One factor that the author doesn't mention is Apple's success at lining up deals with component manufacturers. A couple years ago (before anyone had heard of the iPad) they locked in great prices on flash memory and LCD displays. They could do that because they were about to invent a huge market, and they knew it. Anyone trying to get into the tablet business in 2010 had to pay much, much more.
Steve Jobs and Johnny Ive are no slouches, but Tim Cook doesn't get enough credit for stuff like that.
A hundred upvotes, really. Tim Cook turned Apple from a sloppy, cluttered mess to a perfectly tuned and calibrated machine. He designs business processes like Ive designs hardware enclosures. He's still at it, too, telling investors during the last earnings call that Apple once again snapped up a boatload of supply on an unnamed type of component.
I bet he'd be amazing at Starcraft, once he learned the ropes.
I knew Apple was on to something again when, not long after Jobs retook Apple, their inventory on hand started to approach that of Dell. That was Cook's doing.
I know this is going to burn my karma, but having watched the personality cult of Jobs grow to dominance, and now observing the mantle being handed over to Cook in a way that the cult appears just to have adapted to follow the new leader... it's a very disturbing sight.
Apple are a great company for sure, but I'm extremely uneasy reading things that make any individual such an icon, let alone with Apple where it's happened before.
Tim does appear to be a strong leader and sound COO, but please can we let this personality cult dissipate and not just replace the head that is worshipped. It's weird.
"I'm extremely uneasy reading things that make any individual such an icon...Please can we let this personality cult dissipate..."
Personality cults are much more important than you realise. The post-modernist approach seems to be to downplay the significance of individual visionaries in favour of diffuse accolades attributed to the group or larger corpus. It's nonsense.
Shakespeare was an individual (not a nebulous, anonymous, amorphous collective) of unique literary gifts. Jobs is a design and technological wizard who single-handedly righted the ship. Tim Cook is a process engineering and business operations mastermind of the like that has never been seen since Carnegie. Ives' industrial design methodologies will blaze the path for decades to come.
You've fallen for it. Ives is the designer, not Jobs. Woz was the technological wizard, not Jobs. Jobs is a leader, a salesman and a marketer. Granted, he's a wizard (in the Oz sense of the word) but pull back the curtain and you'll find other incredibly talented people doing their jobs, if you'll pardon the unintentional pun.
"You've fallen for it. Ives is the designer, not Jobs. Woz was the technological wizard, not Jobs."
I don't think I've fallen for anything (in fact, I made strong mention of Ives with respect to industrial design). Being able to conceive good design and being able to guide good design are both signs of design competence; being able to conceive good technology and being able to guide its development are signs of technical proficiency. Jobs in his role as guide (or leader) is an exemplar.
I never claimed (and I don't think anyone else did) that there are no "other talented people doing their jobs".
Your rejoinder, rather than actually arguing against personality cults, is more a reminder that "a witty remark proves nothing."
> I never claimed (and I don't think anyone else did) that there are no "other talented people doing their jobs".
From your earlier comment:
> Jobs is a design and technological wizard who single-handedly righted the ship.
Thats you falling for the personality cult right there. That's also you claiming that Jobs somehow managed to fix Apple singlehandedly, which of course is wrong. Your comment about Ives trailblazing for years to come is quite amusing, given that Ive freely admits that he's heavily influenced by Dieter Ram's work (if you look at Ive's designs you'll see that he's following Ram's principles).
> Your rejoinder, rather than actually arguing against personality cults, is more a reminder that "a witty remark proves nothing."
That sentence appears to be a prime example of your quoted phrase.
Well. I am in favour of personality cults. I'm an ardent believer in personal responsibility. Personality cults encourage us to focus on our own performance and perfecting our own skills.
So If I'm "falling for the personality cult right there", I'm more than happy to and I encourage more people to.
ps. The debate on whether Apple would be what Apple is today without Jobs' Great Return is long and storied. I won't wade any further into those murky waters (As per the personality cult ethos, I'd wager that Jobs saved Apple and that without him it would have sunk).
