Lessons in Marketing – HP TouchPad

Today comes news about disappointing HP TouchPad sales numbers and I am not surprised given the weak marketing they have exhibited for this product. Like RIM’s failed PlayBook the HP devices suffers from a marketing initiative that fails to connect with what consumers want in a tablet.

HP and RIM both seem to believe that selling a device on the merits of technical dimensions matters to consumers… like multitasking and “plays Flash”. Who gives a shit?

Consumers want apps, fashion, and a tablet that is perceived as fun. The TouchPad is none of these and on the app front their efforts are particularly weak with no app store and a claim of “thousands of apps” yet the ones they feature are less than inspiring. For example, their social networking category has Facebook, WordPress, and two SMS apps… SMS and WordPress as social networking? Really? No Twitter?

If they don’t have a large app catalog then so be it but don’t focus on it as a feature which only serves to demonstrate the deficiency. Go all in on HTML5 and feature web apps that negate the need for downloadable apps but even then stay away from the technical discussion that consumers really don’t care about.

What is especially irritating about the TouchPad is that it actually looks like a really slick tablet and with aggressive pricing, a carrier strategy, and a less sucky marketing campaign they could probably do pretty well with it.

iPad Revisited

I’m ready to concede that my prediction that the iPad would be a dud is flat out wrong. I will, however, couch my concession with the observation the iPad has, at least not yet, fundamentally changed the way we use the Web but rather it has added a very powerful new way to use the Web. The iPad has been additive to the market, and while strongly disruptive it is not transformative, but whether Apple sells 10 million iPads next year or 25 million, even though the limited time in the market makes it difficult to predict, it is safe to say the number will be very big.

The iPad does not appear to be cannibalizing Mac sales, according to recent sales statistics released by Apple, however it is evident that the device is depriving Apple of additional iPod sales, which on balance isn’t a bad thing considering the disparity in price points. The fact that iPad users are also a robust Mac segment underscore two important points, the first being that an iPad isn’t very useful without a computer to tether it to from time to time, and iPad consumers are so far loyal Apple consumers who have multiple products from the company.

One area that Apple is seriously impairing competitors in is the netbook category, which I predicted would not happen. Clearly we see a shift in netbook consumption going in favor of the iPad, which confirms something we already knew about netbooks which is that they are compromised devices that serve as something people use in addition to a desktop or laptop computer, and something we didn’t know about the iPad, which is that the market has accepted the iPad as a true multi-purpose device rather than just a better way to surf the web or take advantage of mobile apps.

I will offer a cautionary note on the netbook numbers, which is that this market moves in relation to the school year so before we call the ball on netbooks vs. iPads we should wait until the back-to-school shopping season gets fully underway to see how the price differential impacts device sales in each category. I think we will ultimately see that iPad sales accelerate as the new school year approaches but in this economy it’s worth waiting until the numbers actually start coming in.

Perhaps the most powerful contribution that the iPad has made is that it has broken the Curse of the Tablet and unleashed a new generation of devices that embody many of the most significant characteristics of the iPad, the form factor and application characteristics. Cisco’s recent product announcement, along with the many Android tablet announcements underscore how influential the iPad has become in shaping competitive product plans.

During the demos of the tablet, the most remarkable aspect was how interactive the Cisco tablet experience will be, compared with the hottest tablet out today, the Apple iPad. Cisco is building a device around collaboration, not consumption, which makes sense given how collaboration is a big focus point for Cisco and for getting work done.

[From Cisco Crams Its Broad(band) Ambitions Into an Android Tablet]

Lastly, no I am not an iPad user and I don’t plan on becoming one, in fact I am even ditching my iPhone for an HTC Incredible (as soon as Verizon ships it to me). Apple is no longer the company I used to love, their business practices are increasingly vindictive and petty, examples of both aspects very well documented. While I will remain loyal to their laptop computers because they are hands down the best available but I really hope the company devotes engineering cycles to overhauling this product line as it’s getting a little long in the tooth. I will buy a tablet at some point but will look first to the many Android offerings that are in the pipeline, and I am very interested to see what HP does with the PreOS in a tablet offering.  

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Why You Shouldn’t Buy an iPad

I’ve already voiced my belief that the iPad will ultimately be a disappointment. It’s certain that Apple will sell millions of the devices to technophile early adopters but the prospects for the broader market are mixed and considering that Jobs has declared the iPad the “most important thing I’ve ever done” well I can’t help but recall that pride cometh before the fall.

