Friday, March 5, 2010

Now that the iPad launch date has been announced, media can get down to some serious business

OK, Apple has finally given us a date, April 3, for the actual launch of its iPad tablet. So what's next? Do Apple stores get flooded with buyers, eager to consume all sorts of media on their new tablets, while simultaneously canceling every print publication they subscribe to?

Well, if iPhone sales are any guide, the real rush towards iPad adoption won't materialize on Day One, but will be seen some time in the future, after consumers have seen the device in the wild, and are given an additional reason to buy the device.

Looking back at the iPhone, sales started out fairly slowly for the device with Apple not able to crack the one million units mark until the first sales quarter of 2008, before declining again until the fourth quarter of 2008 when Apple introduced its first 3G model.  But many would be surprised how low the initial sales were compared to a year later. The reason is that Apple's phone sales were zero before the introduction of the iPhone, and so Apple received positive press for simply getting into the market (and for introducing such a revolutionary new version of the smart phone).
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Two developments really changed the cell phone game in 2008: first, Apple's first 3G phone brought their product to the same level as other advanced smart phones; and second, the 3G phone also brought OS 2.0 and the app store on iTunes.

Some have been disappointed that Apple's iPad will launch without many features prospective buyers have requested: a front facing camera for video conferencing, Flash support, a standard USB connection (though the bottom iPod connector is, in reality, a USB connection), etc. Many of these features may be introduced in the future -- though Flash support certainly is questionable -- and so a second generation iPad, like the iPhone, may be a more popular product.

What I look for, however, is more Apple viral marketing, word of mouth, and the Starbucks effect. I think no product benefited more from coffee buying than the iPhone. In 2007 stories began to appear about iPhone users slowing down the register line as they fiddled on their phones while ordering their lattes. Then Starbucks dropped T-Mobile and did a deal with AT&T, giving iPhone users free Wi-Fi at the chain. Finally, Starbucks introduced their own app, allowing iPhone users to buy their lattes using their phones -- it didn't really catch on, but it did lead to more press and more "cool factor".

My guess is that we will see the same sort of sales performance for the iPad as the iPhone. Sales will appear impressive at first because Apple will tell us it is impressive and because once again the base is zero. But the spike in sales will appear later. This time, my bet is that sales will spike in a more traditional fashion, around the holiday season as shoppers decide between netbooks and tablets. The spark may be the holidays, or it may be the arrival of more media and game offerings for the device.

Apple has a built-in promotion machine for the iPhone that will work for their tablet, as well. Every time a media firm or game company introduces their own application they work to get the word out -- go to iTunes and download our new app!. The promotion drives consumers to iTunes, and adds to the reasons why someone would want to buy the phone.
My guess is that we will see the same sort of sales performance for the iPad as the iPhone.
On Day One, there will be a few media offerings: maybe the New York Times will be ready to go, maybe one or more of the Condé Nast magazines will be available. But it really doesn't matter as initial buyers, those that will line-up at the Apple store on Friday evening in order to be first in line on Saturday morning don't really care about the news. They just want to be the first kid on the block to own an iPad.

But six months later, after seeing iPad owners reading the Times at Starbucks, after sitting next to the guy in coach reading his copy of Esquire on his iPad on that four hour flight to the coast, or after seeing someone watching Alice in Wonderland during a horrible flight delay at the airport, will you finally decide it's time to buy an iPad?

That's what Apple hopes because that is how their marketing works.