Siliconchef by Brian Richardson
With the Super Bowl behind us and the promise of spring around the next ice-covered corner, I have some free time to think about technology. Specifically, how the world has a love-hate relationship with a device that hasn’t even made it to stores yet …
Yes, it’s time for Brian to talk about the iPad.
As a full-time techie, I didn’t do much on iPad Launch Day(tm) except make jokes about the name. I own an iPod, laptop, netbook, smartphone, three digital cameras, five video cameras … none of that counting the technology provided to me by my employer. The iPad was interesting but not entirely innovative … so I didn’t really take any sides in the fanboy wars. Another device to do what many of my devices already do was not very compelling.
Then I read this Wall Street Journal article, and realized what’s really going on at Apple. Just look at the title …
Apple Management: iPad Prices Could Change
Why would a computer hardware company be so willing to drop the price of a device that hasn’t even been released yet? But remember, they already did it for the iPhone. And that’s when it hit me … The iPad has nothing to do with displacing netbooks or transforming society into a Star Trek like future full of handheld computers and matching polyester uniforms.
Forget changing the way we use computers … the iPad changes the way Steve Jobs uses Apple.
This started way back with the iPod, and has been a running theme through the iPhone and iPod Touch. They’re devices for consumption. iTunes started out as a way to get music and podcasts. Now iTunes is a hub for videos, books and applications.
Of course anything you get from iTunes only works one place … on your iDevice. The iPad makes official what I have thought about Apple for many years: Apple is no longer a technology company, Apple is a content distributor.
Dropping the price of the hardware doesn’t matter for the iPad, just as it didn’t matter for the iPhone. The real money is in recurring revenue: profit-sharing from app sales and AT&T. Other markets already work like this:
- Razor companies often give you the handle so you’ll buy more cartridges
- The ink in the ink jet printer costs as much or more than the original price of the printer
- The ‘free” cell phone attached to a two year contract
If the touchscreen wasn’t so darn expensive, Apple might be giving the iPad away.
Of course Apple needs technology to distribute content, but it’s the same for a lot of companies. Wal-mart and UPS aren’t tech companies, but look at the depth of their technical know-how. Web interfaces, asset tracking, predictive systems based on weather and sales patterns … tech is just a tool in their toolbox.
Sony didn’t wade into the HD movie format war because they love technology … Sony was there because they own a movie studio and music label. Blu-Ray Disc gives Sony a say in how they distribute content, from the video editing software on my PC down to the TV in your living room.
This doesn’t make Apple bad, it just has to be understood by the Apple fanboys and haters. No, the touchscreen iPad won’t replace my $400 netbook that already has a 10 hour battery life, but Apple doesn’t care as long as I dock my iPod to the damn thing.
The tipping point comes when Apple makes more revenue from licensing deals and iTunes store purchases than it does from hardware sales (if they’re not there already). Either way, Steve Jobs has changed Apple over the years since his return. That’s the real game changer of the iPad.
Valve’s gone through something of a similar transition – their main bread & butter now is Steam. Selling other people’s games through steam sort of subsidized Valve making their own games at this point.