The same day that Amazon announced a free Kindle app for the Apple iPad, one of my favorite economic writers, the New Yorker's James Surowiecki, has a great column about how Apple routinely bucks the conventional wisdom that cheap, mediocre products for the middle market, are the ticket to profitability. The 'good enough revolution' has sustained companies like Ikea and H&M, but Apple consistently aims to reinvent the market with its expensive machines and ideas.
I like writing about the iPad not because I'm going to buy one, but because I'm fascinated that so many people are. Apple's sleek little slab doesn't make sense as a computer, or a book, or a utility instrument. It's a high-end entertainment screen that carves its own category and stand athwart numerous popular conceptions. Here are four:
1) Magazines are doomed. This is the one I hear about the most in the journalism industry, but weirdly it's also the idea I have the least to say about. If a flat touchscreen slab is the savior of the magazine, good stuff. But as somebody who subscribes to four dead-tree magazines and reads dozens more on the Web, I don't anticipate buying an iPad for the privilege to pay for glitzy magazine apps. I like purple prose and tax policy (though not always in the same pieces). I'm basically a words guy, and words aren't a medium-specific experience.
2) You don't need something superior, just cheap and good enough. Surowiecki notes that many business models like Ikea and H&M are successful because they build simple things not well, but well enough -- and so cheap! Apple is the precise opposite. It builds machine not just well, but superbly -- and for a pretty penny. This is, and has been, Apple's gamble and meal-ticket. While cheap and mediocre desktops and laptops are still commanding the majority of the market, Apple has carved out a particular high-middle luxury market for superior computer hardware.
3) Software beats hardware in the tech world. Atlantic Business editor Megan McArdle wrote her last magazine column on the "return of machines as market makers." It's an interesting point. Microsoft and Google have made bank on the premise that hardware is fungible, but superior software is a portable moneymaker. Microsoft makes lots of things, but its revenue keystone is its operating system, browser and Office software. Google also dabbles eclectically, but its revenue pie is practically entirely Web advertising. Apple makes software too but its game changers are in the hardware space: the iPod (and iTunes) changed music; the iPhone changed smart phones; and now the iPad aims to change entertainment and computing. If Steve Jobs' latest gambit strikes a chord, it will be because he invented a machine that changed the way Americans think about their computers....
4) Computers are for work. Most personal computers are work machines on which you can entertain yourself with music and movies and browsing. But the iPad is an entertainment machine on which you can work. Sure, it is compatible with Microsoft Word, and it accesses the Web, and it does other computery things. But the Apple iPad can't multitask -- not yet anyway -- so it
cannot be a first-order work computer. If the iPad sparks a tablet revolution, it will mean that millions of Americans want multiple personal computers in their life: one for work and one for procrastination and entertainment. [Adapted from this piece.]