Friday, March 4, 2011

The iPad 2 Rant

MartianCraft has a fair amount of Android work right now. Personally, I try to focus on the iOS work whenever possible, but we're a small company, so nobody gets to play the primadonna. As a result, I spend a good chunk of my time on Android projects and have to stay abreast of both the Android and iOS worlds from both a hardware and a software perspective.

Last week, I found myself grudgingly admitting to myself that the Motorola Xoom is not a bad tablet. It feels incomplete in many ways. It has rough edges, some definite hardware and software CBBs¹, and a general dearth of good, native-resolution apps. But, it had potential and I definitely saw how certain demographics might be attracted to it over the iPad. I saw a tablet that normal people could use with some frustration, but not an insurmountable amount… much like Windows, post Windows-95.

The thing that I haven't seen in any of the Android tablets, however, is a compelling reason to buy them instead of the iPad. The only people I know who've bought Android tablets also own iPads. Other than a strong aversion to Apple's products or Apple as a company, what would compel somebody to pay $800 for a Xoom or Tab rather than going out and getting an iPad? Maybe there's a reason, but I can't see it. While both the Xoom and Tab had some specs that were better than the original iPad, neither offered a comparable experience let alone a better one, and neither could do anything that the iPad can't², despite higher price tags.

Then came yesterday.

Two days ago, the Xoom looked like a decent, almost finished and slightly overpriced tablet. Two days ago, it had a couple of quantifiable advantages, including native CDMA support and a better GPU. Two days ago, you could make the Xoom look better than the iPad on paper. Though marketing based on tech specs hasn't proven to be a very effective strategy in mobile computing space, at least they did have that for them. They had grounds for claiming you should buy the Xoom instead of an iPad. The arguments were thin, but two days ago they existed.

Today, simply put: The Xoom is fucked. So, I suspect, is the unreleased Samsung Tab 10.1 and the RIM Playbook. I can only imagine the discussions that are going on inside those companies today.

Only the staunchest Apple haters and self-deluded "openness" ideologues are going to pony up that kind of dough for a tablet that can't offer a comparable experience and doesn't have better tech specs. The Xoom doesn't even have the advantage of working with a carrier that Apple's tablet doesn't. In seven days, there will be both native CDMA and GSM models of the iPad 2.

Think about this: yesterday when I checked, the Android Marketplace had sixteen Honeycomb tablet-resolution apps. Sixteen. And you know what's not included in that sixteen? That space game that they show the guy playing in the Xoom commercials. In other words, they had to put a fake game in the commercial. Would they have done that if they had even one compelling application that could make the Xoom look better than the iPad?

As a tablet platform, Android has two big challenges.

First, it has a chicken-and-egg problem with software. Developers are waiting for people to buy Android tablets in sufficient quantity to support the platform, and many consumers are waiting for good apps to buy Android. In the phone world, Android seems to be past that hump. While the app situation is nowhere near as good as on iOS yet, there are apps — including some good ones — for the platform.

But, even if the Xoom were every bit as amazing of a piece of hardware as the iPad 2, it would still have the problem that it does less cool things. There's nothing comparable to Garage Band or iMovies, or any of the hundreds of jaw-dropping iPad apps that have been created in the last year like Infinity Blade, The Elements, or Alice. There's just no "wow" app you can put on your Xoom and show people that's going to make them want to run out and buy one. There's nothing you can do and confidently say "your iPad can't do that shit right there, bitch".

The second, and much larger problem is simply one of price. I see people constantly comparing the Android/iOS situation to the Windows/Mac situation of the eighties and nineties. I usually see this claim by people laughably arguing that Apple's failure is imminent.

In the nineties, Apple kept insane profit margins on their products while dozens of manufacturers created inexpensive commodity PCs running Windows. There was a margin war on the PC side, and PCs became noticeably cheaper (despite paying hefty licensing fees to Microsoft), and that price difference, combined with Microsoft closing some of the usability gap with the Mac, is what lead to the dominance of Wintel machines. In the nineties, Macs simply cost more. You could argue that Macs were cheaper based on TOC or employee efficiency, but in the quantifiable terms that bean counters understand, the Mac was a lot more expensive and didn't do noticeably more, especially once Adobe jumped ship and become cross-platform.

