Great expectations for iPad

Apple's much-hyped tablet PC, the iPad, is likely to have a significant impact on emerging markets, driven by the potential of its applications in sectors like education, say analysts.

After months of anticipation, Apple CEO Steve Jobs unveiled the iPad, an all-in-one device merging smartphone and netbook capabilities, last week. The 9.7-inch multi-touch-screen tablet features Web-browsing, e-mail, photo viewing, video streaming, gaming, e-reading, Bluetooth and WiFi/3G connectivity, among other functions.

In research released yesterday on the iPad's market impact, Gartner forecast worldwide tablet sales of 10.5 million by the end of 2010, saying it would be the best-selling tablet yet.

Gartner notes that, as a versatile media-consumption device with a starting price of $499, the iPad will compete directly with netbooks for light use at home or on the go. But the firm adds consumers may need to consider the extra cost of accessories and a 3G subscription.

“If Apple can use its marketing might and retail presence to convince users how this category of device fits into a household that already has an iPhone and a PC - and if developers come up with more compelling applications to show off its hardware - the iPad will be a real hit,” states Gartner.

“The iPad has introduced a whole new market for software developers,” says Robin Olivier, marketing director at local Apple reseller, Digicape.

Apple's sizeable pool of applications has become a major market force, which Olivier says will only increase following the iPad's release. The device will run all of the 140 000-plus apps in the App Store, and Apple has released a new software development kit, so developers can create applications specifically designed to leverage the iPad's capabilities.

Gartner suggests developers use the multi-touch interface on iWork, a productivity suite for working with documents, presentations, and spreadsheets, as a model for developing touch-enabled apps on large-screen devices.

“People are developing thousands of applications,” says Olivier, adding that this is leading to a shift in the way users interact with software services and functions.

“Take something like Photoshop, which is a very feature-rich application; people who buy it generally only use around 10% of what it offers, because they're specialists. So while it may have features for architecture or engineering, they may only use the photographic tools.”

In contrast, explains Olivier, users could buy single-purpose applications for the things they really want, such as red-eye reduction or cropping, which may only cost around 99 US cents (about R8). “So you can pay R80 for the apps you really need and use, instead of R8 000 for a program where you're only using 10%.”

Olivier adds: “With this product, we're looking at the future of how people work. I don't think the iPad will replace the laptop, but laptops may adopt similar software.”

Gartner predicts that as developers release more native and Web-based applications for the device, it will be adopted in certain vertical markets, for example, as a video-based training tool or in education.

“It's the perfect device for emerging markets like SA, especially in terms of education, for K12 schooling and tertiary institutions,” says Olivier. He points out that because the iPad supports 3G, it could provide wireless broadband access in outlying areas that don't have proper infrastructure.

“The primary goal from an educational perspective is to provide textbooks and Internet access for one-on-one learning,” says Olivier. He argues that the iPad's price makes it a more attractive option than a classroom laptop, as it can come with preloaded textbooks, offer online tutorials, and allow presentations to be screened in environments that have projectors.

“The iPad is a product we can take to the Department of Education, and all tertiary institutions, as you have access to all of that in a lightweight device.” He adds that the iPad could serve as a single-point digital device for university students, linking up to intranets, campus maps, textbooks, and course material.

“Vertical markets have always been the most enthusiastic adopters of tablet-style mobile devices, and the iPad's slim size, robust solid-state drive, and clipboard-replacement shape will make it very usable in a host of environments,” says Gartner.

However, US-based analyst firm JBB Research takes a different tack. The company's CEO, Julien Blin, predicts the iPad will have almost zero impact on emerging markets such as South America, Africa, and even China.

This, says Blin, is due to intellectual property (IP) and content issues, the large proportion of low-income customers, and lack of support for wireless technologies like 3G and WiFi.

Carolina Milanesi, research director of mobile devices, technology, and service provider research at Gartner, says bandwidth and connectivity issues will be a key factor in the uptake of the iPad, as high-speed connectivity will impact the user experience.

