iPad musings - How big is the market for this anyway?

iPad musings - How big is the market for this anyway?

Summary: Maybe I'm the only person who's not doing handstands re: the new iPad. It's a slick device but is the market really there for it? Here are some points to ponder....

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TOPICS: iPad, Hardware, Mobility
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Back in my college days, I worked with a fellow at an auto parts warehouse. He asked me “Man, how many books do you read in a year?” I gave a number in the dozens. That produced a scoff from my co-worker and the following comment “I haven’t read a book since I left high school!” He was, incidentally, a man in his 40’s and he was dead serious.

I kept thinking about that comment as I read my daily dose of fawning comments about the iPad. Everyone out there seems to unquestionably think this device is a great thing. If they have any criticism it’s usually the name of the product.

I think everyone’s giving Apple too much of a blanket attaboy on this. I may be wrong but I wish more people were looking at this device with a more dispassionate eye.

Let’s consider that:

1) There’s a finite market for tablet format e-book reading devices.

2) That market is smaller than the market for PCs, laptops, netbooks and PDAs. How do I know this? I see very young kids with cell phones. I see all kinds of families, children, etc. using home PCs and notebooks. I don’t ever think I’ll see casual readers plunk down big bucks for this device. Will trendy, early adopters get one? Sure! Will most folks? I don’t think so. If there are 300 million US citizens, how many will buy an iPad? Not that many I’m afraid.

3) There are already millions of Amazon Kindles already out there according to Jeff Bezos. How many people will abandon a Kindle to buy an iPad? Sure, some people will but the high switching cost will mean that Kindle switches may take years to materialize. And don’t forget the Sony Reader. By December of 2008, Sony reported they had sold 300,000 units of their device. That number has most certainly gone up since then. That prior install base of Sony and Amazon products may have already snagged a lot of the early adopter market. The real question is how many more buyers are left?

4) At $499, one could buy a lot of books. Seriously, how many people do you know that spend anywhere that much on books in a year? In two years? In five years? Ever? The fellow I used to work with wouldn’t spend that in a lifetime. I looked up the size of the book industry. The current market estimates fall between $26 -40 billion annually depending on whose stats you review. That works out to a maximum of $133/US citizen. I think the iPad would have to price out at something like $99 to get really competitive with books.

5) The iPad is a discretionary purchase. It is not a business requirement. It is a convenience for those who like to read. More specifically, for those who like to read a lot. Sadly, I’m not convinced that this describes a lot people. No, we’ve got generations of citizens who get their political knowledge from Jon Stewart’s comedy show and their current events from TMZ.

I know what you’ll say “But Brian, the iPad can do more than present book content!!!!” And, you’re right. But recognize that’s how the product is positioned for now: an electronic book reading device. Yes, I know that someday many of us will be able to pick up our Kindle/Sony Reader/iPad/et.al. device in the morning and see it has all of today’s news, comics, movies, television shows AND books pre-loaded for our convenience. Yes, I get it – it’ll be like TIVO for all kinds of media except the display device is part of the solution.

But, not everyone is ready for that yet. Some of us may never be ready. Some of us still like to pick up a real book, a real newspaper, do the crossword and the Suduko on paper, etc. I know I do. I like that a book doesn’t need a wi-fi connection or a power cord to recharge it. I like that I can read a book in any light – even bright outdoor sunlight. I still can’t do that with my cell phone. I guess I don’t find these devices to be all that amazing or indispensable yet. And, they’re expensive.

Last week, I sat next to a fellow on an American Airlines flight. He was a 7 million miler (I’m just a 3 million miler myself) and he had a Kindle. He was reading the NY Times on it. He particularly loved how he could load lots of books on it before flying out to Asia for weeks on end. For him, an e-book is a great technology. But how many of us live his lifestyle? Not many.

I’m keeping an open mind but I’m not saving my spare change to buy one of these either. I need a better value proposition for the iPad for now.

On the plus side, I am pleased that Apple continues to innovate and step outside its comfort zone. That's something that's something too few tech firms will or can do. Maybe I'll get more rabid when their next breakout product rolls out.