Shakespeare was an individual (not a nebulous, anonymous,
amorphous collective)
Not that it matters concerning the point you make, but that may not be the best example, as the question of whether Shakespeare was an individual genius is a matter of some serious, although somewhat fringe, debate [1].
I am aware of the serious debate on the issue. But that's sort of the point I am trying to make: One approach seeks to recognise individual genius for what it is: the gift of a singular person; another approach seeks to discount those achievements by attributing them to a diffuse, sometimes ancillary but oft ill-defined group.
The latter approach has become prevalent in recent decades (in my opinion). Now, it is fashionable to question the legitimacy of an individual's greatness, to downplay it and instead award yellow stars to everyone who participated, no matter how tangential their contribution.
The new idea is that no one man could be so smart, so gifted or so diligent as to produce all that Shakespeare did; no one man could be so clairvoyant and visionary as to define the face of technology for a decade; no on man could have all that innate power.
Exactly, it's a combination of betting big on market vision and component supplier management, and not as much about vertical integration. Case in point, "Apple secures 60% of global touch panel capacity, causing tight supply". Tight supply constrains iPad competitors price position with component suppliers.
Isn't 10" the standard netbook display size? Maybe not in the same aspect ratio as the ipad, but no one appears to be trying to stick with the ipad's aspect ratio anyway.
So is it buying in bulk or planning ahead that make Tim Cook the greatest COO in history? Because neither seem particularly amazing to me. Is it just the fact that the sums of money involved are quite large? Or is it the subtle undertones of sticking it to the competition so they can't compete fairly that makes this story (and the ones about patents) resonate so strongly with Apple fans?
It's both, as a matter of fact, and judging from the struggling competition neither is particularly easy. When discussing Cook's qualities and Apple's refined processes, there isn't much fanboy-ism involved.
And yet if you ask a hundred Apple fans why their competition is struggling you'll get a hundred different reasons. You seem to be claiming that planning ahead and buying in bulk to produce a cheap, boring looking, plastic tablet with a half-finished, linux-based phone OS and stylus interface would be enough to destroy the competition. Others would disagree.
And not only do you credit this one factor with decisive victory, you're attributing it not to Apple as a corporation, but to one individual. In other words, this is all about fanboy-ism. Indeed, like the face of Jesus appearing in a grilled cheese sandwich, the only interesting aspect of this story is the way the believers react to it. The underlying reality is suspect, but no-one seems to care as long as it fits their narrative.
> And yet if you ask a hundred Apple fans why their
> competition is struggling you'll get a hundred different
> reasons.
I'm not an Apple "fan." Also, given that success is usually a fairly complex phenomenon, varied opinions are hardly surprising. Ask a hundred so-called "Apple haters" why the company "sucks" and you'll get even more incongruent answers.
> You seem to be claiming that planning ahead and buying
> in bulk to produce a cheap, boring looking, plastic
> tablet with a half-finished, linux-based phone OS and
> stylus interface would be enough to destroy the
> competition. Others would disagree.
I'm not claiming that, and I strongly doubt that I seem to. In fact, I'm simply defending the proposition that Apple's impeccable management of supply chains and inventory allows them to produce quality products at scale and reasonable price points. Yes, producing quality products (not cheap, boring plastic tablets) for 500$ is something that the competition can't do at this point. The stuff that is on par is more expensive (Xoom, Galaxy Tablet and so on); the stuff that is similarly priced or way cheaper (Notion Ink Adam, Archos) is very flimsy and immature.
The combination might destroy competition, including Apple, yes, but would definitely require sophisticated supply chain management. Right now, all relevant components are limited resources. What's so controversial about that?
> And not only do you credit this one factor with decisive victory
I don't (cf. difference between necessary and sufficient conditions).
> you're attributing it not to Apple as a corporation, but to one individual.
I don't. It's a fairly wide-spread habit to identify the work of a full department (operations) with its VP/head (COO Cook). Nothing wrong with that; reading it as "ZOMG TIM COOK IS DOING EVERYTHING WITHOUT HELP!!!!11" is naive at best. Of course, he relies on hundreds of engineers and administrators, but he's been successful in several companies so far and from what I've heard he is indeed a "hands-on" manager and workaholic.
