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

Is Apple's biggest threat embodied in a $159 nobody-brand digital reader sold by the Dillards department store?
Written by David Gewirtz, Senior Contributing Editor

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.

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