The iPad Has Become A Problem For Apple

The product of the year 2010. The company of the year 2010. The CEO of the year 2010. Nobody has any doubts the 2010 was the year of the iPad. The magical and revolutionary iPad. The device that has changed mobile computing paradigm.

Watching the iPad 2 event last Wednesday I kept on thinking... what the hell...? So little? After a year? Same screen. Just a few minor OS software enhancements. A little lighter. Faster, but was anybody complaining the iPad 1 was too slow?

Where is Flash on this powerful dual core processor? Where is the active bezel supporting gestures and virtual buttons? Where is the high resolution display? Brightness control? Improved automatic brightness? Wireless synchronization and peer to peer content transfer (still can't move pictures from my iPhone to the iPad...). Where is three-finger sweep switching between active applications? How about improved selecting of text and copy / paste?

I think Apple has deliberately put iPad on a slower lane. It is becoming a big problem for them. The name of the problem? Cannibalization. Simply making the iPad better they would earn less. Who would be buying $1500 MacBooks if the $499 iPad was really that good at content creation and full Web consumption (read: copy / paste, document publishing and Flash on web sites).

I have been through such dilemma myself. Two products. One more expensive, one cheaper. There was an immense pressure from the market to improve the low end product. And with every feature we were discussing the impact on our top and bottom lines. Everything was possible from technology standpoint. But when you make the low end product as good as the high end one, nobody will buy the high end. The market is happy and your margins go down. And your shareholders go furious.

This is an interesting aspect. It will be the key factor defining what we will be getting in the future releases. Apple does not have this problem with the iPhone, as it does not cannibalize MacBooks. Or at least as long as it does not have Atrix - like laptop dock. But with the iPad 2.0 (or, should we call it 1.5?), it is clear Apple has done absolute minimum to stay in the game. Minor cosmetic touches (thinner, screen covers), version refresh, CDMA Verizon radio, white color. But really is thinner, white and magnetic cover improving productivity, usability? Is it changing the game in any aspect? Everybody knows they could do much more. But they simply did not want to.

Interestingly, Google and the horde of Android tablets in pursuit, have no such cannibalization problems. Neither Motorola nor HTC nor RIM make PCs / laptops. So they can only expand their market share innovating the tablets. Apple has just shown us what the 2011 will be the year of. The year of Android. They may not necessarily be thinner or have magnetic covers, but I believe will bring some real innovation to the market.