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?

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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.