Nothing fanboy-ish about that.
> Indeed, like the face of Jesus appearing in a grilled
> cheese sandwich, the only interesting aspect of this
> story is the way the believers react to it. The
> underlying reality is suspect, but no-one seems to care
> as long as it fits their narrative.
Oh, now you're just venting anger. Fair enough. Continue.
I'm not angry. I'm genuinely interested in myth-making, whether it's conspiracy theories or religion. The Tim Cook thing is too nebulous to argue about, but the A4 thing is the exact same from this perspective.
It's a chip designed and built and sold by Samsung, Apple's chief rival in smartphones (and soon, tablets) and yet the storyline around it is that Apple's competitors can't compete with it because it is Apple's special sauce. That's bonkers. Even more so when you realise that even the Samsung built chip is just a commodity. Samsung's own Galaxy S II phone will replace the next generation A4 with Nvidia's Tegra2 in some territories, that's how interchangeable a commodity it is. (Some speculation why they don't have enough of their own chip, either manufacturing teething troubles, or Apple's already put in a big order).
Yet Apple can put a logo on it, give it a cool codename and stand up and sell a commodity and have people believe it is something special. I'd love to know if this is something Apple marketing understands and intentionally manipulates, or if Apple just reflexively takes credit for the work of others (which by the way is the original meaning of the Reality Distortion Field if you look it up on folklore.org).
Given that the A4 story can thrive in the face of objective reality, you can understand why I'm amused and intrigued that the average time between people finding out what a COO does and deciding that Tim Cook is the best at it in the world is about 2 seconds. After all, even commodities are better when Apple uses them.
This makes Time Cook my dream date. Seriously, and I hear he swings my way too.
There are many ways to innovate in business and technology and design get a lot of time in the spotlight.
Operations, especially of a very large enterprise, with thousands of suppliers which also demands highly precise manufacturing and quality control, while having operations spread around the globe, and a public awareness factor that makes it vulnerable to any "Watchdog" who wants to make news... running a less-than-30-days-inventory system is playing on the Nth level.
Can anyone name anybody who has done something like that? Amazon's distribution network is a lot easier, as they control all the infrastructure. Dell doesn't have the volume or quality requirements or focused product lineup (which reduces substitution- eg: if dell is out of a particular laptop model, they have others to substitute, apple doesn't have that luxury.)
It is no wonder Apple is doing long term contracts for supplies like this.
Some have accused them of cornering the market, but this is not like cornering the market on Silver (look up Hunt Brothers) -- as anyone with reasonable technology can make a substitute for electronics components which are fungible commodities for the most part.
This is just good management of a very sophisticated manufacturing network.
I'd be tempted to say that automotive just-in-time processes are, if anything, more impressive in terms of the industry integration. There you'll have hundreds of suppliers coordinating so that custom builds roll off the production line in an arbitrary order, with no more stock in hand than there are builds in the system for the next shift or so. I've seen it at work at BMW, and it is frankly terrifying to consider what the supplier contract terms must be like; if any one of them has a screwup as simple as packing their parts onto a transport in the wrong order, it has major cost implications.
I worked for a supplier. We had some teething problems once on a new vehicle. We ended up helicoptering parts to the final assembly plant, so we wouldn't shut it down.
At one point this operational oomph was Dell's strongest point with which they crushed the competition. Until everybody imitated them, which they couldn't prevent because they were in the totally commoditized PC market anyway.
"That’s (Apple stores) advantageous, because if the iPad were primarily sold at third-party retail stores, a big chunk of profit would go to those retailers, Hiner reasons."
"Designing in-house means Apple doesn’t have to pay licensing fees to third parties to use their intellectual property. For instance, the A4 chip"
This is silly. Software development, retail, chip design etc. all cost money. Apple isn't just taking Bets Buy's cut, it's taking its risk and its costs. Same for chips, software, etc. Actually it's more risky and costly in many ways. If the chip turned out to be good but not ideal for iPads they're not going to go find a different market for it. Apple stores aren't free to cash in on whatever popular high margin non-Apple widget people are buying this season.
