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

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.

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.