Topics: iPad, Hardware, Mobility

About

Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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30 comments
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  • I think you've hit it.

    The iPhone worked because it was a novel and well designed *phone* that came in very late to the game at a point where everyone is conditioned to carry a phone.

    The iPod took a tricky approach - it wasn't the first in that market either - by a long shot, but people forget that Apple targetting their core base first - then with them out there for a year promoting the iPod, moved it over to the PC.

    But the iPad is in a very strange position. As you note, the eBook market is both saturated and small. The iPad is almost certainly going to sell to the Apple faithful - their willingness, nay eagerness to buy anything new from Apple isn't legendary without cause - but outside of that select group, things get murkier.

    The iPad doesn't really quite respond to any existing niche. It's like a dedicated eBook reader - but more expensive and larger. It's like a slate laptop - but a seriously crippled one - and it goes head to head with netbooks, which in general are cheaper and more powerful.

    I don't think most people are going to carry both a laptop AND an iPad, and since the iPad costs more than a high end netbook and does less... Well...
    TheWerewolf
    • It's just who we are: "techies"

      You're Really Off Base on that one. In a year or less, most of us techies
      will have a iPad, we already have the iPhone and a Ipod touch, picking
      up a iPad will be the next logical choice. Why? Because its something
      we crave, it's what makes us what we are "techies" We may end up
      having 2 or 3 of them, One for the car one in the kitchen and one by
      the bed, you get the idea. You need to think more like a person in
      10?s, not someone from the 60's. The iPad will help us with our
      financial planning, let us read a book when we have time, text
      message to our secret lovers, play an hi-tech game, just about
      anything we do now with are other Apple toys. The iPad will be the
      way of the future and Apple will again change the way we look at
      things ?again?.

      MacNewton
      MacNewton
      • Lust

        Steve Jobs has said that he wants to develop products that he would lust
        after.

        He's done a pretty good job of doing just that. And those who discount
        the future of the iPad are betting against his record.
        Ken_z
    • Why I think some people should buy an iPad!

      by MacNewton


      In today?s hi-tech world, most people are technical morons. Yes, the
      young and the old are tech halfwits. When it comes to explaining how
      new gadgets work these dunderheads do not have a clue. If you try to
      educate them, they look at you as though you just landed your space
      ship in their backyard.

      If you try to dummy up the conversation with hand-drawn diagrams
      the thickheaded ninnies will exclaim, "Yes, Yes, now I understand!"
      Nevertheless, do not believe them for a minute, this is just a tactic to
      hide the fact that they are hi-tech nincompoops that cannot even
      figure out how to adjust the car radio.

      The iPad is the computer of the future!

      Apple has finally developed a computer for the technical challenged.
      You do not have to know how to save files, read a directory or format
      a hard drive. You just turn it on by touching a little button and tapping
      on a little screen icon and off you go to whatever silly little app that
      you just purchased for a dollar. To turn it off you just push the same
      silly little button. If you have an iPhone or an iPod touch, then you're
      fully trained and are now ready for harvesting by Apple Inc.

      Will anyone buy it?

      Yes and in the thousands, Millions will be sold this year alone. Billions
      will be sold over the next two years or so.

      Why? Because Steve Jobs knows that not only will the technical morons
      buy them, but all the smart ass techies like myself will sell our souls to
      get our sweaty little hands on them...now let me see, should I get the
      3G model with 64GB flash drive...
      MacNewton
  • You make the iPad out to be just positioned as an e-book reader.

    And I'm sure that will be one of its selling points. Yet if
    you the launch video you would have seen office apps
    (iWork), games, a painting program and some others
    previewed. I have seen people coming up with all sorts of
    things the iPad will be good for e.g. live music recording,
    the medical field, people that have to do presentations on
    the go, not to say those people that want it for its basic
    media use.

    So, as much as many tech writers are pigeon holing the
    iPad as a book reader, and a decent one at that, I'm sure
    the developers, and indeed Apple, believe it is so much
    more. Your mate at the car workshop (let's assume he is
    still there) may not read a book on it, but might find it a
    great help in cataloguing all the parts.
    A Grain of Salt
    • But can it supplant the iPod Touch

      The single biggest competition to the iPad is the iPod Touch. The question I have for you is how many of the things you list are more desirable to do on the iPad?

