Competing with the iPad: the Old Tricks Won’t Work

Remember when the iPod first got hot? How bad did people want it? Bad enough that some people bought Macs just to be able to use it. When the Windows compatible iPod was released things got hotter and the iPod really hasn't cooled down significantly since then.

Why was the iPod so successful? There are a ton of reasons. Apple's reputation as a company who could produce newish technology that was accessible to everyone was a big factor and the iTunes store was a big component of continued success once the iPod got rolling.

Face it, the original iPod was a hard drive with an audio port, a tiny screen and a scroll wheel. That can't be hard to duplicate, can it?

Why if you had an Altoids tin, a few chips and some spare time you could make your own mp3 player. Since the iPod seemed easy to copy, everyone thought they could make one. Thus, every company that had ever wired a hard drive to a motherboard thought they could either out spec the iPod or out cheap it. The result was a bevy of music players that were either better on paper (and more expensive) or a crappier but cheaper music player.

And just about every company with a home page thought it could sell music better than the iTunes store. Buymusic and Walmart wanted to cash in on the iTunes store. Buymusic decided that since the iTunes store was Mac only they'd cash in by being Windows compatible. Walmart thought they'd sell tracks a few cents cheaper. Neither approach succeeded.

This lasted for years. Everyone either out cheaping or out spec-ing Apple and none of it amounted to much. Finally, Microsoft decided to compete directly with the iPod. The company created the Zune and it was pretty good. The Zune did the whole ecosystem thing and it was nice. The Zune is the tech equivalent of the eastern cougar, people say they see it here and there but the scientific consensus is that both the Zune and the cougar are extinct.

Let's see what the tablet manufacturers can learn from all this. First off, it isn't enough to out spec the iPad. Companies think people buy on specs, and some do, but not enough to make a difference. Thus all the players with more storage and more ports, the small players, the players with a bigger screen all got trounced by the iPod. The same thing will happen with the iPad. In fact, you can see this already with the Xoom. If you had to buy a tablet, sight unseen, you'd pick the Xoom. Then you'd have a case of buyer's regret so severe even penicillin coupled with heavy doses of steroids couldn't touch it.

But if it wins the spec battle isn't it better? That argument is the siren song for the hardware types. Our tablet is faster, the screen is bigger (or smaller), it runs Flash! They sound like compelling reasons on the first pass, but raw specs don't appeal to everyone. Imagining that everyone buys off the spec sheet is like imagining that the only reason everyone doesn't drive a Ferrari is because they can't afford to. The reality is that even if everyone could buy a Ferrari and have car budget money left over they wouldn't.  If you've got three kids then a minivan will be preferable to the Ferrari when it is time to take the kids to the zoo.

The second thing manufacturers can learn is that you can't out cheap the iPad. When the iPod was introduced it set you back 500 bucks. The cheapest iPad is 500 bucks. That pricing is intentional. Apple knows from experience that there's a price point where people will compromise and go for the cheaper and a price where they'll just go ahead and pony up the cash to get what they really want.

If you can't out spec an iPad and you can't out cheap an iPad how do you beat it? Perhaps it is an impossible task. It could be that Apple has already won and everyone else is wasting time and resources trying to compete.

If a big lead is all it takes to win this kind of battle then you'd be sitting down to play Combat CCI on your Atari 100200. Yet when you fire up your console you might be firing up a Wii or Xbox or PlayStation. The key to competing with the iPad (it's too late to kill it) doesn't lie in copying the thing and out speccing it or undercutting the price. The key lies in making your product relevant despite the iPad. The gaming industry can show hopefuls the path.