Vertically integrating obviously works well for Apple, but saying that Apple is able to sell iPads @ $500 because of it is missing the point. You now just have to explain what makes apple good at retail, software, chip design, etc.
There is a bit of a contradiction. It cannot be both great that Apple doesn't outsource its retailing and great that Apple outsources its components production. Economically, it should buy from the cheapest and most efficient source all it requires. If best buy are more efficient retailers, then Apple should use them; but I think there are some advertising advantages to their stores.
"It cannot be both great that Apple doesn't outsource its retailing and great that Apple outsources its components production."
Why not? Outsourcing isn't always good or always bad.
Economically, Apple should do the things it can do well (software, design, retail) and outsource the things it can't do any better than anyone else (component production, assembly).
I think we are saying the same thing, and I just did not say it well. My problem with the statement I quoted is that it is unconditioned on efficiency.
Architecturally wise they are vertically integreated with all their in house hardware and software but I dont think anyone can argue that their manufacturing practices dont help that statement.
There used to be a time when Left-leaning people knew some history. Terrible as the worker conditions might have been at the dawn of the Industrial Age, they were a vast improvement compared to the past.
Equally so, unpleasant as Chinese factories may look to a Westerner, they are an improvement over the past. Have people actually asked those workers if they were willing to quit or had better prospects elsewhere?
> There used to be a time when Left-leaning people knew some history.
Everyone tends to view history from an angle that supports their preconceptions. You don't seem to be any exception.
> Terrible as the worker conditions might have been at the dawn of the Industrial Age, they were a vast improvement compared to the past.
How are you defining worker conditions?
A family with a small plot in the countryside could not occupy their full time with cultivating the land. If you travel throughout the deep countryside of countries like Cambodia, Vietnam, China and the poorer parts of Thailand like Isaan, you still see much evidence of this today.
People moved to the cities because they could make more money. It's that simple. In no way were working conditions an improvement if you care about hours, health and safety. The ready availability of jobs for unskilled labor also created perverse incentives for parents to send their children to work at the factories. That was true in late 18th and early 19th century Europe, and it is still true today in the poorer emerging economies.
I suppose, said or insinuated no such thing. What a childish comeback.
Of course it isn't evil. If you're starving then making money is not only not evil but a necessity. Beyond meeting your immediate needs, working endless hours at a repetitive, unhealthy job to support your family or further your children's future is commendable.
That does not mean worker conditions improved with industrialization as compared to working on your own farm or as a day laborer.
A standard of living is not made by just the raw hours of leisure. Industrialization also brought security from famine and allowed for hygiene, sewage and medicine. It also allows people to chose to work very little, just to support their bare necessities (although very few chose to).
In many cases it wasn't really a voluntary choice to change lifestyle in order to make more money; a lot of the mass-urbanization periods happened when previous ways of making money collapsed. In the U.S., two big periods of rural flight were the late 19th century, when industrialization of farming lowered prices enough that family farmers were no longer competitive; and the 1930s, when the dust-bowl put another large cohort of family farmers out of business.
You could argue they ended up better off anyway, but it wasn't as if millions of people sat down and voluntarily decided, "well, I could stay and farm, but I'd rather go to the city and work in a factory". The collapse of family farming as a viable occupation sort of made the choice for them.
The industrialists were not responsible for the conditions of late medieval agriculture. Again, would the rural folk have been better off without the factories altogether?
An alternative way to look at things was that industrialism saved Europe (and later the rest of the world) from waves of famine. It allowed, for the first time since centuries, the possibility for ordinary people to travel to work and to move up in society. Conditions were not agreeable to a modern eye, but compared to the past were a great improvement.
But in spite of the fact that they outsource manufacturing, they have their own OS, hardware they've designed for the external (such as the chassis), and components they've designed internally (like the A4) - they're still far more vertically integrated than any competitor.
Do you have any more vertically integrated player in the market that has yet to be discussed? The rest of the companies use off-the-shelf parts and an OS they haven't designed. They all are far less vertically integrated.
