The New iPad 3 HD

Whenever Apple releases a new product there is a tidal wave of news coverage. You already know there’s a new iPad on the way. I won’t go through the details, just comment on the big picture. If you want a rundown of the specific new features, try this.

The new iPad is a minor upgrade of last year’s iPad 2. It doesn’t bring anything important that wasn’t there before. Much improved display, better camera, faster processor – those are all housekeeping items. That’s not a criticism! The iPad 2 was a brilliant, game-changing piece of engineering. The new iPad carries that forward. If you had ever considered an iPad before, now is the time to take the plunge.

Apple made one calculated decision: it will continue to carry the basic iPad 2 at a reduced price of $399, which undercuts the price of Android tablets. Apple’s competitors already found it difficult to compete with Apple on price; Apple has locked up the supply chain at prices that are as low as anything that competitors can get and the iPad price is not marked up with any huge “Apple tax.” New Android tablets will arrive this year with a dramatically improved operating system but the feature set for iPads is so rich that there is little reason to consider anything else. The lower-priced iPad 2 will make it even more difficult for Android tablets to compete on price.

The cheaper iPad 2 only connects to a local 802.11 wireless network, not Verizon or AT&T, but frankly that’s not a big problem for a lot of people who will seldom take it out of the house and don’t want to pay for a data plan anyway. The increased screen resolution on the new iPad will make it look grand but let’s not exaggerate that – one of the strengths of the iPad 2 is that its screen also looks grand, deeply detailed and rich and gorgeous. (And don’t get me started on the new iPad’s support of LTE/4G. Enjoy it, all you people in big cities. Those of us in rural areas won’t see 4G service for a long, long time.)

Apple doesn’t need to change the world with every product release. That’s not possible for engineering reasons – fundamental technology shifts do not arrive every year – and because the world can’t absorb a new product niche very often. The new iPad fills a role similar to last year’s iPhone 4s, which was a modest upgrade of an already impressive product that fixed some design bugs, upgraded a few components, and cemented Apple’s place in the market – a step ahead of the competitors.

There is no firm information about the next iteration of the iPhone but my guess is that late this summer the iPhone 5 will be released with a larger screen and a few new features. The increase in size is overdue and will create a frenzy of phone upgrades that will power Apple to its best year ever and take away any ambiguity about whether it is the largest company in the universe. By the end of the year I expect Apple to appear to be an unstoppable force.

In 2013 Apple has two interesting problems.

The first problem is that its dominance in mobile devices is built on a shaky foundation in the computer world. We will be constantly shifting between smartphones, tablets, and computers for the next few years. The computer component of Apple’s world is built on iTunes, and it is showing its age badly. It simply wasn’t built for all the tasks that it is being asked to do, and shoehorning in more features is causing it to become ever more unwieldy and unstable.

Redesigning iTunes to become a full-featured component in Apple’s cloud services would require a very difficult upgrade. Apple has historically not shown much skill in writing software for Windows, but it is the Windows platform where Apple needs to improve its integration. Remember, despite the hoopla, the Mac platform is a small percentage of the computing world, a tiny presence in businesses, and a footnote in Apple’s balance sheets.

The second problem is that Apple’s growth has been powered by Steve Jobs’ ability to identify a niche where a new device could grow a market out of thin air, either because other companies had not identified the market or because nothing had been delivered that struck consumers as elegant. An opportunity for such a device continues to exist in your living room, where we so desperately need a unified experience for dealing with our televisions. Although Apple is shortly going to release a slightly upgraded version of “Apple TV”, it falls far short of anything like an ideal device. Apple may not be able to deliver a game-changing living room product because it’s only partially an engineering problem; mostly it reflects the difficulty of signing deals with the plethora of companies that want to make money in your living room, from movie and TV distributors to cable companies to Netflix to TV manufacturers. Apple might not be able to cut through that Gordian knot.

Other than the living room, it’s difficult to know what the next area is that Apple could dominate. It’s been ten years since Apple introduced the iPod and blew all the competitors out of the market for handheld music devices. The first iPhone arrived in 2007 and effectively created the smartphone market. Two years ago the iPad brought the nascent tablet market to life. The company can ride that forward for a long time without a fundamental new product but expectations for Apple run very high indeed. Did Steve Jobs leave a blueprint for the future? Do his successors share his strength as a visionary?

In the next article, I’ll talk about the walled gardens that are being set up by Apple, Microsoft, and Google, something that will make our technology life more fragmented than ever in the next year or two.

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