That's not where things are now, however. For typical consumers - people who don't have a dog in the technology race, so to speak, are going to buy based largely on price, Apple's mobile "post-PC devices" aren't just better than their competitors, they're cheaper than comparable competitors.

We don't have a situation where commodity resellers can easily assemble components into a working, desirable mobile device. Mobile devices are all about form factor, design, and ease of use. They don't sit on a desk, they go where you go. They need to be well engineered, light, get good battery life, and be easy to use. They can't require IT support staff, an instruction manual, or training. A large beige box on a desk is one thing, but in your pocket it's another thing altogether.

Why is this the case, though? Why can't these companies compete with Apple on price in the tablet space?

The prices Apple can offer is a result of two things. First, is plain and simple buying power. Apple sells a lot of devices, so they buy a lot of screens, flash memory, etc. As a result, they can get quantity discounts. Apple got to the 10 inch form factor first and cornered the market, driving up the price for 10" screen components for any competitors coming after them.

The second, however, is that they have gobs of cash on hand. A lot of market watchers say Apple is foolhardy to keep so much cash on hand. On the contrary! Apple understands psychology, and not just consumer psychology. When they go to a vendor or hardware partner and ask for exclusive arrangements, priority fulfillment, or better prices, do you know what bargaining chip they have that few other companies have?

The corporate equivalent of a suitcase full of cash.

When a vendor needs to retool for a new manufacturing process Apple has developed or needs to increase their output capacity, Apple shows up with a wad of cash in hand. They don't have to liquidate any assets or get a loan or seek permission of shareholders. They just play Daddy Warbucks and pull out a wad of million dollar bills. Apple's partners, in addition to getting large-volume contracts, can get working capital as part of their arrangment with Apple without taking out loans. A definite part of the reason you were able to buy an iPad for only $499 is because Apple didn't follow conventional wisdom about cash on hand.

Arguing that Apple would be doing better by doing what everybody else is doing isn't usually very convincing to me.

Motorola and Samsung… they're both large companies with a lot of buying power and strong brand recognition. The problem is, they don't understand the game that Apple's playing in the mobile space, so they're playing it wrong. They're so caught up in catching up that they're not even trying to innovate in this space. Maybe HP or Rim will figure it out, but I'm not going to hold my breath.

Which is unfortunate. If Apple's doing this kind of amazing stuff without any viable competition, can you imagine what they'd be doing with strong, viable competitors nipping at their heels?


1 "Could Be Betters"
2 From a consumer perspective, not from the perspective of a geek who likes to take things apart and put them back together. The Xoom, with its more powerful processor and GPU had the potential to do things the original iPad couldn't, but didn't ship with any application that proved it. Consumers believe what they see, not what the tech specs say.




40 comments:

Chad Armstrong said...

Thanks for mentioning "Alice". That was the killer app that did it for me to realize what differentiated the iPad from just being an over-sized iPod touch.

Jonathan said...

I rarely care about iMovies and Garageband because there is no needed for me to use it.

Android Tablet can oversize regular smartphone apps like iPad 2x button.

Apple buy a lot of hardware component from Samsung for iPhone, iPod Touch and iPad.

マーティン said...

Great article.

The iPad isn't really comparable to an iPod touch for me, as the iPad really lets you get hands on with the internet in a completely different way. Photos also look great on it. Games are great. Movies are great. Most important of all, the software is simple and the battery lasts for days!

P.S. Should have written "it does *fewer* cool things".

John Molloy said...

@Jonathon

Like Sammy and Motorola in Jeff's closing paragraphs you just don't get it.

"Android Tablet can oversize regular smartphone apps like iPad 2x button."

Yup that is why everyone is claiming that the Xoom is awesome because it's just like an Android phone - only bigger.

"Apple buy a lot of hardware component from Samsung for iPhone, iPod Touch and iPad."

Yes which is why Sammy are considering selling their tablet at a loss because they are being paid for the iPad components. Not a great business model going forward.

Watch how enormous the queues are going to be next Friday...

petershine said...

Wow, didn't know how a lot of CASH can make big difference. Thank you for enlighten us

blebaron said...

Slow down everybody. This is the same kind of stuff that was said about the original iPhone and the G1. Android has come a long way and is running on a lot of phones out there. The iPad owns the market right now, but it will be interesting to see what happens in the near future.

