CES - Apple's Just Out of Your League

By Chris Maxcer
MacNewsWorld
Part of the ECT News Network
01/04/11 5:00 AM PT It looks like this year's CES will bring us wave after wave of new Android tablet computers -- everything from nicely made devices from big-name brands all the way down to true pieces of junk. Faced with this onslaught of competition in the tablet sector, will it be dangerous for Apple to sit out the CES party? Not at all. For Apple, it's about the whole ecosystem, not just a few new products.


Despite the occasional problem with my iPhone 4 alarm not going off, leaving me to blissful slumber broken only by a beam of sunshine hours later, I'm a big fan of Apple's (Nasdaq: AAPL) ecosystem -- and ecosystem is the reason Apple has to little to fear from the onslaught of tablets that will invade the Consumer Electronics Show (CES) this week.
In fact, Apple won't even be there, but I guarantee the Apple iPad will get plenty of press coverage as bloggers and tech news writers cover the introduction of tablets at the tech conference. Android-based tablets will be out in force, with new models expected to be introduced by Acer, Motorola (NYSE: MOT), Toshiba and Vizio (and yes, you read that right, the low-price flat-screen TV provider will even introduce a smartphone, too). There will also be a mess of really cheap, poorly made tablets from off-brand manufacturers whose primary retail outlets seem to be truck stops in the middle of nowhere.
Despite the chance to show off its products to well over 100,000 technology enthusiasts and influencers, Apple might be getting more bang for its buck by snubbing the show altogether. Maybe Apple CEO Steve Jobs saw the wave of cheap tablets coming years ago and decided he didn't want to get anywhere near them, choosing instead to create his own chain of Apple retail stores, using plenty of steel, glass, lighting, etched glass, the occasional smattering of historical brick to satisfy local zoning boards, and, um, glass. Apple retail stores don't have to rub shoulders with cut-rate competitors, and I think Apple likes that just fine.
First off, I should disclose that while I'm a big fan of Apple products in general, I don't really care if Apple is the "Number 1" anything. Doesn't matter if Apple sells the most smartphones, the most tablets, the most songs, movies or electronic newspapers. I couldn't care less. I only care that Apple is able to be profitable -- because if the company is profitable, I can count on the company to continually innovate and create great new products that all work together with the products I already own. Does any BMW owner really care if BMW sells more cars than other companies?
But what if the Android market becomes the go-to place to get the most apps? Still doesn't really matter because the iOS ecosystem of which the iPad is part is large enough to be profitable for most any developer who has a truly good idea.
But what about price? The low-end, and in my mind, under-featured WiFi-only iPad is still $499. That's a lot of money, right? Well, as it turns out, that price point and those that are even a little higher don't seem to be an inhibitor to sales, at least not yet. In the worst recession of my adult life, Apple easily proved that consumers will shell out for a great mobile computing experience.
The thing about Apple is that the company has slowly and consistently been teaching consumers that paying for quality hardware as well as quality software experiences is worth the high cost of admission. Apple Retail Stores reinforce this notion. Have you ever had an old barbecue, washing machine, or couch that you just wanted to get rid of? If you post an ad online or slap a "Free" sign on it in your driveway, you might not get anyone to respond. But when you post the same old ratty couch online and with a sign that says, "$50," you'll have more inquiries than you can handle. The psychological principle seems to say that if it's free, it's not really worth anything and there's probably something wrong with it, so why bother? I believe this principle extends beyond used appliances.
Still, all of this doesn't mean that my eyes won't swing over to a compelling new price point. Over the holidays, I spotted an Android tablet for $200. I thought, "Wow, Android really is driving the price down. This is freaking awesome." And then I started looking closer. First of all, I couldn't find a brand name on it. One of the names that might have been a brand name might also could have been some city in a far off land. Second, the retailer didn't have a model on display and wouldn't let me take it out of the box. Third, what were the specifications? If the tablet was running an older version of Android, would I be able to upgrade it? What was the processor? Was the screen bright and tight? Or dull and fuzzy?
Frankly a little sad, I realized that it wasn't worth the risk. Maybe I'd get something pretty cool for $200, but more likely I'd end up hating a pokey and pathetic user experience that'd make me overreact and throw the unit against the wall in a fit of rage.
And then I'd be out $200.
Worse yet, a grandmother might buy it, and if she wasn't utterly confused and disappointed when it worked nothing like the Apple ads on TV, she might have given it as a gift to a teenager, and that's also a low chance of success.
More importantly, CES is not important to Apple because Apple is focusing on building its entire suite of amazing products. As a hardware manufacturer, Apple doesn't have to wait for Google (Nasdaq: GOOG) and its Android-developing partners to create and deliver the next generation of Android that will finally be designed to work well with larger-screen tablets. Dubbed "Honeycomb," it won't hit until later this year, and when it finally does become available to brand-name tablet manufacturers, Apple will have already released its next version of the iPad.
Microsoft (Nasdaq: MSFT) needs hardware manufacturers, for the most part. But HP (NYSE: HPQ), with its webOS-based tablets on the way, and RIM, with its Blackberry-based PlayBook on the way, are a little more Apple-like in that they control both the OS and the hardware. But there ecosystems are years behind.
What do I mean by ecosystem? The songs, videos and apps I buy and rent all work well together among Apple's devices. If I upgrade something, very little, if anything, breaks. My Apple TV works with my iPhone, which works with my iPod, which lets me stream video, photos and music to my big-screen TV. My Mac backs up my devices, plays nicely and Mac OS X is becoming increasingly similar -- with Lion on the way this year -- to iOS. The new Mac App Store debuting this week will work similarly to the iOS App Store. If I buy something online, I can take it to an Apple retail store for repair, replacement or just to learn how to use it more effectively.
Apple's MobileMe service brings push features to consumers, along with the ability to locate my iPhone, and at some point, MobileMe is going to turn into a truly next-generation cloud service that'll make my suite of Apple products even more effective. Even Apple's new Magic Trackpads are working to extend the ability to touch and tap and swipe to Mac OS X-based applications.
Apple creates products that work together, and they're built with a broader vision in mind: They aren't designed to say, create and take over the tablet market. Smart consumers will increasingly understand this, and while the pretty iPad facade is compelling, the inside connections will rise to prominence -- and eventually, even with grandmothers.
MacNewsWorld columnist Chris Maxcer has been writing about the tech industry since the birth of the email newsletter, and he still remembers the clacking Mac keyboards from high school -- Apple's seed-planting strategy at work. While he enjoys elegant gear and sublime tech, there's something to be said for turning it all off -- or most of it -- to go outside. To catch him, take a "firstnamelastname" guess at Gmail.com. Print Version E-Mail Article Reprints More by Chris Maxcer
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