Why the iPad Matters #2

It is just a possibility at this point. We don’t know what will happen. But some things seem possible. And it is worth asking what will happen should they come to pass.

For example:

It seems possible that Apple’s iPad will be a success like its iPod and iPhone products.

Consider that the iPod has sold over 260 million units worldwide. And that since 2007, Apple has sold 70 million iPhones. 10 million were bought last month alone, which means that the current total will likely double within 6 months. And where will that device be in 2 years? 300-400 million users?

In each case Apple’s design has spawned countless imitators, thereby transforming the marketplace for media devices, and more importantly, for media itself.

Apple’s products actually affect the economies of content industries. They alter distribution chains. They alter bottom lines. They alter customer behaviours. They even alter popular culture. Both by themselves, and by their influence. I am not saying this as a fan, but as a strategist attuned to industry patterns. How big an impact would you say that the iPod/iTunes combo have had on the rise of both illegal file-sharing and legal downloading, for example, and in turn on the film and music and TV and web industries? Huge? Or just lots?

Given this record, as well as the initial high demand for the iPad and the rave reviews it has received, it seems possible that yes, the device will prove another runaway hit. In fact, this series of blog posts in based on that likelihood.

In them I try to understand today the impact of this device tomorrow.

So let’s dig in. If we assume that the iPad is to become another touchstone device, what can we foretell about that success? Why will the iPad have succeeded? How will it have succeeded? And who will have won and lost with it?

Here’s one initial observation concerning the latter question:

If the iPad is a huge hit, it will mean that consuming content on it will be very, very popular. And because the iPad comes with a robust built-in business model (the App Store), it means that a lot of money will be spent on content. Renting it. Buying it. Subscribing to it. Listening to it. Watching it. Reading it. Playing it. Using it. Making it. Remixing it.

This means that there will soon be a lucrative and popular new global content distribution platform; and every content-driven brand, regardless of its medium of origin (be it newspapers, TV, radio, books, the web, music, gaming, film, magazines or just about anything else) will want and likely need to be there. On Apple’s own highly defined terms.

The new platform commands our attention. And one of its commands is the App Store.

It’s difficult to understate the importance of the App Store. What it represents is something never before seen. It is a global content mall with a single point of purchase accessible 24/7 to (in its successful future) hundreds of millions of affluent and voracious content-buying customers.

What it represents, in other words, is gatekeeper status to a brave new world. One which comes heavily circumscribed, but laden with opportunity. Imagine a single teller at which any iPad user in the world knocks to purchase content that used to be sold at newstalls, record stores, book stores, video rental shops, used record stores, cinemas, by magazine subscription, on DVDs, or even via cable or phone companies. On the iPad it is all bought in one spot: the App Store.

Apple’s App Store has already hit 5 billion app downloads. With the advent of the iPad, and the packaging of all media content as individual apps, look for that number to skyrocket.

For example, want to buy the June issue of Wired Magazine on your iPad for $4.99, as nearly a hundred thousand people did within 2 weeks of its release? (Beating Wired’s print edition sales handily.) Then go to the same store everyone else went to: hit that little icon on your iPad and checkout with that same anonymous interactive teller at the one and only App Store. Do not go to your local magazine shop or corner store. Do not go to Barnes and Noble. Do not go to Amazon or even to Wired itself. Go to the App Store. That is the only place you can get it. Regardless of the ‘original’ medium of the content, be it films, magazines, newspapers or whatever, the App Store is the only store an iPad owner needs.

Some of you might argue that the Internet and more specifically your browser is also one store to the world. However, I disagree. It is one interface to a million stores. (A hundred million more likely.) And that is a very impressive thing. But it is not ‘one store’. One store is another ballgame altogether.

What does one store mean? It means two main things:

1) The store gets to dictate the kinds of products it wants to stock, as well as their form
2) The store gets to dictate its business relationships with its suppliers, and mediates all their interactions and transactions with their own customers on this platform

It goes without saying that these are very significant imperatives, especially when every industry player wants in, but I will stop here. In my next post I will explore the implications of ‘one store’ and its impact on different media industries in more detail.

Thanks for reading. Feel free to chime in with comments…

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