Certainly Apple is not completely integrated vertically, but that doesn't mean they aren't more so than any of their competitors.
Samsung designs and builds chips (the A4 with another name basically), AMOLED screens, RAM, flash, chassis and OS (Bada) for some of its smartphones. Probably even more so for its dumbphones. I'm guessing Nokia is also more "vertical" than Apple. And that's just immediate rivals in this industry, I'm sure there's better examples if you only limit it to "in the world".
Is having one's fingers in a lot of pies quite the same thing as vertical integration? If a team making a Samsung phone needs a chip made by another arm of Samsung, do they get special pricing or do they have to bid against other chip customers?
More than just licensing the tech, Apple buys the companies who make it. Apple owns Intrinsity, which designed the A4 processor. Apple also owns P.A. Semi, which contributed to the A4 SoC. Apple partially (10%) owns Imagination Technologies, the makers of PowerVR.
> Apple owns Intrinsity, which designed the A4 processor.
That's a pretty long shot. Intrinsity clearly improved the A4, but overall A4 is a very standard Cortex A8 SoC.
> Apple also owns P.A. Semi, which contributed to the A4 SoC.
I have not seen any analysis or information pointing to actual PA Semi input in A4. Where Intrinsity is well known for improvements to existing designs (power-wise, mostly), PA Semi is generally credited with brand new and unique design, which the A4 isn't. I also understand most of PA Semi left after its acquisition.
> Intrinsity clearly improved the A4, but overall A4 is a very standard Cortex A8 SoC.
Agreed. According to the Times, Intrinsity only made the Cortex A8 perform at a higher frequency [0]. An another Times article suggests PA Semi worked on the A4 [1], but no details are given.
It's not just manufacturing, Samsung co-designed them too (with the company that Apple later bought, which apparently retro-actively made this chip a great example of how Apple does everything "in-house").
> Apple has partnered with a few retail chains such as Best Buy and Walmart, but those stores always seem to get a small number of units in stock. Hiner rationalizes that the true purpose of these partnerships is probably to help spread the marketing message, not so much to sell iPads.
The display unit at WalMart is behind plexiglass. If you want to touch it, someone with a key has to open the cover. I'm glad to see current Apple products at WalMart, but the actual sales experience is significantly less than going to an Apple store, or to BB.
IMHO, the real secret behind the iPad's price is supply chain management and very astute inventory control. Idle inventory can really wreck your bottom line.
> Designing in-house means Apple doesn’t have to pay licensing fees to third parties to use their intellectual property. For instance, the A4 chip inside the iPad is based on technology developed and owned by Apple (not Intel, AMD or Nvidia). The operating system is Apple’s own, not something licensed from Microsoft or Google.
Apple doesn't/didn't pay licensing fees to ARM or PowerVR for the A4 components?
What exactly do you have to pay to Google to "license" Android?
It seems like the author doesn't quite know what he's talking about.
>What exactly do you have to pay to Google to "license" Android?
For one thing, all of Google's core applications - Gmail, Maps, Search, Google Voice, Googles, etc. Same thing with the Marketplace too. All the handset manufacturers have to pay Google to include those apps on their handsets.
For that extra $100 you get 2 cameras, dual core instead of single core processor, 1gb ram instead of 256mb ram, 1080p instead of 720p, 1280 resolution instead of 1024, android 3.0 (built for tablets) instead of ios 4, expandable storage up to 32gb microsd, flash support, hdmi, usb 2.0, gyroscope, 4g (for the more expensive model), and a motherfrackin' barometer :)
And by the way there are perfectly good android tablets already available for around half the price of the cheapest ipad. You can already run android 3.0 on a $249 nook color.
Why not? Even if you compared it as "half the iPad at half the price" - it still is a touch based tablet computer with similar hardware to the iPad, albeit a smaller screen.
