Segmentation is the heart of marketing because it is the best way to guarantee the relevancy of the offering, of the value proposition, and of the messaging to the target market. So, by definition, what is aimed at one segment does not necessarily please another segment, nor should it. This “Marketing 101″ lesson seems lost on the mass of skeptical technology enthusiasts who do not see in the iPad what they were hoping for. But make no mistake: the iPad is a transformational product. Apple intends to capitalize on the momentum of the iPod and iPhone to rope in enough partners and spark another revolution.
It’s not just a product, it’s an ecosystem
Those who wanted Apple to produce a feature-packed piece of tech wizardry are misunderstanding Mr. Jobs’ marketing strategy. Apple is not a just a computer maker anymore. It’s not even just a device maker. Apple is a creator of business ecosystems. The iPad’s features were carefully chosen to support the needs of the new ecosystem Apple aims to create.
“That’s right, it’s not a laptop. Get over it.” : or, a brief de-construction of iPad Product Strategy
Let’s say what the iPad is not:
It is not a high-end gaming machine
The display is too small and the graphics capabilities are insufficient to satisfy the needs of gaming enthusiasts. Does it mean that you can’t play games on it? Of course not. It is a good gaming platform for more casual games that do not require advanced peripherals (the connectors are absent…). Expect an army of established and indie developers to make downloadable games for the iPad just like they do for the iPhone. “So, for playing games, it’s just like an iPhone but it will cost $499 -$829?” No, the display is much nicer, and besides, just like in the case of the iPhone, playing games will be a secondary function, not the main usage model; otherwise, Apple would have launched a competitor to the PSP of the DS.
It’s not a graphics workstation.
The display is too small and the graphics capabilities are insufficient to satisfy the needs of serious digital content creators. Plus it has no webcam and no microphone which limits the way consumers can create rich content for social media for example. That does not mean that, especially when docked to its physical keyboard, the iPad will not be able to be used to create content, but that is not its primary purpose.
It’s not a business machine
Not only does a physical keyboard not come standard but there is no removable media (CD/DVD player) and no multitasking capability. Those choices, as much as any, point to what the iPad is actually designed for. Multitasking is powerful technology for busy people who do many things simultaneously to save time or because their personality drives them to operate that way whether at work or play. The iPad will do one thing at a time. Multiple tasks will be performed, well, serially. With no folding structure, it is more straightforward, less “cumbersome” than the traditional folding, screen-and-keyboard combo. Some people are already trying to see how they will use it to replace a laptop, but the iPad will only marginally be used as a laptop. It will not be used on one’s lap first of all, but probably held in one’s hands. The email function is so important that some people will want to be able to dock the iPad in its docking station and type sitting down at a table. But I suspect that most email will mostly be written in a more casual way, sitting on a sofa using the on-screen touch keyboard.
Is it really a mobile computing device?
I do not think so. It is too large to be carried on one’s person- large enough that it requires a briefcase or a backpack. And its features do not make it a road warrior’s rig. But, it is clearly an unwired device. If one already has an iPhone, and enjoys displaying and interacting with dense data on a palm-sized screen, this device may seem redundant. Those are the users that are inclined to criticize the iPad as being an over sized and overpriced iPhone, with nothing added – actually with less - there is no camera… But that’s choosing to ignore the obvious: the much larger, very crisp screen.
The iPad is not just a device: it’s a strategy
Commentary that is limited to product features is missing the point that the iPad, just like the iPod with iTunes, is destined to be the hardware pillar of a broad strategy. All the limitations that were reviewed above clearly point to the target users and the usage models that Mr. Jobs has in mind for the iPad.
Apple is targeting consumers who need an affordable and easy-to-use device that they will reach for to perform a specific function. For example, there are many consumers that want to quickly check a restaurant listing online, like checking printed yellow pages, without having a need to check email at the same time. They are just looking-up a restaurant. The iPad will cover this kind of quick look-up function nicely without having to wait for a laptop or desktop to boot-up, and without their associated complexity.