@Jeff Great blog. It's helped me more than once in learning how to develop for iOS. Thanks!

Shahryar said...

I didn't know about Alice and these other amazing iPad apps mentioned in this post. I'm going to have to check them out.

(My problem right now is that I don't use my iPad too much (got it as a gift, had no intention of buying it) so I only pay attention to it so much. But it would have a good place in my life being an on the go computer - if I can get a better phone that turns it's data connection to a hotspot I can do that.)

Wojciech Kocjan said...

I think you got a lot of it wrong:

- There's no native resolution in Android. Just smartphones have around 6 different display sizes. But most apps will work fine. Example - keepass app. Mykeepass looks like crap on my iPad. Honeycomb emu showed keepassdroid just fine. So - apps will support it, but some may look a bit different.
Some games will, some will need changes. We'll see how it goes since games are always more complex.

- iPad 2 will have same issues as PS2 vs PS3 - games will be tuned for iPad 1 not to loose customers. And ppl wont buy iPad 2 if they have iPad for same reason. And I am happy with mine, I wont upgrade just for 2 cameras.

- Tablets often run 854x480 so most apps will work fine - same resolution my Droid has, no issues with it at all; this is what first Tab did to make smoother entry into tablets

Rene said...

Great post. Thank you for sharing this info.
I might fall into the categorie that don't like Apple policy. I've owned an iPhone 3G and had a lot of fun with it. When time came however I did not get the iPhone 4. I don't like the way Apple is trying to shield my apparatus, that's right MY apparatus, for me to nose around in. And there is the iTunes prog. Well, ....., and an overpiced cable.
Sure Apple products had some feel of exclusivity but with masses og ppl buying Apple, that is no longer.
Don't know if I will like the Xoom though, how is battery life?

Just my 2cents, from Holland, cheers.

Peter Lorent said...

I think your article is - just as Steve Jobs' presentation on iPad2 - spot on. My feeling is that at the heart of the matter is Apple's user centric approach, their passion for software and innovation. That is what is driving the company, it's their culture. From the very beginning it was about 'we need to make this simpler, anyone should be able to use this'. And that very culture is the 'Apple Magic'. And it's something money can't buy.

Paolo said...

To your point about AAPL's cash on hand. You are right about the leverage Apple has and the advantages they enjoy by carrying around a large "suitcase full of cash". But what people aren't understanding is that Apple can accomplish all of this with a quarter of that amount- $54 billion is a dizzying sum. The reason why market watchers believe that it is foolish to keep that amount of cash on hand is because no one can invest that amount of money at an acceptable rate of return. Warren Buffett, who no one will deny is one of the greatest investors of all time, is having difficulty investing that same amount of cash and he said so in his latest annual report. If Buffett can't do it, then AAPL certainly can't. I agree that Apple is smart to keep a healthy balance sheet, but there comes a point when it's just overkill.

Tyler said...

that space game in the xoom commercial is fake? Lame.
@Kocjan,The PS2/PS3 argument is a false analogy, the PS2 and PS3 had fundamentally different architectures, the GPU in the iPad2 has the same architecture Imagination Technologies GPU , just more cores.

ishcabittle said...

Amazing rant, probably the most insightful thing I've read on the subject.

Matt said...

While the first iPad was a break through item, the second iPad is no more than a slight hardware upgrade. The iPad 2 is not worth the money.

To see more about my opinion of the iPad 2 and why not to buy it:
http://besttechtoday.blogspot.com/

Jef said...

That "fake" game is "Vendetta Online" for Android which is currently not released it looks like.

http://www.vendetta-online.com/android/

Val said...

Man, you are indeed so wrong on innovation coming from Motorola. They didn't copy did they? Look at all the products they have been trying to be best of the best on. Keep thinking that way. It is an uphill battle, but it he who endures and has a great leader that is healthy that will survive to the very end my friend.

Matt said...

Great post, thanks.

For me, one of the major platform differentiators, which is not immediately apparent, is the potential risk to viruses.

Everything that ends up on an iOS device has been approved by Apple (many hate that, but in the end it will protect the platform from the mess that has become the PC world, with slowng systems as virus software needs to run in the background, or worse, viruses and other unauthorised access).

