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Apple failed to move hardware bar with iPad 2, say experts

But it retains edge in tablet sales experience, iOS and App Store

March 2, 2011 03:57 PM ET

Computerworld - By the time that Apple CEO Steve Jobs wrapped up today's launch of a revamped iPad, analysts were already calling it "incremental" and pointing out that it the new tablet delivers "no surprises."

The bottom line? Contrary to Jobs' assertion that iPad 2 will stymie what he called "copy cats," Apple hasn't staked out an insurmountable hardware position.

"Apple didn't really move the bar all that much," said Jack Gold, an analyst at J. Gold Associates. "I don't see this as heads above the competition, especially the Xoom, right now. Apple fans who want the latest will buy this or upgrade, but I don't see any overwhelmingly compelling capabilities that would make people sitting on the tablet fence go out and buy one."

Other experts echoed Gold's take.

"It's all very nice -- smaller, lighter faster, but there were no surprises," said Ezra Gottheil, an analyst with Technology Business Research. "Is it nicer? Yes. But it all was predictable, things that everyone was betting on, including competitors."

Stephen Baker of retail research firm NPD Group chimed in as well on the theme.

"It seemed like this time, everyone knew everything ahead of time," said Baker. "It's all incremental. But there are only so many ways you can surprisingly change things."

The iPad 2, which according to Apple features a dual-core processor, faster graphics and two built-in cameras, will go on sale March 11 in the U.S. at the same price points as the original tablet: The Wi-Fi model starts at $499, while the 3G device starts at $629.

Yesterday, Baker said Apple might preempt actual and potential tablet rivals by going aggressive on price, but the company didn't take his last-minute advice.

Nor did it stake out features that other tablets won't sport within months. "The specs are basically what everyone else is coming out with in three to four months," said Baker. "We're at a point where this set of features will be similar across every device, at least for this round."

But the fact that Apple didn't feel the need to drop the price or radically rework the iPad speaks volumes about its place in the tablet market, which the company essentially kick-started last year, selling nearly 15 million of the devices.

"They're clearly not seeing any constraints on the market at $500," said Gottheil. "At some point, they may drop the price to, say, $400, but they won't do that until they need to."

And Apple has an advantage because of less tangible elements that its competitors still lack. "They have the first second-generation [iPad] out there," Baker said, "and a year's worth of sales and experience with tablets."

Or maybe the talk of hardware is all just noise.

"Let's be honest," said Baker. "What Apple's move today points to is the fact that hardware is not all that important. The biggest differentiator between Apple and [other tablet makers] is iOS versus the others, its App Store versus everyone else. If Apple can continue to build the better experience, its success isn't hardware dependent."

While there may have been a lack of drama about the iPad 2 -- the name bloggers had stuck on the expected upgrade months ago, and that Apple co-opted -- it was balanced by Jobs' presence at the San Francisco event. It was his first public appearance since he announced last January that he was taking an indefinite medical leave, and made up for a missing "One more thing" announcement that has made Apple's product launches famous.

"Steve Jobs doing the presentation, that was important," said Gottheil. Jobs received a standing ovation from the crowd of reporters and others at the invitation-only event.

Apple's iPad 2
Apple CEO Steve Jobs today unveiled the new iPad 2. (Image: Beck Diefenbach / Reuters).
See liveblog coverage for more images from the iPad 2 launch.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at Twitter @gkeizer or subscribe to Gregg's RSS feed Keizer RSS. His e-mail address is gkeizer@computerworld.com.

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