cite for making the switch.
If Apple were to release its own innovative keyboard cover, that could certainly help it retain some of these business professionals who were among the iPad's earliest adopters but are now being tempted by solutions like the Surface and the Asus Transformer.
Last month I was discussing this with my London colleague Charles McLellan and predicting that Apple was overdue to release its own keyboard cover for the iPad, and we both agreed that Apple isn't going to stand by forever and watch accessory-makers gobble up all the profits from what has turned out to be a highly-lucrative iPad add-on. Microsoft's Touch Cover retails for $79 ($129 for the Type Cover) while the keyboard cases for the iPad range from a $29 to $129 retail price. Since Apple always charges a premium for its branded accessories, we should expect an Apple keyboard cover to cost at least $99 to $149.
In 2012, Apple made over $2.5 billion in net sales from accessories. That's up from about $1 billion in 2006. It's no secret that the accessories market has high profit margins. While the brutal competition in the smartphone, tablet, and computer markets keep prices in check and can eat into company profits, accessory prices vary widely and are driven by fashion and branding. Materials costs are typically low for accessories and a brand like Apple can charge a premium, although the company often takes this to an extreme with its own branded cables and cases costing twice as much as third party products, for example.
With the iPhone 5c and the iPhone 5s, Apple has returned to selling its own smartphone cases again (for $29 and $39). The company is already selling its popular Smart Cover for the iPad, ranging from $39 to $69. Through its retail and online stores, Apple also sells $79 and $99 Logitech keyboards for the iPad. With the announcement of the 2013 iPad line on Tuesday, don't be surprised to see Apple attempt to innovate the tablet keyboard and grab a piece of this lucrative accessory market with a premium solution.
Whatever Apple announces on Tuesday, ZDNet will have it covered from every angle that matters to business professionals. If there are any other subplots in the iPad drama that are especially interesting to you, post in the comments below to let us know.