APPLE TABLET (WILL IT BE THE NEXT BIG THING?)

Three Things Apple Needs to Do to Make Its Tablet a Breakthrough Device

The din of rumor and the clamor of speculation inspired by Apple’s expected announcement is about to peak. We’re all convinced that the “one other thing” will be some kind of magical tablet device. We all expect it will be a big deal. And in these past weeks we’ve witnessed a parade of writers, analysts, and consumers who have all published their “wish” or even “guess” (or, in some cases, “fantasy”) lists. But we have yet to see what we think really matters: an Apple “should” list that identifies the things Apple needs to do to ensure that its device is successful.

Let’s put this on the record: Apple has to create a new category here—that’s something it has not done in more than two decades. Apple’s genius is its ability to consumerize a device category through great design, software and marketing. It did it with the PC, the digital music player, and the [shudder] smartphone. The coming tablet is an oddity. It is flawed in meaningful ways: It’s a computer without a keyboard, it’s a digital reader with poor battery life and a high price tag, and it’s a portable media player that can’t fit in a pocket.

As a result, Apple has to tap the 6 million people who will buy e-readers this year and/or the 7% of adults interested in buying a netbook and help them see that this new tablet is a new version of all of those things and more, where its value comes from their elegant integration into a single, awesome user experience. This is something we think Apple can do, but only if it puts the right objectives on its to-do list. We’re not rooting for Apple per se, except to the extent that Apple: 1) improves consumers’ lives, and 2) cleverly exploits market opportunities or gaps to force everyone else to elevate their game. (Note that #2 will lead to more of #1; this is a fruit of free-market economics, and we are eager to taste it.)

So into the vast cacophony of opinion that is about to get turned up past 11 (apologies to Spinal Tap), we offer the following three things we think Apple should do with its announcement tomorrow. Accompanying this recommendation is a warning: if Apple doesn’t do these things, or do them well, the long-lauded tablet form factor will remain a peculiarity.

1. Create a new device category around personal media. Today, people spend as much as five or six hours a day with media (most of it video, next with audio, then with text—younger consumers spend as much as seven hours a day on media, including social media, much of it overlapping with other media). Nowhere do they have an integrated experience that ties it all together. Of course, Apple knows it is well positioned to offer music, video, and, soon, books, magazines, newspapers and web-based opinion and commentary. However, the critical link that would make Apple’s tablet really soar is the inclusion of personal media: photos and home videos. Viewing photos is a top-five online activity, digital photography has created a whole new set of behaviors that Flickr, Picasa and others have tried to serve.

Now with the rise of Flip cameras, video is about to achieve the same prominence, but no one has a handle on it yet because it’s harder to edit, manage and share. Putting all of these personal and professional media into the device and synchronizing them intelligently across other devices with the help of the dreaded “cloud,” that’s where Apple can take it all to the next level. Importantly, personal media are by definition social media because they have to be shared to be valued. Apple needs some to do work here—social media has not been a strength. Nail this combination of professional, personal and social media, and a new device category is born.

2. Work its user-experience magic on connectivity. Among the most hotly debated questions about the tablet is what flavor of connectivity it will possess, which mobile operator(s) may play a role, and what that role may be. Today’s 3G networks simply cannot support a Kindle-like pricing model (that wraps the delivery cost into the content price) for video, nor for a concept like the rich magazine that Time Inc. has demonstrated. To accommodate the full panoply of media offerings, Apple will need to rely on a combination of home broadband, WiFi, and cellular networks to seamlessly deliver and synchronize content using a complex model that optimizes based on cost, urgency and price.

This network dance is already visible to iPhone owners who know they can only retrieve certain content over WiFi or when physically connected to their iTunes library, but it’s a clumsy dance and Apple can—and should—do better. Here’s an idea: become a Virtual Network Operator (VNO, providing connectivity services without physically operating a network)...a smart VNO. Put a multimode radio into the tablet, negotiate wholesale rates with AT&T and Verizon (and others in the future), and do arbitrage pricing across networks to reduce pricing using market efficiencies. Sure, the carriers don’t want this but if anyone can do it, Apple can. After all, you’ll already have all the other retail and service components in place.

3. Break open the meaning of the word “device.” All along, we’ve talked about this device as if it were a single form factor that would define a new era in media use and connectivity. But the future of selling devices is not in selling single devices; instead, it lies in selling device-based experiences, where families of devices work together to give consumers what they really want. That means the tablet must be introduced with a family of co-devices (not accessories, please don’t marginalize them by calling them that) that will make the device itself more flexible and therefore valuable. We’re talking Bluetooth keyboards, sure, but also a family of docks that position the tablet to be a bedside alarm clock, a bedroom Pandora radio player, a kitchen recipe stand, a family-room photo frame, and a home remote control. We’re talking about TVs that tablets can “publish to” wirelessly and HD cameras that can function in attached mode or work wirelessly from across the room—the same camera that will speak to your Mac, your iPhone, and anything else Apple makes.

There’s a lot more detail behind it, but this is our short “should” list for Apple. A list that, conveniently, applies to everyone who wants to take on or draft off of Apple as well. Amazon’s next generation Kindle should do the same (we’ve codenamed it “Kindle Flame” around here). We’ll be publishing a much more detailed analysis of the tablet market in the coming weeks once we have the full detail of Apple’s offering and can scour our consumer data for evidence of who wants—and can pay for—this kind of experience.