Wednesday's unveiling of the iPad 2 wasn't much of a surprise, as most everyone following Apple knew it planned to announce an update to the tablet device. What follows now is an analysis of what the new device means.
Apple has an uncanny ability to roll out new devices and services with almost perfect timing to respond to competitive pressures. Android smartphones taking over its iPhone market share? Simply add the iPhone to Verizon's network in response. The original iPad inspiring a host of rival devices hitting the market this year? Simply update the device with new features and better pricing than the others and stay ahead of the game.
And based on analyst reports, Apple stands a good chance of dominating the tablet market for at least the next year or two. Forrester analyst Sarah Rotman Epps believes the iPad will account for at least 83% of U.S. tablet sales in 2011. The next strongest competitor, Motorola's Android-based Xoom, isn't expected to pose that much of a challenge. In fact, C.L. King downgraded Motorola's stock rating to "buy" from "strong buy" while noting that the iPad 2's feature set "appear to match most of the high-end attributes of the Motorola XOOM" -- yet at a lower price.
In fact, many analysts were impressed by the iPad 2's price, which is as low as $499. In an investor note, Toni Sacconaghi of Bernstein Research wrote that in spite of many cost advantages Apple is taking a lower margin on iPads in order to build market share. "We note that nearly 100 competitive tablets have been announced or introduced, yet none eclipse (or arguably even match) Apple on pricing without compromising markedly on screen size or component quality."
However, some analysts feel Apple will eventually lose market share to Android-based tablet devices in time, similar to how the iPhone has slowly lost its edge in the smartphone race. Mike Abramsky, a technology analyst at RBC Capital, sees a flood of competing devices toppling Apple's leading market share by 2014. "It probably doesn't change the competitive landscape because the market's quite large."
So what does all this mean for the music industry? Sure, the Garage Band iPad app is cool, but it's not a game changer (other than making it much harder for all the third-party iPad instrument apps to find an audience). Other than it being thinner and lighter, and the performance enhancements, one of the more interesting developments in Wednesday's announcements are the steps Apple has taken to connect its devices together in the home. An update to AirPlay lets users stream music and other media from their iTunes library to an iPad or iPhone over a wireless network. An HDMI cord allows users to connect their iPad to their TVs, running their iPad apps on the TV screen.
Apple has had little luck getting traction with its Apple TV product, but the iPad has sold more than 15 million units in less than a year. Perhaps this is Apple's way of establishing a stronger presence in the living room, which is the next battleground in the digital music future.
This is what both developers and music industry execs should keep in mind when considering iPad apps. It's not just what an iPad music app can do on the iPad; It's what can it do in the context of the broader home ecosystem, and how does that then change users listening, buying and discovery behavior.
In the first year of the tablet revolution that answer has yet to emerge. With the iPad's updated features, the enhanced connectivity and increasing competition, perhaps this year we'll learn more.