Perspective On An iPad Market In Flux

Lots and lots of chatter about the iPad, some say it won’t grow like the iPhone, while others say those are not fair comparisons. Let’s briefly review how this is has all surfaced. First, a16z’s Zal Bilimoria wrote Our Love Affair With The Table Is Over. A few weeks later, a16z’s Benedict Evans carved up some data in iPads And Tablet Growth. This post motivated USV’s Fred Wilson to take a VC angle on the growth of tablets versus other platforms, writing How Big Is The Tablet Market? A few days later, as these posts gained momentum, MG Siegler of Google Ventures pushed back against the growing perception, writing The Astonishing, Disappointing iPad. Finally, Andrew Parker from Spark wrote Ubiquitous Computing and iPad Doomsayers and made an interesting case to ponder.

I’ve been wanting to write about this but have held back because there’s so many opinions floating around. I normally wouldn’t cite so many other pieces like I did above, but I believe all of these pieces are worth reading in one sitting to get a flavor of the arguments.

It’s exciting, however, because we are all trying to figure out what the future and impact of the iPad will be. Comparing it to mobile phone growth may be instinctual for all of us, but it may also be unfair, a sort of apples versus oranges, no pun intended — and it may be better to compare to growth of PCs and displays people have at their desks. The growth and consumer attention in mobile is hard for anything to compare to. But, for startups who must make razor-thin choices and platform bets, and for investors who are looking for the largest addressable markets, the tablet isn’t the first choice, nor anywhere close.

Here are some thoughts I try to keep in perspective about the iPad, given the unreal growth of mobile phones:

  • The iPad Is Still Young: iPhone is over seven years old. iPad is about four years old. We can analyze the iPad today, but let’s also keep in mind a lot can happen to iPad over the next three.
  • Carrier Plans Will Evolve: My belief is the carriers will offer more comprehensive device plans and bundle those services across devices and iOS for customers. This is just a hunch, but I can see it happening over next few years.
  • Input Innovation Has To Come: iPad is primarily designed for consumption, but people who need to do work like coding, writing, spreadsheets, and the like probably aren’t satisfied with external keyboards for too long. So, will the ability to input information get better? I don’t know, but I have to think it will, perhaps along voice input.
  • Contextual Computing: Just like beacons inside iPhones will leverage a huge platform network effect, iPads resting in the background could also be beacons, albeit expensive ones.
  • What Is The Killer iPad App: I keep asking this question, and never get a good answer. Maybe that’s the test — will a killer iPad app emerge in the next three years?
  • Equipment Replacements: Just like the iPhone replaced point-and-shoot (for many people) and alarm clocks, calculators, scanners, etc., the iPad may replace many industrial tools like mixing machines, movie cameras, and so forth. So, it could just grow in different ways and have apps written for it that are quite sophisticated (and draw more CPU)
  • Different Monetization Opportunities: iPhone apps that are creating economic value (and/or harvesting it) are in very specific categories — games, photo-sharing, network effects / messaging, and on-demand services. As iPad is on a different growth trajectory (again, can’t be compared to the phone), the categories in which app developers earn money may be entirely different, including productivity tools, as we have seen with the new Office releases, for instance.