I admit to having mixed feelings about this myself, thinking that having a giant iPod Touch would actually be really cool in spite of the cost of acquisition and cost of operating it (assuming you believe 3G is essential for a portable device like this). Then there are the add-on charges that app developers believe they are entitled to… some are certainly justified but for publishers charging 2 and 3x for iPad apps vs their iPhone apps, I feel repulsed.

Publishers are approaching the iPad like a holy grail that gives them the superpowers to avoid having to reinvent their businesses. It won’t do that and if Time Magazine really believes their iPad version is worth $5 an issue then the only explanation is that they are taking all their leftover print mags and rolling something up in them and smoking it.

The whole notion of having “an issue” really underscores how publishers still don’t understand what is going on with digital content. I, like most of the market, don’t want to read a compilation of content like I had to do with print. I want digitally connected content that brings together many sources topically or theme

Cory Doctorow wrote something today that goes far beyond the iPad specific issues and speaks to the broader trends with devices like this (and the iPhone and the Kindle and many more) that ultimately prove themselves to be hostile to consumers. Take for example the proliferation of DRM that prevents legitimate sharing of content:

And let’s look at the iStore. For a company whose CEO professes a hatred of DRM, Apple sure has made DRM its alpha and omega. Having gotten into business with the two industries that most believe that you shouldn’t be able to modify your hardware, load your own software on it, write software for it, override instructions given to it by the mothership (the entertainment industry and the phone companies), Apple has defined its business around these principles. It uses DRM to control what can run on your devices, which means that Apple’s customers can’t take their “iContent” with them to competing devices, and Apple developers can’t sell on their own terms.

[From Why I won't buy an iPad (and think you shouldn't, either) - Boing Boing]

Not only are we passively accepting the locking down of content that otherwise could be legally shared but publishers are using this pacifism to pressure channels to mimic physical goods pricing with digital products that have nowhere near the cost of production and distribution that physical goods have.

The arrival of the iPad, another locked down device, resulted in an unwelcome surprise from Amazon, Barnes & Noble, and Sony, which is that publishers will now set pricing on these digital content networks rather than risk having valuable content held back in favor of Apple. It is somewhat ironic that Apple is the catalyst for this move having launched the iPod with a controversial one size fits all pricing model that content owners, then and still now, gripe about but the arrival of the iPad and another dedicated content network highlights how when interoperability of content is not allowed the content owners end up being the ones with real power because they can play the devices off each other.

Doctorow also goes on to criticize Apple, and everyone else if you accept his argument, for offering a sealed hardware device that can only be extended via software applications that the very access to is controlled by Apple. There is a valid point here that abstracting the hardware layer and making it physically inaccessible gives great power to the manufacturer.

Apple’s model customer is that same stupid stereotype of a technophobic, timid, scatterbrained mother as appears in a billion renditions of “that’s too complicated for my mom” (listen to the pundits extol the virtues of the iPad and time how long it takes for them to explain that here, finally, is something that isn’t too complicated for their poor old mothers).

This trend was not started by Apple, it has pervaded consumer goods for decades as our society has embraced disposability over repair and durability. I doubt it will change and in many ways cannot fault Apple for sealing the device but I still cringe when my iPhone battery is on red and I can’t swap in a freshly charged battery… this is where convenience for Apple results in inconvenience for the consumer.

BTW, if we could do away with the tired “even my mother could do it” metaphor we would all be better off… not only is it sexist but it rarely holds up these days… moms are not genetically disadvantaged when it comes to tech.

Like I said at the top of this post, Apple will sell millions of these devices but I don’t believe it will achieve the lofty dreams of the hardcore apple fanboys. It’s not a laptop replacement… and you still need a computer to interact with it so it’s not a new computing model. It’s not even a new computing paradigm because tablets have existed for years and we’ll all been having fun with the iPod and iPhone for a while now. App developers and publishers are wildly enthusiastic about this device but jeez what do you expect them to be… downbeat?

It’s not a phone and it should not be one either… why would you want another number and another service (like Google Voice) to manage the call routing with? I’m reminded of Zoolander with the micro cell phone, only in this picture it’s a supersized iPhone that still doesn’t have the benefits of integrated voice telephony and data… because the carriers aren’t doing that. Maybe Apple (and AT&T) will allow for the tethering of iPads and iPhones… but maybe not… either way it’s not something they talk about now so even though it’s an obvious benefit for users why should we believe they will do it?

