Yesterday's Apple earnings report revealed a significant drop-off in iPad sales, from 17 million in the same quarter last year to 14.6 million this spring. Is the high price keeping consumers away?
Sure, cost can explain everything, in a sense. Make iPads free and I'm sure you'll find plenty of willing buyers, and cheaper Android tablets are selling well. But there's something else going on here. I first thought about it when, gathered around the lunch table one day, my colleagues were discussing how few of us had a tablet computer of any kind. These are people who work at a website, who are obsessive news consumers, who always have their mobile phones with them. They do just fine with their combination of laptop and smartphone, and they have chosen not to buy iPads (or Nexus tablets, etc.). Why? My theory is that tablet computers aren't the new mobile phone or personal computer, gadgets most American adults have, particularly well-off ones. Rather, iPads are the new bicycle.
What do I mean by this? Let's begin with this graph of technology adoption over the 20th century and into the 21st:
That graph tells a story, not in data alone but in text too: "Consumption Spreads Faster Today." You can't miss it.
But there is another argument embedded in the graph. It goes like this: The arrow of time points toward homes that are fully decked out -- with phones (perhaps mobile, but phones one way or the other), computers, televisions, refrigerators, stoves, cars, etc. Even the slow-to-catch-on dishwasher is on its way to ubiquity, presumably hindered not just by its own price tag, but the need for a sufficiently spacious kitchen too. Sure, there's the family you knew grown up that had forsworn TV, and the small but growing cadre of urbanites who rely on public transit to get around, but in a general sense, the trajectory is clear: With enough time and enough prosperity, sooner or later every consumer-technology product achieves a near-universal level of adoption.
True enough ... for the products in the chart above. But this is a handful of consumer-tech products, and the complete picture would look quite different. It wouldn't show line after line reaching 90+ percent saturation, but lots of shorter plateaus -- technologies that some people find useful but aren't for everyone. These technologies don't follow the electricity trajectory; they follow what I'm calling the bicycle trajectory, and I think that's the trajectory the iPad and other tablets will follow.
Think about the bicycle. It is by no means a new technology, having been around about as long as the oldest technologies on the chart above. Bicycles are not terribly expensive, either, particularly since there are so many used ones on the market (a quick scan of Craigslist turns up plenty of decent bikes going for less than $100). But as exactly zero people would be surprised to learn (zero non-Scandinavian people, that is), most Americans do not have a bike.
In 2001 (unfortunately the most recent year for which I found data -- I will update if any of the places I called get back to me with anything better), the National Household Travel Survey found that there were 0.86 bikes per American household. And while that means it would appear pretty high up if charted above, it's clear that bikes are not like dishwashers, or electricity, or a TV; everyone in the house cannot share one. Extrapolating out the NHTS numbers, we can calculate that in 2001, just about a third of Americans had a bicycle (~90 million bikes, for some 285 million people). And we all know why: Most people don't see the need. They have a car; they prefer walking and transit; they don't feel it's safe. For those who are bikers, and I am one of them, their bicycle is a beloved possession. But for pretty much everyone else, bikes (and other bike-trajectory goods such as video-game consoles, stand-mixers, hair-dryers, etc.) just aren't their thing. By that comparison, we can see a big distinction between a mobile phone and a bike: More than 90 percent of American adults have a cell phone.
What emerges from all this is a more complex portrait of technology adoption. It's not a march toward ubiquity but a march toward a greater array of options. Certain things, everyone will go for. But for many products the distribution will always be limited, and untapped markets will remain forever untapped.