I understand Google has certain 'policies' for developers, with poosible later rejection from app store, but that just seems too little too late in the battle for online security.

Jeff SKI Kinsey said...

>> A definite part of the reason you were able to buy an iPad for only $499 is because Apple didn't follow conventional wisdom about cash on hand. <<

Well said. And from some of the comments to your insightful post, I can tell there are still folks that did not learn the lesson that Apple did [and many others have learned the hard way], when you are out of cash, you are out of business. How much cash on hand is enough? Only Apple can decide. Remember, they "think different" and Jobs always enjoys having the last laugh. Too few people also understand that Tim Cook is as much the reason Apple has done so well since Jobs' return. That $500K signing bonus he received is worth billions last time I looked.

kmudrick said...

Perhaps people legitimately like Android as an OS instead of iOS - and thus want a high powered Android tablet as well?

There are pros and cons of each - for instance, google integration & maps are infinitely better on Android, and unless you jailbreak - Android seems to be a much more customizable OS. I love my iPhone but I do feel somewhat limited in that respect.

Personally - I'm waiting to see if HP/Palm can actually pull off webOS on their PalmPad without it being a lag-fest like the existing webOS-based devices. (I think it is a much cleaner experience than both iOS and Android primarily for its notification system and multitasking.)

blakboy_98 said...

great post. i agree that the ipad has android in the app department which is a big deal. i am an ipad owner but i for the most part only use my ipad for the basics, email, video, books, and lite web browsing. i think most fit this mold so i dont to much care about garage band or imovie but knowing that apps like these are available to me aids in my decision to stay with ipad. i hate that flash is not an option. the xoom looks really nice but it is just the beginning and the apps need to catch up. i cant want till the day i could break free of apple and have more of that freedom andriod gives.

John Clarke, Business Partner, jc-Interactive said...

Great post. But you failed on one part: the iTunes store has been running for nearly 10 years, and people have gotten used to the ease it presents in distributing apps. Then, there is also the fact that people have been developing for iOS much longer than for Android. Android has only been appearing on the scene for the past year, and have quite a number of apps for the mobiles. The tablets only started rolling out a couple of months ago, and Honeycomb being their latest offering in OS choice. I don't see any iOS 4.3 specific apps on iTunes, so I think 16 > 0.

Not saying Apple haven't done great, but I am just saying that the market keeps changing and who knows what the future is holding. For a company, Apple specifically, to have to mention other companies in their keynotes notes that they see them as competition. In the coming months the applications for the Android tablets are going to grow as more people start to develop for them, so once we can compare numbers with numbers, don't take it out of context

Brian said...

Replace Xoom with Mac. Replace iPad with PC. Now re-read your rant. Kind of tells a different story doesn't it?

Apple is the market leader, just as Windows was. Android is the insurgent, just as Apple was.

Ketan Patel said...

Hello Sir,

I want to learn Iphone development but how to start i don't know.

can u help me regarding this ??

Can u send me documents or link from where i can start learning of iphone development.

my email id is ketan_erp@yahoo.com

Jeff LaMarche said...

Brian:

Not to be argumentative, but if you:

"Replace Xoom with Mac. Replace iPad with PC."

The post would simply be wrong and somewhat nonsensical. There are some parallels, but there are far more differences.

Now, maybe I've missed something - it wouldn't be the first time. Maybe there's some brilliant part of the Xoom I've missed after spending a couple of weeks with it, but if I have, I suspect many consumers will miss it, as well.

This isn't about what you like, or what some people like, this is about Samsung or Motorola having a chance of making a dent. If they only target the geeks and tech-weenies who demand a USB port or SD card slot, they're going after a tiny portion of the potential market. If they do that, they're trying to sell in 2011 using 1995 strategies.

And maybe that's a brilliant plan, but I don't see it.

Jeff LaMarche said...

"Honeycomb being their latest offering in OS choice. I don't see any iOS 4.3 specific apps on iTunes, so I think 16 > 0. "

Really? That's your argument for what I missed here?

4.3 is a BETA OS that's not available to consumers yet. Developers aren't allowed to ship 4.3 apps yet. Talk about an unfair comparison. If that's all you have to hang your argument on, I think I'm going to stand by my original article.

