Slates have seen a spectacular resurrection in the PC industry that could only be fittingly compared with the rise of a Bollywood protagonist. They were introduced sometime in the early part of the previous decade and were written off even before the milk in your refrigerator got spoilt. But enough with the histrionics, shall we?
Not everyone was impressed with El Jobso’s magical device at the time of its announcement. For the first time in a long time, people are second-guessing Apple’s chances of success for a new Apple product in an even newer category. Some of the street surveys show that people aren’t finding enough reasons to get excited about what is essentially a bigger iPod Touch, blah blah blah… (check out more reasons for the blah blah in the image below, courtesy Retrevo)
However, a recent survey from ChangeWave has revealed rather interesting-and-contrary insights on the demand pattern of the Apple iPad. A quick low-down of the survey: 27% of e-reader owners wish they had waited for the iPad. It also indicates that for people who’re planning to buy an e-reader in the next 90 days, 40% indicated that they’d consider the iPad as an e-reader – look at the Kindle number just 28%.
This throws up many intriguing issues currently marring the e-reader industry. Amazon was highly successful in establishing a very clear user case for its Kindle e-reader; but since the intro of the iPad (with iBooks Store and e-reader support), there’s no doubt that users will expect e-readers to do more. Having said that, the Apple marketing juggernaut has once again ensured there’s a huge marketing overhang for the upcoming iPad – so much so that people are ready to ignore the Kindle et al product category and go for the iPad for a user case that is well-defined – e-reading. Here’s why.
Brand equity: The iPad is expensive, over-stated and offers nothing more than what an iPod Touch does today, albeit on a bigger display – all this for $500. Similar products are / will be offered by other players in the industry at a possibly lower price-point. Then why do we see such a high preference for the iPad (ChangeWave Research survey). The answer lies in Apple’s ability to manipulate a consumer’s buying preference towards its own offering even when we know we’re settling for a product that’s probably not the most advanced product in the market (Fanboys will agree to this).
Now if one were to measure the power of such a brand, all you’d need to do is to find out the value of the difference consumers are willing to pay for an iPad vs other slates in the market.
i.e. if an XYZ e-reader sells for $400 (iPad starts from $500), $100 is the value of the Apple brand. Most conservative industry estimates put iPad shipments for 2010 to be around 2M units. As seen in the table below, the iPad brand could very well be worth $0.2B by the end of this year. I am not even talking about wild projections for 2011 and beyond that run into 10’s of M units. All this is assuming Apple will continue to sell its iPad at about 20% premium over the rest of the e-reader competition. In the event of competitive prices being on par with the iPad, its virtually game over.
But all is not yet lost. Leading e-reader vendor Amazon is positively hurt with the iPad announcement and has suddenly shifted to the ‘nimble’ mode. Word on the street is that Amazon is looking to intro color e-ink displays and include browser capabilities in the next-gen Kindle. Sony, Samsung and others are following the suite. But more than ever before, these vendors will have to pour in millions of marketing $s to ensure the consumer understands the user case very clearly.
Not everyone was impressed with El Jobso’s magical device at the time of its announcement. For the first time in a long time, people are second-guessing Apple’s chances of success for a new Apple product in an even newer category. Some of the street surveys show that people aren’t finding enough reasons to get excited about what is essentially a bigger iPod Touch, blah blah blah… (check out more reasons for the blah blah in the image below, courtesy Retrevo)
However, a recent survey from ChangeWave has revealed rather interesting-and-contrary insights on the demand pattern of the Apple iPad. A quick low-down of the survey: 27% of e-reader owners wish they had waited for the iPad. It also indicates that for people who’re planning to buy an e-reader in the next 90 days, 40% indicated that they’d consider the iPad as an e-reader – look at the Kindle number just 28%.
This throws up many intriguing issues currently marring the e-reader industry. Amazon was highly successful in establishing a very clear user case for its Kindle e-reader; but since the intro of the iPad (with iBooks Store and e-reader support), there’s no doubt that users will expect e-readers to do more. Having said that, the Apple marketing juggernaut has once again ensured there’s a huge marketing overhang for the upcoming iPad – so much so that people are ready to ignore the Kindle et al product category and go for the iPad for a user case that is well-defined – e-reading. Here’s why.
Brand equity: The iPad is expensive, over-stated and offers nothing more than what an iPod Touch does today, albeit on a bigger display – all this for $500. Similar products are / will be offered by other players in the industry at a possibly lower price-point. Then why do we see such a high preference for the iPad (ChangeWave Research survey). The answer lies in Apple’s ability to manipulate a consumer’s buying preference towards its own offering even when we know we’re settling for a product that’s probably not the most advanced product in the market (Fanboys will agree to this).
Now if one were to measure the power of such a brand, all you’d need to do is to find out the value of the difference consumers are willing to pay for an iPad vs other slates in the market.
i.e. if an XYZ e-reader sells for $400 (iPad starts from $500), $100 is the value of the Apple brand. Most conservative industry estimates put iPad shipments for 2010 to be around 2M units. As seen in the table below, the iPad brand could very well be worth $0.2B by the end of this year. I am not even talking about wild projections for 2011 and beyond that run into 10’s of M units. All this is assuming Apple will continue to sell its iPad at about 20% premium over the rest of the e-reader competition. In the event of competitive prices being on par with the iPad, its virtually game over.
| 2M units * $100 | $200M |
But all is not yet lost. Leading e-reader vendor Amazon is positively hurt with the iPad announcement and has suddenly shifted to the ‘nimble’ mode. Word on the street is that Amazon is looking to intro color e-ink displays and include browser capabilities in the next-gen Kindle. Sony, Samsung and others are following the suite. But more than ever before, these vendors will have to pour in millions of marketing $s to ensure the consumer understands the user case very clearly.
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