iPad 2: The risks are all internal

Posted by Rob Enderle

As we watched the iPad 2 launch today, many of us wondered if the popular tablet should be considered just another PC, or perhaps - like the iPod - a unique product in its own category.

If it is the former, the biggest risk to the device will likely be Google or Microsoft. If it is the latter, the biggest risk is likely to come from Apple.   



This year, the market feels more like an iPod market, as there has yet to be an alternative tablet that has managed to take significant share. 



Apple has, by some measures approximately 90%, and realistically I think that this number may actually be conservative.

 Let’s talk about the competitors this year, where I don’t think Apple will have a problem, and where they might.

HP TouchPad

The largest and most powerful competitor Apple will face this year is HP.  They are a global company and one that enjoys more retail shelf space than Apple does with large printer and PC lines. 



However, HP has never been successful with a pure consumer product. Their last real attempt at CE was with digital cameras and it didn’t go well at all. 
T

hey are coming at the market with a Palm based product, after having dispensed with the Palm brand which likely also eliminated any related cache - or whatever was left of it.  They made poor choices with naming and, at best, chose something that would be very hard to defend if it was successful, at worst it is confusing and dull. 



Launch execution was poor (it was as if they had never seen either an Apple launch event or Palm’s launch of the Pre at CES) and they recently lost their Apple trained head of advertising. 

They are also way behind in applications and the firm lacks a good history with the kind of app devs who gravitate to devices in this class.  



On paper they are the tiger to beat, but they appear to be only a paper tiger. Overall, the TouchPad endeavor appears very under-resourced, especially given HP’s size and capability, almost as if it is was designed to fail. 


RIM PlayBook

RIM’s Blackberry followed the Palm Pilot and became one of the next big successes competing much of last decade with the iPod for hot new product.   



Unfortunately, RIM has never been seen as a consumer company and this is a consumer event right now. That means that consumers are bringing them to their businesses and it is unlikely IT managers will be able to effectively push back with a different product. 



It is well designed and better named than the TouchPad but they made another less troubling naming error in using a name that creates a discord with their corporate image.  

You can see why they did it, but discords seldom work out and they likely should have gamed this out better than they did and used a more neutral name. 



RIM follows Google in terms of getting developers as well and while they are clearly running at this opportunity hard they appear overmatched. Apple even got the CEO of Salesforce to endorse the iPad, and a number of business testimonials during the launch today suggestedthat RIM’s one advantage may be evaporating.

Android Honeycomb (Xoom)

At the Game Developers Conference (GDC) this week one of the big complaints was about Google and how clueless they apparently are with regard to this new market. It has been a litany of changed directions, poor communication and support.

Last week it was RSA and how one of the biggest problems for Android based devices is how aggressively they are being compromised by malware.

Yes, it really feels like Google is trying to destroy the momentum they have garnered as Apple’s only real competitor. They still are, at least this year, the strongest competitor Apple.

Nevertheless, Samsung’s Galaxy tab, which used an earlier version of Android, only sold a fraction of what was shipped and reported returns were as high as 16% which is a product killing level.   



The Xoom came out incomplete lacking LTE and Flash support - two key advantages and now it appears early buyers will have to return their Xoom’s for an upgrade that could take as much as 6 days.   



The entire platform appears on the edge of imploding and it certainly didn’t help that one of the key apps, gMail, failed for thousands this week.   

Amateurs certainly won’t beat Apple and Google continues to appear unwilling to play a pro level game.

Microsoft

Microsoft has failed to recognize the risk of an iPad being classed as a PC and the reports showcase the possibility that Remdond may have lost up to 20% market share by year end.  



I expect they will get this message before 2012 and fund an anti-iPad campaign of some kind. 

But they won’t have a competitive product in the market this year and Apple has historically been more expert at managing perceptions than Microsoft has. 

They represent a risk but one that Steve Jobs certainly could manage.

Real Risks: Apple and Jobs

This brings up where the real risks reside in two areas perceptions around the iPad and Steve Jobs. Let me explain. 



We are operating under the belief that the iPad is not a short term fad any more than the iPod was. But what if it is?

I

’m getting increasing reports that long-time users are going back to PCs, granted a lot of them Macs, but this didn’t happen with iPods and CD players at all. Once folks moved they stayed moved.   



This suggests that the iPad could be a fad and that the market could move on and tablets would go back to being niche products. While I still think this to be unlikely, it remains a real possibility.   



Strangely enough, I think books may be what makes the iPad a sustaining product once it can get an outdoor viewable display.



The other is Steve Jobs, he is clearly a major part of the launch today but obviously isn’t in the best of health.  

When he is at an event he brings more magic - even in his weakened state - than anyone else currently in this segment does. But his departure could remove the magic and without the magic the iPad may become just another CE device.  


Wrapping Up: Apple is an Amazing Company

What you should walk away with is that it isn’t the iPad that makes Apple successful. Rather, it is Apple that makes the iPad successful because Cupertino runs a well-oiled machine.   



No one else is even getting out of their own way effectively - except possibly RIM and they are out resourced.  

The risks to Apple, therefore, come from anything that effects how the product class is perceived, macro risks, or anything that adversely impacts how Apple runs.  

Increasingly, much like it was with Microsoft at its peak, the only way to effectively compete against the firm will be to flank it as Apple did with the iPod, iPhone, and iPad.
 

Definitely something to think about as you marvel at what appears to be another fascinating launch. 

As a final comment, what Apple does can be emulated, there are books by Carmine Gallo on how to do it, the fact that none of the competitors appears to bother to learn this is almost criminally negligent.

Apple’s product launch today pretty much took out the competition and that should never happen, hell even I want to buy one.