The iPad 2 has the same resolution and same processor as the original iPad. Every single iPad-native app, is a native-resolution iPad 2 app. You'll be able to run 4.2 apps on the iPad 2 and they will run exactly as they do on the iPad only faster.

That's simply not the case with Honeycomb. Android 2.3 and lower apps often do not run well on the Xoom, and many don't run at all. Some run, but are unusable because the layout wasn't designed for the larger screen, and most 2.x apps actually run horribly slow under Honeycomb. Older Android apps are far more comparable to to iPhone native-resolution apps running on an iPad (which there are, of course, many).

SilentSno said...

Vendetta is available now on the Market, not a FAKE game.
https://market.android.com/details?id=com.guildsoftware.vendetta&feature=search_result

There are pros/cons to each and each person will decide based on what they want from the device.

I consider myself a power user, so widgets, and notifications are huge for me, and Android BLOWS Apple out of the water.

Being able to glace on my "desktops" and see many different information sources with more than a red number telling me how many new emails I have is the difference maker.

Plus 4G might be a huge thing for more power users than you are stuck without on the iPad 2.

And since the Xoom is "open" imagine when the Custom Firmwares come out like CyanogenMod, etc.. might due with the hardware. Just like the OEMS can slice up the OS how they want, so can use Software Engineers with Android.

Matt said...
This comment has been removed by the author.
MJ said...

That's no suitcase - it's a war chest.

At some point in the future Apple knows it could end up having to put to hand a massive buy of something in order to gain a lead in something or, alternatively, if things go badly, it will need to keep reserves. They never want to be in the situation they were in during the mid 90s.

The poor quality of competing products just astounds me. I complain we've not yet seen the apps which will make the iPad sing, but that goes tenfold for Android.

swirl said...

I haven't read each comment yet so I don't know if what I'll say has been capped on before. Still, I think Gizomodo already covered two other factors that Apple uses to bring the iPad price down - their retails stores and their iTunes ecosystem. They don't have to chip off their profits by chopping of some for retailers - they own their own distribution line. Also, the more people buy iPads the more people will buy from the iTunes and app store.

Wojciech Kocjan said...

@Tyler PS3 originally has hardware emulation for PS2 - game developers made games for PS2 since they could take on both PS2 and PS3 customers. So Sony removed the emulation layer to force devs into making PS3 dedicated games.

The point was that people will want to make games for iPad to have both customers - at least until iPad 2 gets enough customers - and people having iPad 1 won't upgrade to 2 because they won't get software dedicated for new hardware.

ps. People hacking PS3 claim the chip to emulate PS2 is still there, just disabled (http://www.product-reviews.net/2010/09/07/ps3-psjailbreak-update-did-sony-remove-ps2-gaming-on-purpose/).

hasnat said...

I have read an article on coming iPad2, in the article specifications/features and all the important FAQ are available.
http://searchesntopics.com/2011/03/07/ipad-2-coming-fridaymarch-11/
The article is really fully of informatic and inspiring.
Regard.
Wilson

Marc Hummel said...
This comment has been removed by the author.
Marc Hummel said...

Thought provoking post!

I see your point about the general public benefitting from a bit of competition, but Apple is one of those companies that has such a diverse creative team dedicated to pushing boundaries that if no one can catch up, I think we're in good hands.

I'm not sure this was your intention, but comparing the evolution of the iPad 1 to the iPad 2 and reaching the conclusion that this is the best Apple can do is a bit of a jump to me. I see the iPad 2 more as an iPad 1.5, and the true iPad 2 will be a more imaginative device.

Gavin McKeown said...

@John Clarke, the iTunes store was launched in April 2003, so you're 20% off in your 'nearly 10 years' estimate. It's actually just under 8 years. Also, the App Store only launched in July 2008, so the application development has only been around for less than 3 years. The Android Market was launched in October 2008, so in fact, iOS was only 3 months ahead of Android in being about to create and sell Apps.
It's not the length of time the store has been available, it's about the user base and the willingness of that user base to spend money in the store. That will change over time, but at the moment it's a huge advantage for iOS.

name99 said...

"
When they go to a vendor or hardware partner and ask for exclusive arrangements, priority fulfillment, or better prices, do you know what bargaining chip they have that few other companies have?

