iPad discussion spurs reflection on the PC as a bargain

During a discussion today about potential iPad sales, a friend and I got distracted by reflecting on the tremendous value delivered by a vanilla PC. Over on the Dell Web site right now, a basic 15″ laptop costs $499 and includes 320 GB of hard drive and 3 GB of RAM. So for the same price as an iPad, you’ve got a machine that can do the following:

  • give each family member his or her own private and personalized set of files, programs, and bookmarks
  • support the creation of almost any kind of document, plan, or project
  • run nearly all of the world’s software development tools
  • function as a videophone
  • function as a television, DVD player (and burner), radio, and videogame
  • be used almost anywhere in the world (multi-voltage power supply and standard 802.11 wireless adapter)

The machine exacts a price in terms of learning and administration, but it does a lot for $499!

So… can Apple sell a huge number of machines at the same price that do a lot less? Sure, at least to those who have an extra $499 for an indulgence.

Let’s look at Apple’s track record:

  • Macintosh: substantially more expensive than competition, 2-5 percent market share
  • iPod: comparable price/megabyte to competition, 55-70 percent market share
  • iPhone: slightly higher price than other smart phones, 16 percent market share of smartphones (source), negligible market share of all mobile phones

There have been enough spendthrifts worldwide to keep Steve Jobs in Gulfstreams, even when an Apple product carries a premium price, but Apple has only touched the mass market with products that are close in price to competitors’ products.

The best predictor of iPad world dominance may therefore be how much it costs to buy a similar tablet from a competitor. I.e., if the competition costs about the same (see “Zune”), Apple could end up with most of the market.

13 thoughts on “iPad discussion spurs reflection on the PC as a bargain

  1. Apple’s not out to conquer the world. They’re out to make better products. There’s no shortage of successful companies who cater to the preferences of the affluent and wealthy.

    I know I paid more for my MacBook than I would have for a Dell. But I also have a machine and OS that doesn’t drive me to pull out my hair. I also have to run Windows, but it quite frankly runs better in a VM on the Mac. I paid more for my iPhone, but it’s a joy to use. I will probably end up with an iPad. It does less than the Dell laptop, but what it does do, it does better.

  2. It’s perennially shameful that powerful hardware is squandered on poor software.

    My Windows 7 Lenovo SSD Tablet is less elegant, and fun than the iPad.There are only two apps on it that do not have iPad versions. Already, there’s a far wider choice of aviation apps for iPhone / iPad.

    Microsoft has had 10 years to get smartphones and tablets usable. They’ve already lost.
    Since Apple is vertically integrated, they could compete on price if necessary, but could be very profitable when they have a category winner such as the iPad. The reason the iPods are cheap was so Apple could get market share from existing MP3 players.
    There is no such price pressure in the Tablet category, so it could relatively expensive, at least until Android gets significantly better.

  3. I bought the iPad for the privilege of not opening a laptop for casual reading of web based content in the evening and on weekends. That luxury is worth a premium, I’d say. No keys clacking. No hot lap.

    Some people own multiple televisions. I don’t personally, but most do. Would anyone think to compare the relative cost per square inch of the TV in the kitchen or bedroom with the one in the den? I don’t think so.

    If the form factor has a future in the mass market, it will be be because it carves out new usage patterns. A computer is a waste of function for basic web browsing. The smartphone isn’t bad, surprisingly, but the screen is a little too small. Some limited function tablet device like the iPad covers the middle ground.

    I have a feeling that people will pay up just as they do for their 2nd and 3rd TVs. The fact that they “already have a device to do that” will be neither here nor there.

  4. I agree — the value delivered by a PC is highly understated. After looking at what some of Intel’s new Core i7 chips had to offer (quad cores, higher energy efficiency, etc) I went out and assembled a computer for $650 or so — albeit with a few spare parts cadged from other machines — that ranks in or close to the top ten fastest desktops in the world. (If you’re interested, I blogged about it — see my link on this comment.)

    And what a difference it makes: I can do a million things at once without even phasing the system. I can have twenty FireFox windows open, run Outlook, Word, TweetDeck, Visual Studio, YouTube, whatever. These new systems are like little supercomputers, really; and the engineering that goes into them is astounding: almost a billion transistors on the CPU alone.

    I, too, love the iPhone. But as for the iPad, it may be another of those “version 1” releases that needs a little more time in the cask? Why is it not a superset of an iPhone, fer chrissakes — you could plug in a set of those famous white earphones and talk away. (Skype, anyone?) 3G and GPS not standard? That’s a step backwards, isn’t it? And to squelch the laptop comparisons — well justified — couldn’t Apple engineer a keyboard-trackball solution and *make* it a laptop?? (Didn’t Toshiba come out some time ago with a laptop with a swiveling screen that could hide or expose a keyboard?)