This gets to the last point, which is the one that I believe Doctorow is trying to make, which is that you, as a company, have to decide what side you are going to fight for, consumers or partners. You can’t have it both ways and in Apple’s case they went from standing up for clear benefits for customers with the original iPod to now benefiting telcos and content owners, as well as themselves. Amazon is guilty of this as well, rarely has a business been more pro-consumer than Amazon yet by caving to publishers they are saying that their growth aspirations for their Kindle business are more important than standing up for consumers.

Relying on incumbents to produce your revolutions is not a good strategy. They’re apt to take all the stuff that makes their products great and try to use technology to charge you extra for it, or prohibit it altogether.

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The iPad is Steve Jobs’ Waterloo

Jobs has put together a remarkable track record at Apple over the years, not only releasing a string of hit products (overshadowing the few duds… like Apple TV) and making the company solidly profitable with a plurality of analysts rating it a solid buy even with a P/E of 20:1.

Having said all that, Jobs is still a mere mortal and the iPad is a dud which will seriously deflate his carefully crafted image as a hitmaker with a Midas touch precisely because he himself has publicly attached so much significance to the iPad product, which by the way is simply an awful product name that has evoked well deserved criticism as something that suggests Apple is getting into the feminine hygiene product market.

The primary problem is that Apple is competitively targeting everyone with this product despite having glaring deficiencies when pared against specific competitors. Before I get to that, let’s call a spade a spade, the iPad is a supersized version of the iPod Touch, which in itself is interesting to consider because the market typically heaps praise on companies for making successful products more capable and smaller, rather than taking successful products and simply making them bigger.

Apple is clearly putting the Amazon Kindle in their sights but against the Kindle the iPad comes us short. FIrst the screen, yes it’s big and beautiful but so is the Droid and that alone doesn’t make it better than an iPhone… but a big bright screen is exactly what I don’t want in an e-reader for 2 reasons, battery life and readability. The Kindle, and if you have used one you simply know this as fact, has a display like paper, not as good as Sony’s display in this respect but pretty close and that makes the reading experience really pleasing on the eyes, you simply don’t get eye fatigue looking at the thing.

The iPad is also much bigger and weighing it at about 1.5 pounds it needs to go on a diet. It’s remarkable how much you notice a few ounces here and there when you are using something like an e-reader, or what the effect is of throwing another 2 pounds (power cord, case, etc.) in your travel bag. Apple fundamentally erred by not using advanced composite materials instead of aluminum and something other than glass for the display. This thing is too damn heavy.

People will say “yeah but imagine watching videos on the iPad!” and that’s a fair point but how are you going to feel the first time you go to Hulu and find out you can’t watch it because the iPad doesn’t support Flash?

Apple says the battery is good for 10 hours between charges but nobody can deny that Apple has a history of optimistic battery life estimates and to achieve 10 hours the networking components will have to be turned off, which gets to the next point, netbook replacement.

Apple also called out netbook makers but how good is the iPad as a netbook replacement when you have to carry around a separate keyboard that Apple has yet to release? Sorry to be a luddite but there is no way a virtual keyboard will replace a physical keyboard for a device used as a subcompact notebook computer… ain’t gonna happen.

On pricing Apple surprised everyone by offering the device for $500 but if you need 3G, which most will, the price jumps up to $629 and then there is another $360 of data (unlimited, who would risk going with anything but?) per year. All of this adds up to a bit of sticker shock for me… it’s too expensive as an e-reader replacement and given the peculiarities of the design (e.g. virtual keyboard) somewhat pricey as a netbook. On the latter Apple has successfully delivered on a well honed premium pricing strategy so I will acknowledge that on price alone it’s probably not an issue in the netbook market but in this economy I don’t think anyone should take anything for granted.

I am also somewhat dismayed that Apple continues to stick with AT&T in the U.S. market… I simply cannot understand how Apple can overlook the customer satisfaction issues and hitch their wagon to AT&T yet again.

I have predicted leading up to this announcement that Apple would suffer the same fate that every other tablet maker has experienced, nothing in yesterdays product announcement makes me feel any differently. If you want an e-reader you are better off sticking with Amazon and if you want a netbook there are plenty of very capable options available for less and that give you more, and if you just want a touch computer then you should get a Microsoft Surface because it’s simply far more capable (there’s something I never thought I would write).

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