      If you're going to do live music recording, you'll still need an app and hardware adapter...that should work on an iPod Touch. On-The-Go presentations are again also software/hardware dependent; this would be better suited for the iPad if it had a VGA/DVI/HDMI/DisplayPort output, but IIRC it does not. Basic media use is half the reason to own an iPod touch (gaming being the other).

      I do think you said it right when you mentioned the industrial applications. The medical, construction, and warehousing industries are just a few places where an Apple tablet could really take off - *if* there was software available that would seamlessly integrate with software solutions like AutoCAD and proprietary medical imaging software. That however, is not within Apple's jurisdiction, and will hamper its introduction into the fields that can (and already do) use tablets the most.

      Joey
      voyager529
  • Brian

    "Everyone out there seems to unquestionably think this
    device is a great thing."

    You must not read ZDNet bloggers. Not one of them has
    anything good to say about the iPad...not even the so-
    called Apple fans.

    They clearly don't understand what this device means. It
    marks the end of an era. Most people probably don't need
    a computer, yet they have to use one to do the things that
    they desire. Does that really make sense? Those days are
    over my friend and the iPad and the devices that are sure
    to follow are all most people need. Not all that other stuff
    and the headache that goes with it.

    Many say...oh woe and doom..such lock in! Thank god for
    lock-in I say. It's the only thing that will give us any piece
    of mind and value. It will be about who can give us the
    best ecosystem to play and live in. Apple has a big lead
    here.

    I can go on, but I think the bulb just went on...yes?
    CowLauncher
    • you're funny

      And without a PC, just how will an iPad get updates, already bought app's and music? It's still just a bigger iPod Touch. I'm sure you'll enjoy your iPad, but I'm like most folks around here, I'll pass.
      nothingness
    • Steve Jobs would be proud...

      OK - this is the main argument I hear from
      Apple heads... Non-techies ~want~ lock-in
      because they have some pre-defined list of
      things they want to do with The Internet and
      the iPad will provide all of them and lock the
      user in a warm, safe cocoon.

      Seems to me this notion misunderstands the very
      essence of what the Internet is...

      The beauty of The Internet lies in infinite
      possibilities... Jobs and Apple are going the
      other way. Maybe you want to follow him. I
      don't think many will join you.
      jfiser
      • Most non-techies don't care about lock-in

        Otherwise, the app store and itunes would not be the success they are.
        IAmMarty
      • I am a techie

        I do multimedia web development all day long and have to deal with
        all the ridiculous incompatibilities between browsers and platforms so
        that "most" users have a hope in hell of viewing a resource the way it
        was originally conceived by the designer, which ends up being a
        compromise anyway.

        In the rest of my life I don't want to deal with all the compromise and
        fiddling around. I just want to enjoy my digital life. An ecosystem
        gives me that...plus the Internet if I choose.

        So this really isn't about the Internet. The Internet is a vast ocean of
        information and I enjoy going there too very much. Apple is not going
        the other way. If anything they are giving us more opportunities.
        CowLauncher
  • RE: iPad musings - How big is the market for this anyway?

    Techie things I'll use it for:

    1. Better telnet/ssh client than iPhone
    2. Nice SNMP client if iRiS is ported for the larger screen


    The above are vertical uses that I need when running to the lab in the next building from my cube to make some adjustments to my testbed.

    I've got a 17" MBP, an iPhone, and a Sony Vaio running Fedora. The iPad will replace the Sony for most things I do in the lab.

    Non-techie things I'll do with it:

    1. A third screen on my desk. It'll sit to the left of my MBP and 24" Cinema Display and will be a "static" desktop where I can keep e.g. Perl/C++ references visible as I change virtual desktops on the MBP. The iPhone is too small for this.

    2. Dead simple device to lounge around with on the couch and in bed (no, it won't replace my wife, at least not initially!).
    qoqo
    • I agree

      I'd like one, or something like it, to read my techy books or O'Reilly's
      Safari when I work or at night. It looks like a great tool, if it does what I
      need. I will know in 50 days.
      IAmMarty
  • RE: iPad musings - How big is the market for this anyway?

