And it's not today's $499 price that's important -- $499 is
still too expensive for what the iPad is. It's where the $499 is
headed over the next couple of years.
In three years
If iPad prices follow the trend of iPod, iPhone and other gadget
prices, we should be able to buy the low-end version for $299 in
two years and $199 in three years. At $199, especially, the whole
game changes.
Why?
Because of the way the iPad is likely to be used.
On-stage Wednesday, Steve Jobs demonstrated the primary use case
for the iPad: Puttering around the house. Note that Steve did not
demonstrate the iPad by walking around the stage (mobile) or
working at a desk (office). Note that he did not play up its
productivity benefits (the sales pitch for most PCs and laptops)
nor its communications benefits (the sales pitch for most mobile
computing gadgets). Steve focused on something different: media
consumption and entertainment for the home.
In three years, when the low-end WiFi-powered iPad costs $199,
many households will buy three or four of them and just leave them
lying around the house. These iPads won't be "owned" by any one
member of the household, the way PCs and cellphones are. They won't
live on desks, the way desktops do, and they won't be carried
everywhere, the way mobile phones are. They'll just be there,
around the house, on tables and counters, the way today's books,
magazines, games and newspapers are, booted up, ready to use.
You'll be able to play two-person games on them (also
revolutionary for a handheld device). You'll be able read
newspapers, magazines, e-mails, books. You'll be able to tap out
and send short messages. You'll be able to research and shop.
You'll be able to keep and share family calendars. You'll be able
to sit around the breakfast table with each member of the family
scrolling through one, the way many families still do with
newspapers. You, your children and your guests will, most
importantly, just be able to walk around your house and pick one
up.
Platform will dominate At $199, Apple will
eventually be able to sell tens of millions (eventually, hundreds
of millions) of them a year ($199 x 100 million = $20 billion, not
counting app and advertising revenue). Eventually, every household
will have them. And as long as long as the iPad becomes a platform
in addition to a device, the way the iPhone has, Apple should be
able to maintain a very healthy market share.
Eventually, in other words, the iPad should blow away even the
towering expectations it failed to meet at launch. And it should be
amazing for both consumers and Apple shareholders alike.
(But they still should have called it "Slice.")
