How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

Summary: Is Apple's biggest threat embodied in a $159 nobody-brand digital reader sold by the Dillards department store?

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TOPICS: Apple, iPad, Mobility
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Image courtesy Flickr user ferret111.

On the eve of yet another of Apple's uniquely scripted branding events, a question comes to mind about who threatens Apple the most. Can the Apple media juggernaut be slowed by Microsoft or even Google? Or, in fact, is Apple's biggest threat embodied in a $159 nobody-brand digital reader sold by the Dillards department store?

For those of you unfamiliar with Dillards (the store, not the progressive bluegrass band), the company is a $7 billion dollar chain of department stores (I know, I only vague remember them from my childhood, also) located all throughout the southern United States.

The company has 330 stores located in 29 states, has 167,000 employees, and is one of those stores you go to when you're trying really hard to be nice to your wife or a parent. Department stores were big in the days before Wal-Mart and the warehouse superstores.

Sears, Macy's, JC Penny, Saks, and Dillards are all department stores. Most of us geeks have heard of the names, but with the exception of Sears, where our dads took us for tools before the sacred birth of Home Depot, most of us have rarely ever gone inside. After all, department stores generally don't sell CAT5 cable, Radeon 5790 cards, copies of Starcraft II, or SATA/IDE to USB adapters.

To us geeks, department stores pretty much don't exist.

But here's the thing. To the rest of non-geek America, department stores are a big part of how they buy stuff. First, the rest of America likes to buy clothes. I know. Shudder, right? Second, the rest of America actually likes to go the mall. Ewww! And the rest of America doesn't instantly think of Newegg or Cyberguys when they want to buy something, they think of buying things in the stores in the mall.

Yes, without a doubt, mall sales have taken a hit in our dot-com world. Amazon (and to a lesser extent, eBay) have taken sales away from department stores. But there are still millions upon millions of people to whom the latest Apple announcement doesn't even register on their consciousnesses, because they're mostly concerned with buying a new pair of pants, slacks, jeans, dungarees, or whatever regular, non-geek people call the stuff that covers the lower part of the body these days.

All of this brings us back to Dillards. Dillards, it turns out, also knows how to sell online. My wife recently got an email (you could call it spam, but she likes the store, so she calls it "news") that contained an ad for the Pandigital "NOVEL" ebook reader, basically a tablet computer.

It's $159, color, and Android-based. It reads PDFs, plays music, lets you check your email, and even download applications. Unfortunately, it's only tied to the Barnes & Noble bookstore, but even so, for $159 and color, it's not a bad deal. The Android Kindle app might even run on it.

My wife actually has, and loves, the Pandigital photo scanner. She scanned in almost two thousand snapshots taken during her pre-digital camera days. The scanner was pretty good, so the ebook reader might also not be all that bad.

It also probably won't be exceptional. It's not a wildly over-hyped, overblown iPad. It's not $600, and nobody at Dillards is asking you to kneel before a "Genius" and kiss his or her ring before buying.

It's just a $159 color pad computer, and it can be bought from your local department store. More to the point, your mom or grandmom can buy it at your local department store.

This, then, is the threat Apple faces. It's not coming from Microsoft's almost-promising Windows 7 phone. It's not coming from Amazon or Google. It's not even coming from Barnes & Noble.

It's coming from brick-and-mortar stores and online retailers most of us geeks have never heard of or, at least, pay absolutely no attention to. It's coming from also-ran products that most of us geeks would never stand in line for overnight, discussing whether it'd be cooler to play Zerg or Protoss when the next Starcraft comes out.

Most non-geek Americans only vaguely know the difference between a shortcut and an application. Most non-geeks think Droid and Android are the same thing. And while most non-geek Americans are aware of the iPad, when it comes to plunking down $600 for a genuine blessed-by-Steve-Jobs device or $159 for one that pretty much works, guess where the money is going.

Yep, $159 is going to win every time.

But wait, you say, what about Amazon's $139 Kindle? Indeed. Good question. People will pay $20 for color. Simple as that. Without a doubt, we're going to see sub-$100 close-enough-to-iPad devices within the next year.