The corporate equivalent of a suitcase full of cash.
"

I think this is a point that isn't appreciated by most people. The single most unexpected thing I think I have learned from friends running medium-sized businesses is how cash flow dominates EVERYTHING. They're constantly screwing over their suppliers by delaying payment --- and constantly being screwed over by their customers doing the same thing. They're constantly renegotiating loans, and playing games like "renting" rather than buying equipment. And this is for SUCCESSFUL companies.

I can absolutely imagine the scenarios being described here --- Apple pays immediately, and perhaps even loans money for certain tasks --- and in return gets better prices and/or certain types of exclusivity.

name99 said...

"While the first iPad was a break through item, the second iPad is no more than a slight hardware upgrade. The iPad 2 is not worth the money. "

This makes no sense. If the first iPad was worth buying, why is an item that is better in a number of ways but costs the same, not worth buying?

Basically you are upset because some aspect of the hardware that you wish were upgraded (maybe the screen, maybe you want a cortex A15 in there) has not been.

But Apple is not selling based on "we want everyone with an iPad 1 to upgrade".
They are selling based on "we want to look competitive against the competition --- but no better than that".
Apple is behaving like any rational business would -- they are introducing the minimum amount of upgrade necessary, while keeping further upgrades (better screen, more powerful CPU) in reserve for when they are needed.

To want to live in a world where you upgrade your iPad every year, then to complain that Apple isn't playing along, is stupid. Do what normal people do. Buy the current model iPad, enjoy it for three or four years, then be amazed at how much things have improved when you buy your next one.

name99 said...

"But what people aren't understanding is that Apple can accomplish all of this with a quarter of that amount- $54 billion is a dizzying sum."

The market cap of Sprint is $14 billion.
That's an interesting number compared to $54 billion, no?

And think how much more interesting iPhone could be (and the entire Apple eco-system) if they didn't have to put up with carrier bullshit and shortsightedness.
For example --- imagine having a single account, your AppleID, and a single pool of data downloading capacity that you have bought, which you can use as you wish --- on your iPhone, your iPad, through tethering to your MacBook --- and for voice, for text messages, as you like. None of the traffic segmentation and multiple accounts nonsense that carriers currently put you through.
Imagine eg not having to deal with carrier locking and the way that cripples your iPhone whenever you travel.

So: Apple having that money in reserve has, for example, a certain value when it negotiates with the carriers. And I suspect that those negotiations are going to become a lot more interesting over the next few years. There isn't just playing off ATT vs Verizon --- there is the on-going threat that either you guys get your acts together and start treating your Apple customers better (obviously Apple doesn't care about how non-Apple customers are treated) or we might just up-end the entire system you've found so convenient for the past fifteen years.

Sudsy said...

Your analysis is true today but I wonder what things will be like in a few years when all the Chinese vendors will be producing good quality hardware using the legally free Android 3.0 (or newer). In the past, it wasn't possible for these vendors to produce any tablets because they couldn't legally use any of the existing tablet software. Android changes all this so they'll be able to concentrate on what they do best, which is to make commodity hardware in large quantities for very good prices.

BiBeep said...

In the last decade, when you would go about buying a piece of hardware, you would look for the best one or the fastest one. Nowadays, I believe that hardware doesn't make much of difference for normal users. Apple can still release their stuff with hardware which is not as powerful as the latest one out there because things are so fast anyways and people don't really care. As time becomes precious, people just want things to work. I used to be a hardcore hardware maniac who would build his own machine and get the most out of the hardware but nowadays I cannot be bothered. I just want things to work. By closing us in the so called ecosystem, things just work. You don't need to bother about so many other things. One thing which also helps are the apps. Software plays such an important part now. The appstore is full of apps that will work and the market place is full of ..apps... but a lot of them can't be trusted as well. One thing that google really needs to do is to release a premium/trusted/certified appstore.

Brandy said...

Great article! I just got my iPad 2 a couple of weeks ago, and am still learning a ton about what apps are out there. I'm an educational designer, and it looks like Elements is something that starts to get at what I think is really the true potential for a device like this. Thanks for turning me on to it.

People have been mentioning Apple's cash reserves for years, wondering what Jobs had up his sleeve with that. Now we all know - and how!