From The Economist
Published: February 02, 2010
"HEROES and heroics" is one of the central themes of the current season at the Yerba Buena Centre for the Arts in San Francisco, which prides itself on showcasing contemporary artists who challenge conventional ways of doing things. On Wednesday January 27th the centre played host to one of the heroes of the computing industry: Steve Jobs, the boss of Apple, who launched the company's latest creation, the iPad. Mr Jobs also has a record of showcasing the unconventional. He did not disappoint.
The iPad, which looks like an oversized Apple iPhone and boasts a ten-inch (25cm) colour screen, promises to change the landscape of the computing world. It is just half an inch thick and weighs 1.5 pounds (680 grams). "It's so much more intimate than a laptop, and it's so much more capable than a smartphone," Mr Jobs said of the device, which will be available in late March. With a host of other touchscreen "tablet" computers that are expected to reach shops over the next year or so, it could also revolutionise the way in which digital media are consumed in homes, schools and offices. The flood of devices is likely to have a profound impact on parts of the media business that are already being turned upside-down by the internet.
The move from print to digital has not been easy for newspaper or magazine publishers. Readers have proved reluctant to pay for content on the web. Companies are unwilling to pay as much for online advertisements as paper ones—hardly surprising, given the amount of space on offer. The iPad will probably accelerate the shift away from printed matter towards digital content, which could worsen the industry's pain in the short term. Yet publishers hope that tablets will turn out to be the 21st-century equivalent of the printed page, offering them compelling new ways to present their content and to charge for it. "This is really a chance for publishers to seize on a second life," says Phil Asmundson of Deloitte, a consultancy.
It does not come as a surprise, then, that Apple has already attracted some blue-chip media brands to the iPad's platform. During his presentation Mr Jobs revealed that the company had struck deals with leading publishers, such as Penguin and Simon & Schuster. They will provide books for the iPad, to be found and paid for in Apple's new iBooks online store. The iPad will carry electronic versions of newspapers such as the New York Times, which presented an application at the launch. More agreements ought to be signed before the first iPads are shipped in March.
Apple's media partners no doubt have mixed feelings about dealing with Mr Jobs. Apple is now widely demonised in the music business for dominating the digital downloading business with its iTunes store. The firm has been able to control the price of music, boosting sales of iPods but not bringing the record companies a great deal of money. That said, Apple did provide a way for the music business to make a profit online, which had hitherto eluded it. Apple's sleek iPhone has also given plenty of content producers a platform on which they can charge for their wares.
The firm's record suggests that it will be able to make one of the computing industry's most fervent wishes come true. Technology companies have repeatedly tried to make a success of tablets or similar devices. But the zone between laptops and mobile phones has been something of a Bermuda Triangle for device-makers, points out Roger Kay of Endpoint Technologies, a consultancy. "Products launched in there have usually disappeared from the radar screen," he says.
Among them are previous generations of tablet-style computers. In the 1990s various companies experimented with the machines, including Apple. When its Newton personal digital assistant failed to take off, Mr Jobs killed the project. Tablets were once again briefly in the limelight when Microsoft's Bill Gates predicted they would soon become people's primary computing device—powered, of course, by his company's software. That did not come to pass because consumers were put off by tablets' high prices, clunky user interfaces and limited capabilities. Instead the devices, which cost almost as much as proper PCs, have remained a niche product used primarily in industries such as health care and construction.
Why are tablets causing so much excitement now? One reason is that innovations in display, battery and microprocessing technologies have slashed their cost. Apple's iPad is priced at between $499 for the basic version and $829 for one with lots of memory and a wireless connection, bringing it within the reach of ordinary consumers. Another reason for optimism is that interfaces have greatly improved. The iPad boasts a big virtual keyboard, which pops up when needed. It also features multi-touch, meaning for instance that two fingers can be used to change the size of a photo. Furthermore, tablets will benefit from the fact that people have become used to buying and consuming content in digital form.
All this explains why other firms are eyeing the tablet market too. Dozens of prototypes were on show at a consumer-electronics trade fair in Las Vegas earlier this month, including ones from Motorola, Lenovo and Dell. Jen-Hsun Huang, the chief executive of NVIDIA, a maker of graphics chips, reckons this is the first time he has seen telecoms firms, computer-makers and consumer-electronics companies all equally keen to produce the same product. "The tablet is the first truly convergent electronic device," he says.
That is why the iPad and other tablets could shake up the computing scene. There has been some speculation that they could dent sales of low-end PCs, including Apple's MacBook. But a more likely scenario is that they eat into sales of netbooks, which are essentially cheap mini-laptops used mainly for web surfing and watching videos. The netbook market has been on a roll recently, with global sales rising by 72% to $11.4 billion last year according to DisplaySearch, a market research company. That makes it a tempting target.
The iPad also poses a threat to dedicated e-readers such as Amazon's Kindle, though these will probably remain popular with the most voracious bookworms. Apple's long-expected entry into the tablet market has already forced e-reader firms to consider making their devices more versatile and exciting. "You will see more readers using colour and video over the next five years," predicts Richard Archuleta of Plastic Logic, which produces the Que proReader. And more makers of e-reader may mimic Amazon's recent decision to let third-party developers create software for its line of Kindles.
The gospel of Steve
Book publishers are quietly hoping that Apple's entry into e-books will help to reduce the clout of Amazon: the Kindle has a 60% share of the e-reader market, according to Forrester, a research firm. They are also excited by the opportunities that tablets offer to combine various media. Bradley Inman, the boss of Vook, a firm that mixes texts with video and links to people's social networks, believes the iPad will trigger an outpouring of creativity. "Its impact will be the equivalent of adding sound to movies or colour to TV," he says.
Newspaper and magazine publishers are also thrilled by tablets' potential. Their big hope is that the devices will allow them to generate revenues both from readers and advertisers. People have proven willing to pay for long-form journalism on e-readers. But these devices do not allow publishers to present their content in creative ways and most cannot carry advertisements. Skiff, a start-up spun out of Hearst, is a rare exception to this rule. Its 11.5-inch reader is large enough to show off all elements of a magazine's design and accommodates advertising too.
Apple's arrival in the tablet market also means that publishers will have to develop digital content for these devices, as well as for e-readers and smart-phones. Many will prove unable or unwilling to do so. That may boost firms such as Zinio, which has developed a digital-publishing model called Unity. This takes publications' content, repurposes it for different gadgets and stores it in "the cloud", the term used to describe giant pools of shared data-processing capacity. Users pay once for the content and can access it on various Zinio-enabled devices, increasing the chances that it will be consumed.
It makes money too
Apple has other ambitions for the iPad. It hopes it will become a popular gaming machine and has designed the device so that many of the games among the 140,000 apps available for other Apple products will run on it straight away. The company has also revamped its iWork suite of word-processing, spreadsheet and presentation software for the iPad in an effort to ensure that the new device will catch on with business folk.Apple's shareholders are also hoping that the iPad will live up to its billing as a seminal device in the history of computing. They have seen the company's share price soar. Defying the recession, on January 25th Apple announced the best quarterly results in its 34-year history with revenues rising to $15.7 billion and profits to $3.4 billion—an increase of 32% and 49% respectively over the previous year. They will be keeping their fingers crossed that the iPad turns into another billon-dollar hit rather than a flop like Apple TV. Whether or not that turns out to be the case, Mr Jobs has already proven heroic enough to merit a portrait on the Yerba Buena Center's walls.