Also sorry for my absence!
This is more specific to iPad and Apple's business model, and how it can be a brilliant model, perhaps at the expense of iTouch. Everyone compares iPad to iPhone, except that you can not make phone calls from iPad. You can, however, pay for data services from AT&T (and part of your money I am sure goes back to Apple). So iPad is more like a iTouch, but with an (optional) data service plan!
This is brilliant in many ways, but also has some pitfalls. On the brilliant side, it allows Apple to compete with Kindle, integrate under the demand curve by separating data and voice services (i.e., iPad/iTouch vs iPhone), and solve the small screen problem for the web surfers who do not want to use iTouch and iPhone. But (not atypical of Apple) it also comes at a cost to the customers that have to buy two data plans from AT&T!!! One for iPhone and one for iPad! At least for now. A bit of a price to pay for the larger screen, and annoying to later stage consumers.
But with or without the data plan -- specially if you do not get the data plan from AT&T and use the local WIFI hot spots with iPad -- why buy an iTouch?!!! For now the main difference seems to be the price point! :-) Yes, iTouch is more portable, but as it is, some people are opting for iPhone without a plan from AT&T plan, thus not buying an iTouch. This shows that without price sensitivity iTouch loses its differentiability. Also, in the high likelihood that iPad does get subsidized -- say by application providers, and may be part of AT&T income -- or its price does naturally drop overtime, then why buy iTouch?!
The other difference may be applications. Bigger screen gives developers incentive for more applications and different ones too :-) But iPad has a different processor all together, designed by Apple. But assuming all else being the same, specially on the toolkits, this means that application providers now just have to recompile their programs for iPad :-) which I was told, iPad, is already running all the iTouch apps.
Alright then, so much for the whether iPad will be cannibalizing iTouch or not, and hence the title. Simply stated, it is more likely that iPad cannibalizes iTouch and not iPhone.
So what about the important things :-) Like Apple's long term strategy around iPad? Well, first lets acknowledge that this is typical of Apple. That is, it is giving the users a subset of what they want. Apple then, it should be trading future features/product_upgrades for dropping the price too quickly :-) Specially with a $599 price, would later stage buyers pay to get a non-PC for teh same price. Also in Apple's long term strategy is morphing the product into a other new products/markets. Look at how early iPod, got developed into better and better products, its own product line, and finally into iPhone. The question is, do users want much more improvements to iPad? and thus creating a potential for major product development/evolution and a product line?
The alternative Apple strategy, is having a one off products -- such as Apple Air, or some of Apple desktops. IMHO this is quite a strong possibility, specially if iPad does not sell much.
Alternatively this may be where Apple portables are moving toward? this means more powerful hardware and features, plus applications from developers for iPad. But this raises new questions about Apple strategy. With its new processor (this time without any troubling partners) is Apple trying to get specialized again and move away from Intel? For various reasons (including being able to run Windows applications), I don't think so. But we are talking Apple, and this also does depend on how many application developers will develop laptop type applications for iPad.
I am not going to get into iPad carrying voice and being a big cell phone. It can be instead of add-on, but I do not want to explain it, and it has it's own technical and business challenges that make it unlikely.
The only remaining and important question is, would people want another Kindle? specially given the rumors that Kindle is not really selling? and specially now that Kindle is has an SDK for application developers? (See
Well, it is likely but it comes to Apple alliances with publishers. As a product iPad is Kindle in color :-) Second, iPad is not going after a niche market of books, which is how kindle got its starts, rather the broader music, video, WIFI as well as books. Third, it is Apple -- i.e., large number of early adopters, existing developers, and then the brand and followers or customer loyalty (different than early adopters). But Amazon does have a major in road with publishers. And they are providing Kindle software for PCs -- signifying that selling (softcopy) books are more lucrative than selling kindles. Basically if Apple is going after kindle, it needs to create the same type of alliances and success it did with publishers as it did with music industry.
In short, Apple's long term strategy for a product has often depended on the product adoption/sales and its long term potential as a product line. This has usually been a function of how popular a product became, how much Apple held back at first and introduced later (creating a potential for product line), what the users demanded, how the product morphed, and to some extent what the developers delivered :-) As I said earlier, the initial indication is that users are not demanding that much more or do not see that much to be added. There is also the issue of specialized processor (may be there is a whole strategy there in itself)... This may make iPad a separate product line with small number of variations only! Or staying with Intel, Apple will basically do a portable that is like iPad, but with all the powers of an iMac -- i.e., an Umph'ed Up iPad, and another shot of Apple Air :-)