Nook color full specs:
Processor: ARM Cortex A8-based Ti OMAP 3621 @ 800 MHz (same processor as Droid 2 and Droid X)
GPU Processor: PowerVR SGX530 Graphics Rendering: Open GLES1.1/2.0 Hardware Scaling: 854x480 scaled to 1024x600 Video Formats: .3GP, .MP4, .3G2 Video Codecs: H.263, H.264, MPEG-4, ON2 VP7 Image Formats: JPEG, GIF, PNG, BMP (same GPU as Droid 2 and Droid X)
RAM: 512MB Hynix H8MBX00U0MER-0EM MCM (Stacked Chips 2x256MB each die mDDR)
Internal Flash: 8GB Sandisk SDIN4C1-8g
Removable Flash: 32GB via microSDHC
Connectivity: 802.11b/g/n Security: WEP/WPA/WPA2/802.1x Mode: Infrastructure
Display: 7" 1024x600 IPS Display w\VividView Cypress Semiconductor TTSP Gen 3 (TMA340) Touchscreen , kernel driver , reference LG Display LD070WS1 (SL)(02) LED Backlight Pixels per Inch: 169 Aspect Ratio: 16:9 Colors: 16 Million Viewing Angle: 178° (same as HTC 7 Surround and HTC 7 Mozart)
battery Battery Life: ~8 hours
Micro-B USB 2.0 High-Speed
Accelerometer
So B&N is able to deliver a device with matching specs minus smaller display for $250 less than iPad. I am not counting magic or experience anywhere - we are talking about concrete stuff like hardware components here - with Honeycomb we could argue that it is possible to ship a iPad alternative with better hardware and equal or better software for $499.
I think your comparison is more than a little narrow. The Nook and the iPad are marginally similar but not really comparable devices. There's a reason why one has been far more successful than the other, and no, I'm not referring to any sort of "magic" or ephemeral voodoo.
But there's a larger point to be made in that I think your comments reflect a common attitude among many nerds - this obsession with specs. Most consumers don't make purchasing decisions based on a giant list of specs. Maybe you feel they should and they're stupid for not doing so, but that just isn't the reality of the market. And many manufactures, as well as Google, are starting to realize they simple can't put a faster processor and more memory in their products and expect to compete with Apple. Google in particular is putting a lot more effort in to the "polish" and overall "experience" of using Android devices. I know these are dirty words for some, but they reflect the market realities of how consumers make purchasing decisions. And I think it's a good move that will help Android increase it's market share even further.
I am not denying the "experience" factor. You are right that most consumers don't care about specs at that detailed a level - they do care in general at high level about it, i.e. screen sizes and storage space etc. but that is besides the point.
What I am pointing out is that it is possible to produce and sell a device that can compete with the iPad on specs and experience - the original article said nobody else could sell a device matching the specs of the iPad at $500. It clearly is possible and with Honeycomb improving the experience the software part is also covered - mostly for free to Android tablet device makers.
I see no one mentions the NotionInk Adam, at $550 for the top end model (with a spec better than the ipad) I think it's a real contender. http://notionink.com
Disclaimer: I have one on order.
Edit: I'm also struggling to see how they are cornering the market by consuming all the components that are manufactured, rather I think it a combination of clever marketing & strong fanboy base.
Yes, but ipad is at least a generation behind hardware-wise. If I were to buy a tablet now, I'd rather pay $100 more for last generation hardware. The same as with PCs, mobile phones ... why pay premium price for old stuff?
I guess it's also a problem with Android. When the iPad is sold for the low price, they're aiming for market share. This in turn, attracts developers which attract consumers where apple makes a nice 30%. But if Motorola competed for a low price, it wouldn't necessarily secure a future as it only furthers the Android platform, which any vendor can build on top of. Thus it doesn't make sense for any Android tablet vendors to play loss-leader, while it does for Apple to.
As far as I'm concerned, I'm not sure this is about price. Yes, I have the $499 Wi-Fi iPad, but I bought it over the Kindle, Nook, and Galaxy because it's a perfect blend of technology and efficiency.
The Galaxy feels like a clunker, and the Nook isn't versatile.
I don't believe the iPad can replace a decent netbook or macbook for working on the road, but it works great for doing what it's supposed to do.
