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Apple iPad: game-changer or just another screen?

In the wake of a television campaign during the Oscars, buzz is building in anticipation of the Apple iPad?s impending release on April 3. But will it live up to the hype?

Mobile industry analysts and executives are split. Some believe that Apple?s marketing muscle will make the iPad a success, and thus an attractive platform for mobile marketers and merchants, while others believe that it will be hard for media tablets to replace smartphones, netbooks, laptops or eBook readers.

?I don?t think the TV ad shows much we have not seen before,? said Carl Howe, research director at Yankee Group, Boston. ?It?s really the introduction of the iPad to the everyday consumer.

?As such, it was just intended to get people interested and thinking about it and building up momentum toward the launch on April 3, as well as generate pre-orders,? he said.

Apple's TV spot promoting the iPad debuted during the recent Academy Awards broadcast on ABC.

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While all indications point to the fact that the iPad, like the iPhone, will not support Flash, Mr. Howe still believes that the iPad experience will be similar to a desktop-computer experience in some ways.

?The opportunities opened up by the iPad will mainly be related to mobile commerce, with a little bit of mobile advertising, but really ads will be much more traditional desktop-style advertising,? Mr. Howe said.

?The iPad?s main value is that it is a great device for consuming media?watching movies and video clips, listening to movies, reading books and Web sites?that will be its main value,? he said.

?It wouldn?t be surprising to see consumers spend a couple hundred dollars a year on media, because the device is comfortable to hold in your hand for longer periods of time.?

Apple iPadding its resume
The lowest price point is $499 for the 16GB iPad that only connects to the Internet via WiFi. The 16GB version that can connect via WiFi and a 3G data plan starts at $629. There are also 32GB and 64GB versions available.

If Apple is able to replicate the success it has had with the iPhone, then its iPad tablet computer will have a huge impact on mobile advertising, branded applications and content distribution (see story).

?The iPad will certainly enable new ad units, although they could also be similar to traditional ad units on the Web, with the caveat that they can?t run Flash,? Mr. Howe said. ?I don?t think there?s any intent to do it, and a lot of online display advertising is in Flash.?

While Amazon will have its work cut out for it to compete with media tablets such as the iPad, Mr. Howe does not believe eBook readers are going anywhere any time soon.

?I think the iPad will coexist with the Kindle and other ereaders, at least for a while,? Mr. Howe said. ?For one, the iPad is about twice the price, and for another, it does a whole lot more than just download eBooks, so consumers will self-select.

?If you?re mainly focused on books, you?re more likely to buy a Kindle, but if you?re looking for a broader media experience, you might buy an iPad,? he said.

Initially Apple will only sell the iPad via its own Web site and its own bricks-and-mortar retail outlets. However, Mr. Howe believes that could work to the company?s advantage in this case.

?The iPad is one of those devices that you really have to touch and use to understand what the value proposition is,? Mr. Howe said. ?One advantage Apple has is 283 stores with 50 million visitors a year?that?s a huge advantage over Amazon.

?The problem with Kindle, you have to lay down 250 bucks before you can evaluate it and know if you want it?there?s no try-before-you-buy,? he said. ?That?s also an advantage for nook, because you can go into a Barnes & Noble to try one.

?As we look forward to the launch, it will be the usual Apple thing?you?re going to see lines, you?re going to see people camping out overnight and there will be a big media frenzy.?

Reaching for scale
Where the iPad and other media tablets represent an appealing canvas for marketers to engage consumers, and Apple users represent a desirable target demographic, there are questions as to how long it will take for iPad users to reach the necessary scale to interest large brands.

?I think it?s going to be interesting but it?s going to take some time,? said Julie Ask, San Francisco-based vice president and principal analyst at Forrester Research. ?Not many people are going to have one initially?even if you sell a million iPads to Apple enthusiasts, that?s still kind of a niche audience of early-adopters?it skews male, it skews higher income.

?You have to be an advertiser that wants that audience to spend money, and go in with the knowledge that the iPad is not going to have tremendous reach early on,? she said. ?It?s also dependent on what media companies come forward and what types of applications and content will be developed specifically for the iPad.

?Video ads and all kinds of things may look good on it, but it?s expensive to develop these new ad formats.?

Also, the use case is an open question. Most consumers will not be carrying a media tablet with them wherever they go like a mobile phone. Steve Jobs implied that the iPad may be intended for use in the home.

?Location may become less relevant if it?s being used in the home,? Ms. Ask said. ?It?s not the device I have with me every minute of the day.

?It?s less ubiquitous than mobile phones, and location doesn?t tie in as much,? she said. ?Marketers have to think of new and creative ways to take advantage of the potential to reach people using the iPad.?