The true faithful will buy Apple. But the rest of America will buy the good-enough model. That's why Windows has so much more market share than the Mac ever had.

Especially in a deep recession, good enough will trump 4-times-more-expensive every time. That's why Apple's biggest threat is commoditization. You know what'll make Steve nuts, though? Just like many Android buyers claim they own a Droid, many cheap, knock-off tablet buyers will claim they bought an iPad -- and they won't know enough to know the difference.

Topics: Apple, iPad, Mobility

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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208 comments
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  • Hey Apple's going out of business... AGAIN.

    Haven't people been proclaiming that cheap mediocre products were going to drive Apple out of business for decades?
    Tigertank
    • Apple will NOT go out of business with this, but, it WILL reduce their

      volume of iPads. And, it is cheap, but, does not sound that mediocre. It might even have an SD slot and USB connector!
      DonnieBoy
      • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

        @DonnieBoy - From Engadget:"Surrounding the .5-inch thick device is SD card slot, a 3.5mm headphone jack and a mini-USB port. There's also a volume toggle, a WiFi on/off switch"

        But of course, they hated it because of the resistive touch screen. They don't seem to understand you operate a capacitive and resistive screen differently. So as usual, they bashed the crap out of it.

        They closed the article with something along the lines of "We don't see how a device of this quality has made it onto so many store shelves." Gee, we don't all have six or eight hundred dollars to throw Apple's way, so maybe it really IS good enough.

        I will wait until Google starts allowing the tablets access to the Market. Right now, it has to have phone capability to qualify, and only a couple of 7" devices do.
        babyboomer57
      • mediocre looks to be a nice description.

        @DonnieBoy

        Yep. android tablets are a raging success so far. So far they have all been poorly thought out.
        Bruizer
      • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

        @DonnieBoy "And, it is cheap, but, does not sound that mediocre."

        And, I wish, you, would learn, to write a, simple, sentence.
        ewertz
      • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

        @DonnieBoy: according to the specs available here <http://www.pandigital.net/search.asp?productid=392>, the thing does have USB and a "2-in-1" card reader. The specs don't say which processor is used, but I'm betting on Atom. Curiously, the specs say the operating system is "Windows 2000/XP/Vista/7, Mac OS X." Android is not mentioned. Just as a guess, I'd say this is a netbook under the hood, and would probably run your favority Linux netbook distro without much trouble.

        The screen is 800x600, which is a bit small for a netbook, but it ought to work just fine as a reader.
        barence773
      • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

        According to the specs on Pandigital's site, the thing does have USB and a "2-in-1" card reader. The specs make it look like a netbook, with an ARM processor. (One curious note: the online version of the specifications for the white version say that the OS will be, "Windows 2000/XP/Vista/7, Mac OS," but not Android.)
        barence773
    • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

      @Tigertank Yup, and here's to another 10 years !
      inkcorporate
    • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

      @Tigertank
      Yes, just like they've predicted MS would fold to linux. However, sometimes a threat can be real. In most of those "threats" you really didn't have something that worked as well as the Apple product. With Android, it actually does some things better and it is improving rapidly. When you look at the hardware there's no advantage to Apple Iphone or IPad hardware. Particularly with the IPhone currently, there are Android based products that do everything that IPhone hardware can do and do it better. Cameras 8Mpix back and 1.3 front, memory upgradeable, screen size and resolution, price (cheaper), performance (1ghz ARM), graphics, gps (turn nav free), radio reception (better), speakers, mics, network performance (4G), battery (replaceable), etc. etc. and do it all cheaper.

      So if someone creates a $159 that's close enough. It's gonna hurt.
      DevGuy_z
    • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

      @Tigertank - and for a while, it almost did!
      JimboInChi
    • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

      @Tigertank yes... they have .. yes they are wrong. This "Novel" may have a different impact - check out www.slatedriod.com - they have a Pandigital hack session that is nothing but amazing what they are doing to the stock OS of this box. Will it beat an iPad.. maybe not - but at less than $150 bucks (Bed Bath and Beyond has them too with 20% coupons) maybe it does not have to.
      Jim888
    • Umm wait a second

      @Tigertank Those Cheap (by Apple Standards), Mediocre (not all of them were but to an Apple Snob that didn't matter) devices almost did Drive Apple out of Business!