The reason the competition can't get it right is because they're trying to compete by adding more junk that we don't need. They do the same with phones too. Loading more memory or faster processors isn't what works for me - what works for me is a lightweight device that works.
I rarely use my iPad, but I wouldn't sell it because it serves a great purpose, which is as a tweener. The competition is trying to turn their tablets into souped up netbooks with touch screens, and that's why they are failing.
The Kindle is not a tablet though. That's not dismissing the Kindle (I own one of the big sized Kindle's and I lvoe it), Amazon explicitedly has set out to make an e-book reader, not a tablet.
The Nook is closer, but it still isn't comparable to an iPad.
When I read about the component shortages of 10" displays, I couldn't help but think about Steve Jobs rant last year about tablet sizes. He went on about how Apple had thought a lot about tablet screen sizes, and that you needed a 10" screen to get a decent experience. The companies deciding on a 7" screen had made the wrong choice.
It now seems like he was just mocking the competition about being unable to ship a similar price competitive tablet.
The most ironic part of the iPad (and now Android) tablet explosion is that hard Bill Gates had been pushing tablets for years at Microsoft. And now Microsoft doesn't even have a dog in the fight.
Bill was too early, didn't want to do the necessary UI work, and didn't have the hardware team to push the hardware standards up. I remember people trying to use windows tablets. They were full-on laptops running an extended version of windows, with a few apps and a handwriting recognizer slapped on top. They were heavy, confusing to use, and not terribly finger-friendly.
They've got good reason to stay out of this one. iOS came from Apple's phone OS (esp. in terms of UI). Until Windows Mobile starts getting some traction, MS is better off staying out of the fight. You can always commoditize your opponent later.
Somehow, having a crapload more hardware hasn't entered the author's analysis anywhere. Why would you expect 1GB of RAM to cost the same as 256mb?
I can't believe people are buying this tripe. I'm willing to put down $20 that by the holidays, you'll see cheaper android tablets (same specs, not this bullshit), any takers?
I don't see what will change between now and christmas. Many of the android tablets are vaporware at this point so there is nothing to stop them from advertising that they'll be cheaper... yet they seem to be more expensive for the most part.
Well, you should go ahead and take my money then - I wasn't kidding about the bet.
What will change? First of all, the Xoom isn't spec-comparable to the iPad and second, other manufacturers will start shipping their tablets, bringing prices down.
Facts don't matter. This is a new article of faith for Apple fans. Some Apple commentators still think that all Android phones cost the same as the iPhone because of Apple's magical supply chain. In reality, the competitors are delivering more raw hardware, at a lower price than Apple, mostly via building from generic, mass-produced, commodity parts. Clearly the same is true in tablets.
Ironically Apple's true advantage, that it can deliver a better end-user experience per unit of hardware power, by clever holistic hardware/software/product/ecosystem design is pretty much the opposite of this new theory, and Apple increasingly finds itself in a tech arms race that it doesn't want to be in. It wouldn't surpise me if Apple conceded the high-end hardware in both tablets and phones this year to better pad its margins on devices that are expensive yet middling in raw power, instead focussing on user experience issues like battery life.
What if Apple is selling iPads at/below cost in a bid for marketshare? I could see Jobs et al guessing this would be a big market, and choosing to sell (especially the entry model) at/below cost. Reminds me of the Jobs' perspective on why the the Mac stalled in the 1980s, "when they should have gone for market share, they went for profits." (<a href="http://www.newsweek.com/2004/02/01/ok-mac-make-a-wish.html&#...). This time he's going for market share.
I feel a lot of other companies are riding the tablet wave. Why would motorola underprice the Xoom when possibly they could make a killing on selling the next "iPad" killer.
If its true that Apple is sitting on a pretty price margin on the iPad, then the Xoom, I feel, wouldent be to far off. If they had to they could lower the price to gain momentum but so far this is Motorolas first good tablet release and I dont think they will want to miss an opportunity to make a pretty penny on this.
I think the underlying assumption of this and other articles is that if they could, they should and would release a tablet at (at least) price parity. Therefore, since they aren't, the belief is that they can't profitably price under $500.
