In less than a year, Apple's iPad has gone from a new gadget with uncertain prospects to become a revolutionary product that has upended the consumer electronics market.
"It has changed the world in 10 months," said Richard Doherty, an analyst with Envisioneering Group. He cannot think of another product since Apple introduced its Macintosh computers during the mid-80s that has caused such ripples in the tech industry.
Even as rivals like Hewlett-Packard and Samsung race to sell me-too tablets powered by Google's Android, Apple appears poised to announce its next version. It sent out announcements Wednesday for an event next week in San Francisco, doing little to hide the focus of the announcement. The electronic invitation shows the image of an app-like calendar date being pealed away, revealing an iPad behind it. "Come see what 2011 will be the year of," it reads.
Analysts speculate that the latest iPad will include a camera that allows use of Apple's FaceTime video conferencing feature. It also is expected to have a faster processor.
With its slender body, light weight and ease of use, the original iPad did what no previous tablet had done -- become a hot-seller.
In just three quarters, beginning last April, the Cupertino company sold nearly 15 million iPads. That accounted for 35 percent of the company's growth in sales for that period, observed Needham analyst Charles Wolf.
"Here is a product that didn't exist a year ago and it already represented 17 percent of Apple's revenues," he said.
Tim Bajarin, president of Creative Strategies, estimates Apple will sell another 36 million iPads this calendar year while competitors using Google's Android software will sell about 12 million.
But he expects the new iPad version to be a tough act to follow.
"They give the consumer so much more bang for the buck," he said.
That's because the iPad, as well as the iPhone, have become content platforms that expand their importance far beyond being simple computing devices. It is designed for book-reading, playing games and scanning magazines and newspapers as well as watching video. iPad users can choose from about 60,000 applications customized for the tablet, among some 350,000 total applications in Apple's app store.
The iPad and its apps are also giving Apple greater sway and influence in a wide range of industries, from videogames to publishing, as more producers of digital content see much of their future growth coming from sales and subscriptions sold through the Cupertino-based company.
Apple's advantages in the emerging tablet market goes beyond its innovative designs and its software. The company is also using its financial might to buy up many of the components needed for the iPad at high volumes, which means lower costs than many of its competitors can get. That makes it easier for Apple to price its products lower while still enjoying healthy profit margins.
"They've tied up about 60 percent of the supply of display screens and other components that go into the iPad," Wolf said. "So only the name brands will have the resources to go out and buy these components. The second-tier tablet-makers will be shoved out of the market. Apple is playing a great gotcha game."
Before Apple launched the iPad, its executives repeatedly rebuffed analysts who asked why it was not entering the netbook market. Instead, the company rolled the dice to create a new tablet line.
"It is consistent with Apple's business model -- high risk, high rewards," said Gartner Research analyst Van Baker. "It is a pretty fundamental change in the way people perceived mobile devices."
It already is changing the netbook market.
Last year, some 32 million netbooks were sold; this year, that sector will be lucky to see 20 million in sales, Bajarin said. He ties to the drop to the iPad, as well as falling prices of traditional laptops, making netbooks less of a bargain.
The new iPad could help answer the question of whether the tablet is more of a laptop placement or a new gadget consumers add to their current collection.
"If it is truly a transforming product, the way the smartphone or the iPhone was, then consumers will allocate additional spending to it, without cutting spending in other places," said Stephen Baker, an analyst at the NPD Group.
But Wolf believes the iPad has already revealed itself as a completely new computing device. Hotel clerks are using them to check in guests, business travelers are bringing them along on work trips, teens view them as multimedia players.
"An iPad becomes anything the customer wants it to be," he said.
Resource: http://www.mercurynews.com/ci_17461691?source=most_viewed&nclick_check=1
