The iPad Launch

Two weeks ago, the iPad became available for the many anxious Apple fanatics. However, the iPad has some features that are not perfect, such as not supporting Flash, no USB port, and not supporting video chat. Other manufacturers, such as HP and Dell are about to launch their own table and slate PCs, and the market for tablet PCs, e-readers and netbooks will soon be crowded. Various functionality, features and price points will be factors that determine consumer behavior in the market place for these variety of products. Some manufacturers may engage in price wars and thus margins will suffer.

Below I have assumed I am the Product Manager (PM) of the iPad, and am called to Apple’s boardroom to explain your decision about the iPad features & functionality, cost & price, accessories and its evolution.

The release of the iPad this weekend has a lot of hype. Not only are we thrilled about our product, but we are confident that this ground breaking product will create a new market of tablet PC’s/ e-readers. Below we have outlined the features, pricing, and future evolution of the product.

In today’s computing market there appear to be three new types of products that are similar, yet slightly different. These are: the simple e-reader (such as the Kindle), the tablet PC, and netbooks. Consumers overwhelmingly want smaller, more portable computers. After Amazon launched the Kindle in 2008, many companies have eagerly jumped into this e-reader market with different types of products in 2009. With e-reader functions becoming more diverse, computing in the future will no longer be solely used for reading, which has become apparent with the emergence of tablet PC’s and netbooks. This analysis will examine the iPad against the current products in the market, and will look at future developments in order to hols the market share.

In terms of market evolution, the iPad Product Development Team believes that it will take 2 full years before the iPad has moved from the Innovators and Early Adopters to becoming adopted by the Early Majority. This is displayed in the graph below. Early Adopters will have purchased the product upon the release. These Innovators and Early Adopters are Apple fanatics already. They most likely have several Apple products, and believe that we will pave the way in the e-reader market. However, the team knows that most Early Majority adopters will wait until the second version of the iPad is released in 2011. Because there are several disadvantages to the product (which will be outlined below), the iPad Product Development Team will look to improve these aspects with the release of version 2 of the iPad. However, despite any “disadvantages” that might be seen initially, we believe the product is truly ground breaking and will pave the way for e-readers and tablet PC’s.

Features

The primary benefit that we see with the iPad is the fact that it's a product between the monumental iPhone and hugely successful MacBook line. The iPad Team thinks that the product will take over the netbook and tablet PC market, thus changing the entire personal computer market as we know it today. Below we have outlined some of the main features that will attract consumers to our product.

Physical Features

• 9.7-inch LED backlit IPS display – true and deep colors
• fantastic battery life: almost 11 hours
• 16GB, 32GB, or 64GB
• a volume rocker
• screen position lock (which forces the device to remain in landscape or portrait mode)
• a power / sleep button and headphone jack on either side of its top edge
• Apple's famous 30-pin dock connector alongside a single thin speaker on the bottom of the unit
• photo application - fast scrolling, high resolution
• renders webpages quickly
• the hugely successful app platform

One of the disadvantages that the iPad has received already has been in terms of handling a flat slab. Consumers seem to be concerned about typing on a flat surface and the fact that the iPad is heavier than the iPhone. Either consumers will find themselves typing on a flat surface, typing with one hand and holding the device with the other, or typing with two hands using the dock. Early reports have revealed that typing on a flat surface is actually nice. The way our team has designed the product is that the virtual keypad is actually quite big. Although there will be a learning curve in using this product, iPhone users will be adept, and the others will either learn to either type on a flat surface or using the dock. Although typing with one hand will be difficult for some users, we believe the other two options are sufficient for using the product.

However, the touch screen features that consumers love are still included in the product. We have mirrored some of the functions from the iPhone such as the tap and hold function (although we have improved it). Additionally, the iPad has the ability to do split screen, contextual menus and menu bars, and the hover over feature for popup windows. These touch features will be highly appealing to iPad users.

Price

In terms of competitors, we are competing against three other types of products, as mentioned previously. The graph below analyzes the pricing point of the iPad to its competitors.

Product	Price
iPad	$499
HP Slate	$540*
Kindle	$259**
Dell Mini	$299
Aluratek e-reader	$179

* The HP Slate has not yet been released, but early estimate prices say that it will be around the $540 range.

**Kindle recently slashed this price when the XD was released, and upon the release of other tablets like the iPad and expected HP Slate. Clearly the Kindle knew that the only way to stay competitive was to drop prices.

Although we are in the higher end of the price range, Apple must remember that we have produced a sleek, well-designed product that we believe will be the best on the market. In terms of pricing, we believe this is ideal since it is not the highest priced product, but it is near the top end. Apple users know that we produce premium products, and when looking at the list of above products, the iPad stands out because of all of the functions (games, iCal, email, videos, photos, etc). The iPad’s functionality will blow the e-readers functionality out of the water, yet it will simultaneously be different than other netbooks.

Additionally, the strategy of paid content must be included. Apple’s App Store will be a major component in bringing in revenue for the product. Because the company has partnered with many providers, the Apple strategy going forward will be similar to the iPhone. Currently, the average prices of applications are $3.13; however, many applications come for free.

Product placement

As mentioned above the iPad Team believes that we are reaching a market segment that hasn’t been reached yet. The graph below looks at the price and quality of products.

*The quality of the products go from high to low. We believe we have the highest quality product in a price range that isn’t met. Most e-reader products are in the $150 to $260 price range, while netbooks are in the $300 range, and new tablet PC’s will be in the $500+ range.

Despite the few "disadvantages" pointed out by Early Adopters, the iPad's attractive design, multi-touch capability, and application platform will offset the initial omission of Adobe Flash, according to preliminary forecasts from iSuppli Corp. Based on current forecasts, the iPad is expected to sell 7.1 million units in 2010, 14.4 million in 2011, and nearly triple to 20.1 million sales in 2012. These promising statistics have reaffirmed our decision regarding price point.

Evolution

Being the iPad Team, it is of course expected that we will launch new and better versions. Improvements in the second generation will include:

• 4G network: data/ network capability improvements from the current 3G
  
• OLED screen: Organic Light Emitting Diode screen which will provide truer color, and more dynamic ranges of contrast.
• USB 3.0 port: It will be much faster than the current USB 2.0
  
• better battery life: Although the battery life is already impressive, we will look to continually improve it.
  
• faster processor: As with each Apple product, we will continue to improve the speed and efficiency of the processor.
  
• thinner and lighter: Similar to the MacBook Air coming out, we will also aim to make the iPad lighter.
  
• camera's: Cameras will enable video chat function, and other fun photo features that users are looking forward to.
  

The final reason why we are sure of the product's success is due to the fact that the iPad Team is focused on launching a product that is the best, and not necessarily the first to market. We believe we've developed a truly revolutionary product, and we anxiously await the future!