I don't know why samsung went with a 7" vs 10" but it makes a huge difference. In comparison its like carrying around a big hardcover book vs a paperback book. Watching youtube and stuff on it is fine, I don't find a huge difference. The biggest difference I find it much easier to hold with one hand, and manipulate the screen with the other without having to place it on my lap or needing a stand, and hold it like a real pad should be held and to pass around.
Apple definetly holds a dominant hold on the 10" tablet market and the Samsung Tab took a stab at the market with their 7" and did ok. I feel Motorola is taking a brave stance here by trying to tackle the 10" market. As another comment in here points out, "wifi-only Xoom to be priced at $600" so there is competition when it comes to the "Nobody Can Match the iPad’s Price". (http://arstechnica.com/gadgets/news/2011/02/motorola-xoom-ta...)
If I understand it right... (I probably don't) Aren't this sort of vertical restraints anti-competitive? Could someone please explain me how they locked competition and didn't hit any sort of antitrust laws?
Steve Jobs had already warned that margins are going to be down. It was a strategic decision to not earn Apple-sized margins on the iPad, but rather outflank the PC industry by introducing a new computing product.
Wired.com is right though on the ability to suck the air out of the touchscreen supply. It is an acknowledgement to the artificial gravitational field Apple exerts on the hardware components market.
Apple can sell the iPad for $500 because they have the iTunes store backing it. They know they don't need to make money on the sale of the device because the entire point of buying the device is to buy apps for it, and Apple as we all know gets a cut from every sale.
Other manufacturers don't have this working for them.
"[Apple knows it doesn't] need to make money on the sale of the device because the entire point of buying the device is to buy apps for it,"
The opposite is true. Apple doesn't need to make money on software, because their hardware products have healthy profit margins. The iTunes Store breaks even, and it has done so for years. The same is true for the other software Apple sells.
Compared to competing products, Apple's software products are dirt cheap. Its office suite (iWork) is priced at $60 while Microsoft Office is priced at $280. Apple's photography software (Aperture) costs $80, Adobe's Lightroom costs $300. Apple's video editing suite (Final Cut) costs $1000, Avid's Media Composer costs $2300.
This article didn't get the prices right (which is suprising since that was the sole point of the article), and it got the history exactly backward.
The main shock people had about the ipad was how expensive it was priced ($500-$750). They weren't 'surprised' at how low it was priced. And to Apple's credit, we now know that even at that price it would sell well, and also we know that this price is actually not so unreasonable or inflated as we thought, because other major manufacturers making comparable quality tablet products are also in that price range (except for the nook color, notion ink adam, archos 101 and 70, or several no-name tablets).
Also, the xoom is $600 compared to the old ipad's price of $500. If you want to compare the $800 xoom with 3g (and 4g), compare it with the $750 ipad with 3g. So the prices are not so different.
I disagree. I remember much of the Tech press predicating a $1000 price point and being rather surprised at the existence of a low end model at $499. It was only the cross section of nerds that really dislike Apple that called it expensive and panned it as a crippled piece of junk. (Engadet had to shut down their commenting system for a few days due to all the vitriol)
Also, I think you're missing the point on pricing. It really hurts Motorola that there isn't a low end model at $499, because there are a lot of non-technical users for whom 16GB is perfectly adequate. We don't have direct data AFAIK, but I'm willing to bet the low end iPad is Apple's best selling model by far.
I completely agree with you. There was a collective jaw drop when Steve put the $499 slide up. The lowest the rumor mill had gotten was $800 leading up to that point.
No, most people thought the ipad at $500-$750 was overpriced at the time. They thought it would be comparable to the prices of netbooks ($300 range). And I defended the price knowing now what we know (other android tablets are expensive too). But as this first article indicates, the main reason why people AREN'T buying the ipad is because they think it is overpriced still, along with the apps:
And by the way your response below indicates you are against even a hint of criticism of the ipad, even though I'm not criticizing it at all in either of my responses. Don't know why I bother feeding trolls though.
Steve Jobs and Johnny Ive are no slouches, but Tim Cook doesn't get enough credit for stuff like that.