But Milanesi adds that the factors affecting uptake in SA are similar to those globally, including price point, 3G coverage, and WiFi hotspots. “They just play a different weight according to the market.”

Gartner says the no-commitment 3G data plans are a good move and priced low enough to appeal to heavy mobile users. “But many users will already carry a device with a data plan, and may be reluctant to pay for two subscriptions, as well as the extra $130 for the 3G iPad model.

“We believe most consumers will use the iPad from the living room, coffee shop, or campus, where they have access to a WiFi hot spot and, therefore, the WiFi-only version will sell better,” the firm states.

Despite being lauded for its competitive pricing, Blin says the iPad's $499 price tag for the WiFi-only, 16GB model, and up to $829 for the full version (WiFi/3G, 64GB), will remain out of reach for many customers in emerging markets.

But Milanesi points out that iPhone uptake in SA has been reasonable, and argues there is a market for strong branded devices that carry a high price point.

“This, however, will be more niche than in markets like Europe or the US,” she adds. “Given the strong push for wireless broadband, it could also be an interesting device for operators to use as a push to sign consumers up.”

Another obstacle to uptake in developing markets, according to Blin, is IP and content issues. “Today, many people download content from iTunes, and shift this content file into a shareable MP3 player. Here, in the US, it's against the law to share content that way, but the reality is that many people do it knowing they could be fined heavily.”

In an emerging market like Africa, however, it is hard to enforce this type of law, says Blin. If the content available on the iPad gets into a country, like Nigeria, for example, it would be difficult for the content industry to penalise the end-user, he explains.

But Olivier says Apple has been very successful in locking down music, video and app downloads. “They've taken it to a point where it's almost impossible to pirate stuff.”

In addition, he notes, the device platform itself cuts down on sharing, because, unlike a book or magazine, which consumers can pass on to friends and share physically, the content on one user's iPad can't be shared with another.

An Apple release says the new iBooks app for iPad includes the company's iBookstore, which will feature books from major and independent publishers.

According to Gartner, publishers must experiment with a variety of distribution models for the iPad, both through Apple, as well as the competing e-book application ecosystem for the device. “Prepare for renewed interest in e-book readers; Amazon, Sony, and Apple will compete more fiercely now and may offer better terms,” the firm says.

Competition has already ramped up in recent weeks, with Amazon.com losing the battle to keep e-book prices for its Kindle reader at $9.99. The site pulled and then reinstated books from publisher Macmillan, after it demanded a price increase to between $12.99 and $14.99 for its e-books.

“Huge content publishers worldwide are very protective of their printed content,” notes Olivier. He adds that newspaper industries have realised the reduction in demand for printed content, and predicts the move to digital will bolster iPad sales.

“As this starts happening more and more and people become more eco-sensitive, the convenience and immediacy of this device will become increasingly important. Digital delivery of news is almost instantaneous, with updates you could never achieve in print.”

He adds that the multimedia capabilities offered by e-readers such as the iPad, including video, makes the experience much richer than with a printed product. “I expect that in future, it will be the book delivery system of choice.”

“We expect textbook publishers will approach the iPad and the Bookstore cautiously,” says Gartner, adding that the iPad's iPhone OS lacks support for Adobe's Flash technology. “This will present a particular challenge for newspaper and magazine publishers, which have grown comfortable with using Flash on their sites.”

Olivier maintains that the iPad is more than just another gadget, and will have a significant effect on the market. “It's changing something that no one has really been exposed to before, and it involves a paradigm shift that will take a while to become effective.”

Milanesi says Apple will also respond to market demands in future updated versions. “This year will show the potential of the device, and Apple will then decide how to develop the product portfolio in the long-run.”

According to Olivier, there is no information on local availability or pricing yet, but he confirms that the iPad will definitely be coming to SA shelves, and not suffer the delayed release of the iPhone.