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Apple's iPad: The Writing's on the Tablet - ONYX RESEARCH, INC.® - ONYX RESEARCH, INC.®

Apple's iPad: The Writing's on the Tablet

Content drives the internet. Search, images, movies, print, and messages fuel our internet addiction.

Apple is the mobile device leader (based on revenue). Strategically, Apple understands mobile hardware delivering search, images, movies, print, and messages captures attention (i.e. $).

As went the music industry, so goes "traditional print media". The music industry demonized digital pirates. Print media companies and authors vilify Google as raider of lost content (and not so lost content).

Apple is often heralded as music artist and producer messiah (for a low 99¢ tithe). We see this occurring again.

Lauding the iPad's elegance and convenience at the unveiling were media titans from The New York Times, Electronic Arts, and other media producers.

Apple's pricing model matches strategic intent. Businesses often subsidize one business unit with revenues from another. During the iPad unveiling Steve Jobs presents an external price recommendation of $999, which is then crushed by the Apple price of $499.

Why is the pricing model crucial? The iPad is a mobile content platform from which Apple may control digital content distribution (think books and newspapers). The low $499 price will be subsidized by future content sales.

If in doubt $499 is a low unit cost, note that the iPhone 3GS retail price range is $499-$699.

Where will you buy content?....Apple of course.

Traditional media considers this partnership a necessity. Why?

Tablet Screen with Stock Data

Google changed the business model for traditional media. Quantifying advertising results and automating relevance-driven ad distribution, advertising revenues at long-standing publishers plummeted.

Schumpeter would be proud. Google's creative destruction dramatically improved advertising (no longer need you see ads for Macy's lingerie sale when you're really looking for a new Harley).

In response, content providers such as The New York Times are partnering with hardware manufacturers to distribute content in a manner far superior to paper-based distribution developed over five hundred years ago.

How will Google respond? Controlled content limits Google's advertising business.

Tellingly, Jobs said Google's "Don't be Evil" mantra was to the tone of "bullshit" or a "load of crap" (Wired - 31 January 2010).

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