Taking Back the Market

Why I Expect a 7" iPad in September

Tim Nash - 2011.02.18

I first discussed a 7" iPod touch in March 2009. As a rose by any other name would smell as sweet, here are some thoughts on the 7" iPad. (Steve Jobs has talked about the disadvantages of a 7" tablet compared to the iPad, so if he prefers it can be called the iPod touch 7.)

The 10" iPad has defined the tablet market after years of indifference towards Windows tablets. In April, we should see a slimmer and slightly lighter iPad 2 with the same screen size, more memory, and a faster chip. It will be a good upgrade, a better model, but no significant changes - apart from a camera for FaceTime.

The Competition

The market for Android tablets is yet to take off, although Samsung managed to convince enough carriers and electronics stores to buy over 2 million 7" Galaxy Tabs. It's too bad that ITG Investment Research found that 16% were returned by mid January. While Samsung claims 2% returns, that's the difference between repairs and customer dissatisfaction.

Much of that could be from trying to use a version of Android designed for smartphones, and since Google has redesigned the new 3.0 (Honeycomb) version for tablets, it will be a much better test of how well Android will succeed.

HP is looking to launch WebOS tablets this summer in its bid to make more out of spending $1.2 billion on Palm. Early reports are favorable, but until there is a price, a final tablet, and a launch, it's impossible to know how competitive it will be or how many developers will show serious interest. As little has been done with WebOS phones since the takeover - and the then-CEO suggested HP had bought Palm for other reasons - attracting more developers to WebOS will be difficult without a very successful launch. These days it looks like HP offers a more rigid corporate structure than Apple without the huge iOS market to sell into.

RIM is talking up its PlayBook, a QNX tablet, which seems to improve its specs every time the CEO talks about it.

Nokia and Intel still seem to have MeeGo tablets, but reports from the Mobile World Congress at Barcelona suggest MeeGo is not ready for prime time even if it survives Nokia's embrace of Windows Phone 7.

Meanwhile, Microsoft is trying to dust off its Windows everywhere strategy, which has already failed once with tablets.

Judging by Samsung's Galaxy Tab and Motorola's Xoom, all of these tablets will have difficulty in significantly beating iPad pricing. This bears out Tim Cook's Analyst Conference Call remarks about how aggressive Apple has been in pricing the iPad. This means that competitors need to find tablet markets that the iPad doesn't serve well.

Why 7" Makes Sense

The 7" iPad/iPod touch fills a major gap without a major fragmentation of iOS. It doesn't matter if it's marketed as a small iPad or a large iPod; it can still hit the same price points. People expect to pay more for a larger iPod touch and less for a smaller iPad. So $399 for 16 GB, $499 for 32 GB, and $599 for 64 GB works. With the same resolution as the iPad and nearly the same pixel density as the iPhone, iOS developers should be able to make any necessary adjustments to their apps. It would then also make sense to use the same 1024 x 768 on the iPhone and iPod touch, instead of the current 960 x 720.

It's all about the weight. There are plenty of people - seniors, kids, women - who don't feel comfortable handling a 730g tablet unless they can put it on a table or prop it on their lap. This is why so much of the advertising shows people reclining. For those who don't mind, the iPad still needs both hands. Although Apple won't be able to make a 7" tablet at Kindle weight, but 400g (just above Galaxy Tab weight) should be feasible.

It's all about the size. With a 7" screen and a bezel around the outside, the size would be about 7" by 5.5" - small enough to fit in an outside pocket in a handbag or pocketbook, a kid's backpack, or a document case so that it could be used without taking it out. Large enough for typing to be much easier than on an iPhone. Large enough to better show and find your photos and videos and music. Large enough for all those long car journeys that parents love. Large enough for the regular commute to work, but usable if you are forced to stand.

It's all about the quality. While there are Android lovers and Apple haters and plenty of companies looking to make a buck, most buyers faced with a choice between a well engineered iPad and a plastic backed Android tablet at a similar price point will go iPad. Until Android tablets look and feel like an iPad or are significantly cheaper, they won't attract buyers in large enough numbers to make a market. Even Samsung, which makes most of the components itself, is yet to undercut iPad pricing or offer as attractive a Galaxy Tab.

The Apple Advantage

There's nothing to attract the corporate buyers to Android either. They already have a choice between RIM (if there ever is a PlayBook at a good price), Apple, or even a Windows laptop for the same money - platforms that IT is already supporting or knows it will have to support.

Of course there is production to sort out. If there is tablet demand that Apple can't supply while ramping up iPad production, those missing out may buy something else. As iPhone 4 supply has barely kept up with the growth in the smartphone market, it is always possible.

This is, however, where having a cash hoard helps. Apple can afford to contract with suppliers for quantities that would put Dell's whole business at risk, as it is doing with Samsung. So its rivals will have to fight over the leftovers, and if components are in short supply, pay premium prices. Even if the components are readily available, the best rivals can do is buy at Apple's price, unless they are a manufacturer and efficient enough to be an Apple supplier.

So why September? That is the annual launch time for the new iPods, and this is much more a large iPod touch, hence my original article, written before the days of iPads. It is even more of a consumer device than the 10" iPad and will give a boost to the iPod product line, as well as iOS sales in the Holiday quarter.

Calling it an iPad merely allows Apple to charge more, because it is always easier to buy a cheaper version of a more expensive range than a more expensive version of a cheaper range. It will also have the same resolution as the larger iPad, that is a few more pixels than the current Touches and 4x the screen size, and because the iPad is held further away, this 7" version would be the Retina Display version of the iPad until, in a couple of years, that too moves to a higher resolution.

With this new iPad/iPod touch, a Nano completely customizable watch, and a 128 GB iPod touch to replace the Classic, iPod sales could start growing again. In any case, an expansion of the iOS market is good for Apple and good for developers - and it will persuade reluctant newspapers, magazines, and publishers that 70% is better than nothing. LEM

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Tim Nash is a Director of WattWenn which has a new approach to scheduling the production of TV and movies to make the most of budgets. The views in this article are his own and are prejudiced from spending more years working for computer companies than he cares to remember.

Tim lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the Macintosh IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

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