Connectivity and content consumption define Apple's latest device.
For all the hype leading up to it, last week’s formal unveiling of Apple’s iPad was greeted with a collective, “huh?” Resembling an overgrown iPod touch without all the apps, with limited computing ability due to the mobile OS and a still-clumsy on-screen keyboard, many wondered what you’re supposed to do with the thing.
The new use Apple (AAPL) highlighted at the unveiling was the e-reader app and new iBooks store, leading many commentators to focus on its potential threat to the Kindle and Amazon’s (AMZN) dominance of the e-book business, an impression Amazon itself helped fuel by reacting hysterically.
While Amazon certainly has its competitive work cut out for it, the competitor that most ought to be worried about the implications of the iPad is Google. Not just because Google has substantial e-book ambitions of its own, but because the iPad presages a new model for content acquisition and consumption — especially media content — that is the antithesis of Google’s search-driven, browser-centric model. If Apple succeeds, it could pose a significant threat to Google’s power to attract and generate traffic for multimedia content, undercutting its hugely profitable search ad business.
The first clue to what Apple is up to is the extremely limited means of getting content onto the iPad. It has no USB ports, no SD card slot, no HDMI or Ethernet port, not even a camera. The thing is effectively a sealed vault. About the only way in is through the wireless connection, using either Wi-Fi or 3G, or through a docking station (sold separately of course) connected to a desktop or laptop.
Even via the wireless connection, access is limited. You can browse the web using the Safari browser, but Safari does not support Flash or, of course, Microsoft’s Silverlight, which makes the iPad incompatible with most of the popular online video sources such as Hulu (Flash) and Netflix (Silverlight).
It isn’t very easy to get content off the iPad, either. Apart from the lack of removable media support, it outputs video through composite video, which means it will look great connected to your old CRT TV but probably won’t work well with your HDTV set.
In short, the iPad is a device for running apps, obtained through the iTunes app store. It’s designed not for discovering content, or searching for it, or even managing it directly using your choice of applications. It’s built to be served content, through a proprietary interface, on the content owners’ terms.
With the iPhone and iPod touch, Apple has already demonstrated the power of the app-store model to shift consumer behavior away from finding and accessing web content through a browser in favor of a dedicated interface. The iPad, with its larger palette, capable of richer, more immersive applications, represents an effort by Apple to extend that model to traditional media content.
The danger for Google is that media companies are likely to leap at what Apple is offering them, once they figure out how to develop for it. For content owners, the iPad is, in effect, the anti-Internet: a platform for digital distribution in which all aspects of the user experience and functionality are under their control. Just as importantly, it’s an environment where their content can’t easily be shared, aggregated, re-published, mashed up or indexed by search engines.
If Apple succeeds in its ambitions with the iPad, the app-store could well become the dominant new paradigm for distributing media content digitally. Media companies are likely to channel more of their content into proprietary apps and away from open platforms. Over time, that would greatly reduce their dependence on traffic from search engines to monetize their content, and with it search providers’ ability to monetize that traffic separately from the content owner.
The price, of course, is greater dependence on Apple.