Are Apple eating their own lunch?

Apple released the iPad in the US about a month ago and they have this week announced they already have sold more than 1 million devices. But what impact is that going to have on the iPhone, and have they factored it into their planning?

John Gruber points out that Newton sold just 200,000 in its ENTIRE lifespan, which means that despite the protestation of the envious geeks who just wish they could play with their toys how they like on an embedded device (just as they can on a Cable TV Box for example), it’s already successful.

Though, as I protested over at Delimiter yesterday, success in Business Terms is defined by a successful Business case over the length of that Business Case. So, perhaps we’ll have to wait and see.

What I’ve learned in recent years is that a Business Case has a number of different inputs which define success. Both positive and negative.

For example, if you are introducing new Product offerings, or changing an existing one, you need to take account of the negative impacts which that change will have on the existing services and products you provide. These may look like sales impacts on a currently in-market product whose Business Case term is not yet complete. Or it maybe forecast additional costs at Customer Support due to choosing to site your Support team for a deal breaking product within your core organisation rather than outsourcing it to India or elsewhere.

Now, I have no idea what Apples Business Case models look like. But if I take my own experience and assume at least some of what happens there would be applied by Apple, then I believe it is logical to assume they have allowed for the iPad sales to affect iPhone Sales over time, if not immediately.

But it’s not a Phone you say!

How do I counter that? If you look at usage of iPhones and remember that a large part of it reason to exist is as a Portal to App Store. As Fraser Speirs says;

iPhone OS is the first mass-market operating system where consumers are no longer afraid to install software on their computers

So I don’t think I’m going out on a limb when I say you can safely assume a large minority of users mainly use iPhone for activities OTHER than making mobile phone calls and even perhaps sending and receiving SMS.

Excluding voice calls and ultra-portability, all of what iPhone does exists on an iPad. Having used one a couple of times this week, I can say it exists in many cases with a substantially better User Experience for the same apps we depend on or use daily.

In that case, and assuming I have a regular job with a Mortgage and 2 kids (okay, that’s me), if I had to make the choice between an iPad and a new iPhone, I’d go the iPad.

The question is, how many others – especially potential new iPhone acquirers – would do this? And more importantly, how much of this negative benefit have Apple factored into their Business Case?

I agree the iPad is more valuable as a laptop or desktop computer replacement for people who really only use their computer for services which the iPad will do really well. We’ll be one of those families this year. But the 3G Data capability and the move to a greater use of Messaging services serviced by that data instead of voice makes it more than capable replacement for what the majority of iPhone use has become.

I’ve been saying for a long time now that Mobile devices are what Smartphones have always wanted to be. I believe the iPhone was the first real fully integrated Mobile device. Only Android has done anything remotely close to iPhone.

What chances Apple moves on from the ‘phone’ market at a time of their own choosing. Noting, this becomes especially important in the brand new world of 2010/11 where Android Phones finally come of age and Telco’s will promote them ahead of the iPhone due to likely better upside for them.

I think Apple believe the Mobile Device is more essential and, more importantly, more profitable. Perhaps they have factored that into their business cases. After all, Apple believe in leaving the past behind.

Either that or they release an iPhone Nano But that’s just a commodity, Apple don’t do commodities.


5 thoughts on “Are Apple eating their own lunch?

  1. Great post – interesting ideas. I’m not really qualified nor informed enough to answer, but my gut feel is some will go iPhone + iPad, some will go iPad + other smartphone, Apple wont mind as their ecosystem is protected – their users still use the App store. I’ll be interested in Hugo Ortega’s view being @MrMobilePC and like me “a PC not a MAC”

    My situation at home:
    – 3 kids
    – 4 laptops
    – one desktop
    – all WinTel (Windows 7)
    – PS3
    – Wii

    I brought one of our school’s new Macbook Pro 13’s home for the weekend last year: hated it! OK, it was beautiful, but I couldn’t intuitively figure how to do anything except multi-touch and Safari. I’m too ingrained into Windows (I still use the DOS prompt on occasion and write batch files!)

    My kids (12,9,8 years old) all know their way around Windows too well, Office docs, homework, IE browser, etc. I’m sure they’d adapt to a Mac, but we won’t be getting one any time soon. I would like just one to play and learn with though *ahem Apple – loan machine? 😉 *

    I do believe the iPad is a game-changer though, just watch all the competitive tablets come out over the next 18 months. In fact shortly I will be reviewing the “TEGA Tablet” as Hugo has agreed to loan me one. Stay tuned. 🙂

    Thanks for sharing this post. Will click through all the links another time, its getting late 🙂


    • Tony. Great commentary. I believe we r creatures of habit. So even though we know change happens, unless we absolutely require it we don’t do it.
      The UK election today for example.
      In any case, these things are all just tools to get results. In the end, does it matter how we get them.
      (written on my iPhone WordPress app – ‘there’s an app for that’)

      • Hehe – I love Hootsuite and adore the Hootsuite app for iPhone (on J12’s iPod Touch) Mostly I adore the Sonos app on the iPhone (given the $%#$$!!$! Sonos remote itself is about $700 its a no-brainer to get a $250 iPod Touch and the free remote (that was my justification in buying it for J12 last year 🙂 The strategy worked as J12 rarely uses the iPod Touch now so happy days I get to play. However battery life is appalling on the Touch, so for mobile music I still resort to the $70 Shuffle.

        Glad to know you mate, always challenging our thinking and educating us out on the twitterverse and beyond.


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