How Apple put the user first to make a billion dollars fast

When it came to its design, Apple's iPad broke the rules. Then it created new ones:

Within a month of the iPad hitting the shelves, Apple's already sold a million to make a billion, the fastest product ramp in history according to Yankee Group analyst, Carl Howe

"Apple's iPad will likely take the crown for the fastest consumer product growth to the $1 billion revenue mark in history, taking less than 120 days from announcement to reach that milestone," he writes.

Cutting-edge design, a focus on simple user interfaces, and Apple's existing forest of multimedia content via iTunes have all helped the company breed success. The perceived value added to the inherent attraction of the device to each unique user by the plethora of apps available for it is incalculable.

Think back to January, when industry watchers scoffed at the Apple product, saying smartphones, notebooks, and netbooks left no market niche for an "in-between" device like iPad to attract customers.

They were wrong

The iPad has killed the netbook business.

Where netbook sales climbed 641 percent year-on-year in summer 2009, they immediately slowed on announcement of the iPad, falling once again in April when the product was introduced, said Morgan Stanley analyst Katy Huberty. Last month, netbook sales growth had shrunk to 5 per cent.

Further, 44 percent of US consumers intended purchasing an iPad planned to do so instead of a netbook or notebook, a March Morgan Stanley survey says. Another 41 percent intended an iPad instead of an iPod touch -- a cannibalization Apple can likely endure.

What's the secret here?

It isn't rocket science, it really isn't.

It isn't Apple KoolAid. It really starts with the user experience.

Use this

iSuppli last month explained the design process. "Apple started by designing the screen, the touch pad and the battery, and lastly focused on the semiconductors and where to put them. This design is what gives the product a unique feel and functionality," the company said, via DigiTimes.

"The iPad is a device that lets users forget the technology they are using as it morphs into almost anything they can imagine through the use of applications."

UK newspaper, The Independent, predicts the iPad will transform the netbook and other industries, ushering in an era of touch-based computing in which the aesthetics of the product will be at least as important as the ability of the device.

Apple may not have it all its own way. Netbook makers are determined to fight back against the Cupertino collosus. Many across the industry are plotting a response.

  • ASUS, HP, and many other manufacturers are hatching tablet plans
  • Google is constantly developing its Android OS
  • Google recently acquired Agnilux, a chip creating start-up launched by former PA Semi people.
  • HP recently purchased Palm, in doing so bringing in its own OS for use in future touch-based devices.
  • Microsoft continues to invest in its own tablet technologies

Even Amazon is attempting to attract developers and adding new features designed to boost the appeal of its Kindle eBook reader. And Nokia holds its own plans to take on Apple in the touchscreen mobile device market

Apple design for life

Despite this horde of competitive forces, iSuppli expects iPad sales to reach 20.1 million in 2012, up from a predicted 7.1 million this year.

Derek Lidow, president and CEO at iSuppli points out, "Anyone that wants to compete with Apple is going to have to consider the design of the iPad, as well as its huge implications on the electronics design and value chain."

Even if competitors can develop products that can match the iPad's eloquence as designer chic, while matching its feature-set and aping its apps appeal, they must also meet Apple on processor power and battery life.

Apple continues investing in its own processor teams. These are tasked with developing the future of mobile computing.

The A4 processor currently used in the iPad and likely set for use in the iPhone when that product is launched (perhaps next month) is only a first result.

Underlying Apple's competitive advantage here is that the processor, is designed to extract maximum speed while requiring minimal power, helping boost battery life.

That the ARM processor design basically underlying the A4 chip may be available to other licensees may offer little advantage to competitors, given Apple's move to embrace and extend that basic design with its own A4 technologies.

Battle of the battery

The future of the tablet market may eventually be decided by battery life. In using a low power processor, Apple has seized a major advantage. This advantage will be all the more apparent when competing products running Adobe Flash reach the market.

Flash inherently has a negative effect on battery life, because it must decode video and other assets in software, rather than using the hardware, as is possible with H.264.

Apple has realised this, which is why the bulk of the iPad is designed to house the battery.

An eloquent expression of just how the iPad can also be used as a netbook is in the video below, which show a product called Clamcase, which combines a stand, protective case and Bluetooth keyboard in one design.

iTunes ain't just for fun

How much more attractive Apple's mobile products will become if and when the company introduces all-you-can-eat all your music everywhere iTunes streaming solutions based on technology acquired on purchase of remains to be assessed.

The iPad has changed the game. Which is why it has become the fastest product launch in history.

As Warner Music Group chairman, Edgar Bronfmann Jr. said today, "No one's gotten very rich betting against Steve Jobs."

How do you think Apple's competitors will respond?

Copyright © 2010 IDG Communications, Inc.

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