    Interesting blog Brian. At the moment I'm hunched over
    my notebook in the home-office. I'll enjoy your blogs
    even more in the future laid back on my couch reading
    them on my iPad :-)
    dionliddell
  • Brian, within a year ...

    ... I predict that you will own an iPad. And, I believe you will actually
    read a book on it.

    Seriously, however, the iPad ... or devices like it ... will change how
    books are created. Notice that I didn't say "marketed".

    The dawn of the first multimedia novel is almost on us and the reason
    that it has taken this long are several ... not the least of which was a
    lack of a device like the iPad.

    Just like a paraphrase of some "Field of Dreams" classic lines ... if Apple
    builds it, they will come. People will come, Brian, people will most
    assuredly come ... and they will buy and they will read an ebook on it.

    Or not ... Grin!
    kenosha77a
  • Well, they have to get cheap enough!! Google will probably be the one to

    make that happen by supplying an OS that OEMs can run on Arm.
    DonnieBoy
  • Oh, the other things needed for success: USB, SD, HDMI, Flash, etc. Google

    will also make it possible for OEMs to include those features.
    DonnieBoy
    • USB, SD, HDMI, Flash, etc.

      USB and SD are available for the people who need them. Fortunately,
      most won't.

      As for the rest, you left out all the other critical 'must have'
      technologies that will cause this thing to fail: floppy disks, RS232 port,
      10Base2 coax ports, cable TV connection, 12 v jumper cables in case
      your car won't start, and PS2 ports.

      GET IT THROUGH YOUR HEAD: the iPad is not a full-blown computer
      and doesn't need all the ports that a full blown computer has.

      Flash has been hashed through endlessly. If Adobe ever gets around
      to writing a half-way decent Flash client, perhaps it might appear.
      Until then, it appears that Windows Mobile is also dropping Flash
      support. Good riddance.
      jragosta
  • Between markets

    This device is just odd as it sits "between" markets in a funny way.

    This device operates like a big iPod/iPhone, except is not quite as portable. It's pretty easy to justify something (not to mention excuse it's short comings) when it slips in to your pocket and you have it with you everywhere. Also, I think the smaller form factor helps with quick text entry. You can cradle it in your hands tapping away with both thumbs. I think people will find it will be a bit tougher to type text in to the iPad. So I don't think someone in the market for a super portable IM/texting device (not to mention a phone) is going to buy one of these instead.

    So does that make it a netbook/tablet device? Kind of. It has some similarities, but also more shortcomings. The lack of a video port of any kind makes it a lot harder to drag around for a presentation, and Like any tablet, the lack of a keyboard is going to make it useless for extended typing. As for tablet functionality, it could be a decent device to drag around in a warehouse to catalog something, but is your company going to want to deal with putting your home made/contracted inventory systems (and all its little supporting apps) in the app store when you could just get a windows/linux tablet and maintain the control? So, people in the market for a table/netook MAY pick this up, but who could blame them if their needs keep them from being able to.

    And that brings us to e-readers. With iBooks Apple is obviously trying to bill this thing as an e-reader contender. I think it could fit this need, although there are many who won't like the shorter battery life, and difficulty to read in sunlight. This is the area I can kind of see some people opting for this device rather than one of the other devices dedicated solely to the e-reader market.

    I personally just don't know how well this thing is going to do. It is kind of a smart phone, kind of a netbook, kind of an e-reader. I don't like/dislike Apple any more/less than any other tech company, but I feel the only market for it with any size is an e-reader than can do other things as well. An e-reader/smart phone tweener, and I have no clue how profitable this market is.
    Rabayn
  • Excuse me? What reviews are you reading?

    Most pundits are calling the iPad a joke in hardware, cost,
    capabilities, etc.

    Oh. Wait. Nevermind. I just realized. You want to do the
    same thing, but in order to look balanced and impartial in
    your criticism you have to pretend that everyone else is
    fawning over the device.
    frgough