      Crud, 140 Million Investment from Microsoft and Steve Jobs "Next" buying Apple is what saved them...

      If you think that Jobs and the boys aren't in for a rough ride here then you better really think twice about this because the average joe or jane will settle gladly take an Android based Tablet if the Apple offering is that much more expensive.
      slickjim
    • Apple is as likely to go out of Business ...

      @Tigertank ... as Mercedes-Benz and BMW. That said, they might very well see their marketshare start to slip if these kinds of products start coming from Dell, HP, Google, or any of a number-of Android-base devices makers. Amazon needs to bring-out a color device pretty soon now.
      M Wagner
    • Thats right 3 months later and I'm back

      Todays headlines read: ipad is the best selling gadget of all time...

      http://www.informationweek.com/news/storage/portable/showArticle.jhtml?articleID=227700347&itc=ref-true
      Tigertank
    • RE: How a mediocre iPad knock-off could foretell Steve Jobs' eventual doom

      @Tigertank
      The tides are changing and China's manufacturing power has grown 10-fold in the past decade meaning the ability to manufacture good quality products that replicate Apple products' functionality (even if slightly under-par in some aspects), is more relevant now than in decades past.
      Take the iPad in comparison to the cheap Android tablets coming out of China. Just a year ago even the best Android tablets from China were cheap resistive screen models with underpowered CPUs and incomplete firmware. A year later, and new Android tablets such as the AG3 from http://www.androidgold.com are sporting capacitive screens, Cortex A8 1GHz CPUs, and at prices that are certainly going to put pressure on Apples's bottom line.
      Add to that, the inevitable decay in Steve Job's health and me thinks the future of Apple may be due for another downswing in profits.
      AndroidGold.com - Best Android Tablets and Phones
  • I basically agree with you except..

    without Android these products would not exist. Therefore Google is the real threat. The commodity HW makers are just making a buck where they can on low margin stuff.

    This has basically been my view for some time. Apple may break the ground and make a lot of money in the beginning, but ultimately the commodity market will prevail. The question is whether there are enough products and product categories for apple to continue to do well. Last time around they lost out.
    Economister
    • except apple makes more profit selling its computers than anyone else...

      @Economister - this game is about profit, not units sold.. and Apple has been out growing the market and every other computer manufacture in the world in profits for many, many years now.. HP, Dell etc may outsell apple in terms of numbers, but when you are in the commodity business with razor thin margins it doesn't necessarily translate into huge profits.. so who won again? if losing means i make more money than you (again, profit, not revenue) sign me up for losing every time..
      doctorSpoc
      • True, Apple will make a lot more on the sale of each unit - UP FRONT.

        But, Google will make money on advertising, application sales, and not have to deal with hardware issues, nor OS issues. Those are all the problem of the hardware vendor.
        DonnieBoy
      • It's all about the volume and overhead

        @doctorSpoc - Hmm, if I sell 5 Million devices that make me $20 each - that's $100,000,000. If I sell 1 Million devices that make me $100 each - that's also $100,000,000. However, if the drastically lower-priced $20 profit item is accepted by the market, the probability is that I'll sell more of them because of the lower price and word of mouth gain me more penetration and recognition that the more expensive unit.

        In the long run, $20 per unit will result in higher profits through higher volumes. And, since I don't have the overhead of dedicated stores and the management required for a dedicated restrictive App store, I'll be even further up.
        Timpraetor
      • re:except apple makes more profit selling its computers than anyone else...

        @doctorSpoc >>>this game is about profit, not units sold.. and Apple has been out growing the market and every other computer manufacture in the world in profits for many, many years now<<<

        Uh huh. And as a consumer, given the choice between giving a company an outrageous profit at an outrageous price and giving another company a modest profit at a modest price for a comparable or better product, can you guess which one I'll give my business to?
        richdave