Wednesday, October 24, 2012

Curious commentaries on Apple's new mini iPad

In roving the Internet, I am sometimes astounded at the comments people make.

A case in point: with yesterday's announcement of the Apple mini iPad, there have been many comments by pundits, columnists and regular people about the relative merits of the mini iPad, the larger iPads and the iTouch, and their relative positioning vs. Android phones and tablets.

What seems to be missing in all these analyses is a simple strategic observation: as markets become bigger, there are more opportunities for segmentation. Reading on an e-Ink reader from Amazon addresses a different set of needs than a more video oriented tablet. A tablet used on the go requires a different form factor than one that does not travel off the couch.

And as prices go down, the propensity of people to have more than once device goes up.

And given that tablets, phablets, music/internet devices such as iTouches and iPods, and smart phones can be supported by different business models, pricing is likely to be difficult to analyze unless you take into account the full life cycle profitability of the relationship. Smart phones are subsidized to the tune of $200-400, but may generate a service revenue of $1500-2400 over the life of the phone. Low end tablets may generate advertising revenues in the case of Google and product/service purchases in the case of Amazon or Barnes & Noble.

As a result, many of the discussions assume that everyone has similar needs, or makes similar trade offs. That seems like a bad assumption.