iPad: The breakthrough is the economics

Apple announced its iPad this morning. It is a big iPod that also serves an eBook reader (through iBooks) and also runs iWork (which will make it the presentation tool of choice). Amazing though all that is, it is not the true breakthrough. The amazing thing is the economics. It will have an optional 3G plan with $14.99 per month for 250MB but just $29.95 for unlimited in the US. It is incredibly cheap. Now usually you would think that this would be made up for by an expensive price. However, the baseline iPad costs just $499 with the top of the line one with 3G and 64GB, it is just $829. Moreover, it is available worldwide and is unlocked. Basically, Apple is pricing for a mass market and is now acting like a major rather than the niche company. And so it should. But with technological leadership and such a lead in the market, it is difficult to imagine competitors getting anywhere anytime soon.

5 thoughts on “iPad: The breakthrough is the economics”

  1. I don’t see the market for it, Joshua. I expect it will cannibalise sales from the highly profitable MacBook Air rather than bring new customers to the business.
    I think this is the next Apple TV: a product that doesn’t really go anywhere.
    I’d like to be wrong.

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  2. I think it’s just the ticket – and for the reasons Joshua has spelled out.  I’m not so sure why the subscription price is cheap, but at $499 lots of homes will want the toy and then they’re gonna go buy books and mags. And Kindle – well poor old Kindle is going to splutter.

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  3. I think MacBook Air is dead anyway on the long run. But this gadget lets us glimpse some of the future of computer navigation AND experience. Not for coders anymore, but the gravity point of mobile entertainment, mobile networking and possibly education. It’s not the hardware that sells, but the user experience. UI and apps ultimately designed for the hardware (processor, too). All in one hand. As Jobs defined: we are the biggest mobile device company. How about that for a challenge?

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  4. <blockquote>And Kindle – well poor old Kindle is going to splutter.</blockquote>
    iPad uses an LCD screen, not eInk. However it might drive the price of Kindles down.
     

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