Pragmatists and laggards
Technology enthusiasts enjoy the advanced capabilities of a device even if they are overpowered for most of the functions they routinely perform. Pragmatists want the simplest and most inexpensive device that gets the job done, while laggards are intimidated by advanced gadgets but still want to enjoy the convenience of some of the new functionalities. Apple clearly decided to target the pragmatists and laggards, that is why the second most important aspect of the product after screen size and before battery life, is the very aggressive entry price: $499. How can Apple afford to do that? First because it has exercised discipline and restraint in the selection of features, second, because additional revenue is expected to come from the ecosystem.
What ecosystem?
To answer this question one has to look at the industries that have not been able to harness the Internet but rather are suffering from the disruption it has brought to their business: Publishing (books, magazines, newspapers) Network Television, and Advertising (a close relative). The short of it is: fewer people read/watch traditional media (print and TV) because everyone is online, and, advertising revenue is down to the point that the survival of many media names is at stake. The iPad is to be the platform for the renewal of the business model of the Publishing and Advertising industries. The same as the iPod and iTunes allowed the music industry to at least slow the financial hemorrhage from peer-to-peer sharing of music by offering a way for consumers to download the songs they want for $1 each, the iPad will allow consumers to read the selection of content they want at a price that is attractive to them, AND, Publishing and Advertising will be able to at least slow the loss of ad revenue by selling ads that will appear along with the free content. Apple will certainly extract the value that befits its role in creating this entire environment, so Publishing and Advertising will have to yield a good portion of the profit pool. But, if all goes well with the iPad, it will sure beat the alternative.
Flash technology is out – so what happens to online ads?
As attractive as Flash sites may be, Flash is an Adobe technology that is known to use a lot of power, thus reducing battery time something which is anathema for a consumer-friendly device. Web designers often stay away from Flash because of display issues and problems with SEO. This being said, many online ads use Flash, so Apple’s decision not to support Flash is both an aggressive competitive move versus Adobe and a gamble that an alternative technology will be available to enable online ads on the iPad. That technology is HTML5 which seems to be supported by most big players today as a common standard for the Web. Many ads would have to be re-produced for HTML5 but that should not be a technical hurdle especially if overall production cost fall if a single format ends up working for all browsers/platforms.
New places to access data
A laptop placed in a kitchen to be used to look-up recipes always looks like a fish out of water. I cringe at the possibilities of ingredients falling in the keyboard. A presumably tightly closed iPad casing would look right at home on a kitchen counter. A coffee table device that is always there to read the news, send out a brief email while sitting on the couch, or play a simple game, with no frills and complexities could become as ubiquitous as iPods are now. That is why the name has been selected to be plain: so that it becomes ubiquitous. I can envision the device becoming as common as the phone book was in any home or business: a device that does a few things very well, very fast, very reliably, very easily, and that is broad conduit for advertising messages.
The iPad, the Internet, and Consumer Empowerment
Some are criticizing the fact that the iPad does not offer the ability to create content as much as to consume it; that it cements inequality between producers and consumers of data. One of the great revolutions of Web 2.0 is that it makes consumers active participants in the relationship with companies whose products they buy, through forums, comments, social media etc. The absence of the camera and of the microphone in the iPad seems to confirm that. But perhaps Apple is recognizing that even habitual content creators often engage in usage models that do not require the creation of content, and therefore that it was not necessary to build in content creation capabilities in the iPad.
There is an certain elitism of the technologically savvy segment of the market that looks down on a device that is manifestly aimed at more pedestrian online activities for people who want a worry-free, bullet-proof experience. The same segment tends to be partisan of the Internet as a force of popular empowerment and of resistance to the oppression of large corporations. They may see these product design choices as some conspiracy against the public. It’s probably just segmentation.
Tags: high-tech marketing, marketing strategy, product innovation, Product Management, segmentation