    But Apple succeeds admirably by building human-friendly, well-thought-out solutions; for me, however, it will have to be the iPad 4G or something…

  5. Took delivery of an iPad today. My idea was that I would give it to a couple of our elementary and high school teachers to see what they might do with it in our special needs environment…I’m a bit concerned though because frankly it really doesn’t do much. Yes, all my iPhone apps run on it but they all appear the size of an iPhone screen. It does calendar, mail and contacts but my iphone appears to be faster and our students won’t be much interested in these applications…I’m afraid it will be used as a reward for students who finish their assignments early. Kind of the way teachers sometimes use special toys with the youngest students to “motivate” them. We’ll see what happens…by the way, it is really heavy.

  6. Completely wrong comparison. You can’t compare a huge laptop to an iPad. A $350 desktop can blow away the $500 laptop in terms of performance, reliability and you can upgrade every part. A better comparison would maybe be a netbook which is usually cheaper than an iPad. I own one and while it can do more I hate using it and use my iPhone unless I absolutely need to do something I can’t do on my iPhone. On paper a netbook should be faster than iPad but the iPad feels so much faster. A netbook has flash but you can’t watch hulu, high quality youtube or netflix without the video turning into a slideshow. The iPad actual has more watchable video then my netbook. Also, my netbook keeps getting dialog box that don’t fit in the screen and it keeps reminding me that this os was not design for this small a resolution.

    The closest comparison to the iPad by the way is the JooJoo which is also $500 and the iPad blows away the JooJoo.

  7. Just curious, how come you don’t apply your attitude towards computers to camera equipment? You’ve repeatedly mentioned how great Dell PCs are primarily (only?) because they’re bargain-basement cheap, yet from the photos I’ve seen of yours you shoot with the highest-end, most expensive Canon equipment instead of some cheapie Sanyo that you have to admit does 80% of what a DSLR does at 1/50 the price. Especially odd since I thought you are (or at least were once) a software developer and, one would think by extension, a prosumer in that area as well? Like I said, just curious here; I suppose we’re all inconsistent and idiosyncratic in our own ways.

  8. enigma: The Apple of photography is Leica, which offers some theoretically high quality products at very high prices. I have a Canon EOS system, which is the most popular among working photographers and therefore could be considered the Dell of photography (with Nikon as the HP). Most of my commercial photography these days is aerial (from one of our helicopters), which requires image-stabilized lenses. The job could not be done with a compact digicam (netbook?) due to lack of resolution and high lens distortion. The job could not be done with a Leica system costing 4X as much as the Canon due to Leica’s lack of image stabilization (just like an Apple computer could not be used by a flight instructor due to its inability to run required FAA applications).

    As for the price of a Canon EOS system, the typical wedding photographer will pay for his or her EOS 5D Mark II body with one or two jobs. My 5d Mk II and 24-105L IS lens are paid for with about three aerial projects. (Another way to look at the Canon hardware is that it accounts for slightly more than 1 percent of the total cost of the helicopter-camera system. Durability is also important as the helicopter generates a lot of vibration and a camera failure would necessitate a very expensive return to base.)

  9. The form factor and startup and shutdown time are very important. Booting up a netbook and getting it on the Internet takes time. I have a netbook but I never use it. It’s small to carry around, but to connect to the Internet I have to plug in my Verizon cellular modem card, or go through all the steps of connecting to the nearest free WiFi. The keyboard is small and not very usable, and the screen is not a touch screen. The “mouse” is a touch pad that sort of works.

    My iPhone is so small I don’t have to carry it; I just wear it. It’s reasonably fast.

    If I get an iPad I’ll have to carry it around, and I don’t think it can share the same phone number for Internet use as the iPhone (so I’d have to install WiFi in my house just to use it at all at home), but I see many positives: fast startup, fast shutdown, the touchscreen is better than using a mouse, and the onscreen keyboard is probably no worse than the netbook keyboard.

    It’s not a substitute for a full computer (you can’t run multiple apps at once for instance), but the netbook doesn’t work very well as a substite for a real computer, and I have enough real computers.

  10. I discussed the Apple’s A4 system on a chip, which is at the heart of the iPad. We discussed that having the design and final tweaking in-house might be enough to capture the margin needed to always undercut their competitors.

    We also discussed that Apple has 500 million active iTunes accounts… so they’ll always have that additional revenue stream to offset any low/negative margins on the hardware.

    If Apple wants to own tablet/portable/wearable computing, it’s theirs for the taking.

  11. There are already a flood of android tablets from relatively no-name companies coming out for $100-140. These have a similar form factor to the ipad and run all the android apps. The problems right now are waiting for the newer and more functional android 2.2 operating system, for the bugs to get worked out, for the build content to stabilize, and people to catch onto it.

    The humor in all of this is that these cheap tablets may be getting turned out on the same assembly lines as the ipad.

    Given the parts content and the capability of android and its apps suite, I see no reason why a first tier supplier of computers or consumer electronics wont offer an ipad comparable product for under $300.

    Negroponte also says he’ll have an XO tablet this year for $100. That means next year for $200, but the point remains.

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