Growth curve
The much-anticipated launch by Apple next month of its iPad computing device highlights the real start of a new market segment for media tablets that, according ABI Research, will see 4 million units shipped this year (see story).

In addition to the iPad, that number includes competing media tablets from pretty much every PC manufacturer under the sun, many based on Google?s Android operating system.

For example, HP, Lenovo, Dell, Acer, Asus, ICD and Notion Inc. have all announced plans to release their own media tablet.

?My first thought is, perhaps too much focus is given to a particular company?s product,? said Jeff Orr, Bend, OR-based senior analyst at ABI Research. ?Just because Apple has made a media player and a smartphone before doesn?t mean they will be successful with a media tablet, and that holds true for PC manufacturers as well.

?There are a large number of companies that are in this ecosystem?Apple not first to market, but it is now in the mix, and they are going to be promoting it significantly,? he said. ?All media tablet boats will be lifted.?

ABI Research predicts that initially media tablets will attract early-adopters in select markets?Western Europe, North America, Japan and Korea.

?Those are the same places you tend to see consumer electronics adoption first,? Mr. Orr said. ?It?s an emerging category that the iPad fits into called media tablets, which is relatively small, because there are prerequisites such as high-speed broadband or WiFi, and only 30 percent of households have a WiFi home network.

?If we?re talking about using a 3G modem in these types of devices, that?s another prerequisite, a service contract that allows it to be used anywhere,? he said.

A lingering question is how the iPad will find its place in the market among a sea of smartphones, netbooks, laptops and eBook readers.

?It?s yet another platform, yet another display that may appeal to consumers, but has achieved very little business traction yet, so the question is, how will people use them?? Mr. Orr said. ?Media tablets are not too much different from smartphones, netbooks and laptops?maybe they offer a more appropriate form factor for eBooks?

?Is it cheaper than an eBook reader? No? Cheaper than downloading an eBook reader app for your smartphone? No,? he said. ?Some activities will transfer to media tablets, just like email has transferred from computers to handsets.?

What are media tablets really going to be good at? What challenges are they addressing? Is there an opportunity for something in the middle?

?Media tablets are really going after a different purpose than smartphones or laptops,? Mr. Orr said. ?Netbooks and laptops exist for productivity, and have multiple user interfaces, while smartphones have taken off around a wide range of applications and services, including entertainment, but they are still centered on communications at the core, whereas the media tablet has entertainment as its central capability.

?The media tablet category will not impact shipments of laptops, netbooks, smartphones, smartbooks, not even eBook readers,? he said. ?Those other form factors are all part of the landscape, and the Pad does not remove any of them.?

Mobile advertising, marketers aplenty
Just as many big brands have flocked to the iPhone, the same will be true for the iPad, if for no other reason than the sexy factor.

However, each brand must decide whether the investment in iPad specific software and/or ad units makes sense in the context of its specific marketing goals.

?It will be more of the same in terms of using the iPhone OS, but I do think it gives a broader range of opportunities for ad units,? Mr. Orr said. ?It will be more like the laptop and desktop experiences, not just rectangular banners and footer-header type ads, but more and more conceptual ad unit formats?skyscrapers, interstitials, video.

?There are a lot of different ways that content on tablets could be delivered,? he said.

On the heels of Steve Jobs? official introduction of Apple?s iPad in January, marketers and developers raced out the door with applications and advertising services for the new tablet (see story).

Interactive mobile media company GoldSpot Media Inc. recently released an enhanced version of its mobile advertising client SDK, miAPI, to support iPad applications.

The miAPI client SDK offers developers a single video advertising monetization platform across the Apple family of devices such as the iPhone, iPad and iPod Touch, as well as Android, RIM, Symbian S60, J2ME and Brew.

?Mobile video advertising is at a stage where online video advertising was four to five years back," said Srini Dharmaji, founder/CEO of GoldSpot Media, Sunnyvale, CA. ?One of the primary issues with Apple is the lack of Flash support?if Flash was supported, video advertising would definitely take off on these devices, because it provides better ROI.?

Mr. Dharmaji is fascinated by the potential of the iPad as a marketing platform, but he is taking a wait-and-see approach.

?The impact of the iPad won?t be comparable to the impact of the iPhone, because there was nothing comparable to the iPhone when it came out,? Mr. Dharmaji said. ?The key aspect here is how the users are going to perceive it and use it: Is it a PC-like experience or a mobile experience?

?Apple is a phenomenal marketing machine, and whether the iPad will be adopted or not, I can clearly see some usage in between mobile phones and PCs,? he said. ?My personal opinion is that the iPad leans more toward the PC than it does the mobile device.?