Monday, April 5, 2010
AAPL is one of the few stocks to have reached new all-time highs in the wake of the Panic Recession of '08-'09. It peaked at $200/share at the end of '07, right on the eve of the recession, and it's up 18.5% since then. But in those 27 months the iPhone has become the dominant player in the global smartphone market—the one everyone wants to imitate—and Apple has developed and released the iPad. Apple also has gained significant market share in the laptop and desktop computer market. In fact, Apple now has a virtual lock on the high-end laptop market. The question of the day is whether the iPad will become the leader in, and rejuvenate, the tablet market. I think it will.
I received my iPad last Saturday, and I spent quite a few hours over the weekend playing with it and showing it to family and friends who came by to have a look at it. If my grandsons (ages 3 1/2 and 5 1/2) are any example, this thing is hot. So hot we had to tear it out their hands as they fought over the thing yesterday afternoon. Who would have thought, 20 years ago, that you could put the equivalent of what was then a supercomputer into a slab of glass and aluminum about the size of a small magazine, and that a toddler could pick it up and immediately start using it? It's simply awe-inspiring.
From my limited experience with the device, I have come to several conclusions. I think that just about anyone who picks up an iPad will marvel at its design and at the way it works. It's extremely fast and responsive; photos scale up and down instantly, and the screen rotates instantly. The eye candy is unending. It's gorgeous and it's sexy, and it's a must-have for gadget lovers. Apple has done a tremendous job with this.
The WSJ, New York Times, and BBC have done a superb job of presenting their content in iPad-friendly fashion. ABC allows you to watch their TV shows in HD after only a few seconds' wait. Netflix movies also pop up almost instantly and look terrific. The X-Plane flight simulator is absolutely breathtaking: choose from dozens of planes (even a 747) and locations, and fly by holding the screen in your lap and nudging and tilting it. Books are very readable, and now they can be interactive to boot. You can buy all sorts of things by just tapping your finger.
I'm still wondering, however, exactly how this device is going to fit into my daily life. It fits somewhere in the spectrum between an iPhone and a laptop, and it could replace either one or both, but not completely. It's a new type of computer, but you can't access the file system, and it won't let you print things directly (though I suspect that will come with time). You don't need to know anything about computers to use it, but if you know a lot about computers then you will wonder why it doesn't do some of things that all computers do.
It's designed to work best while sitting down as you would with a good book (physical books are now obsolete), but it's awkward to use at a desk. (That may change once I get the carrying case that doubles as a stand, and a wireless keyboard.) When they get cheaper I imagine people will buy several iPads and leave them lying around the house in different locations. It's ideal for surfing the web and showing people your pictures. It will go where laptops won't: to the bathroom, to the dinner table, or to the couch. It will be an essential traveling companion, since it's so much lighter yet almost as functional as a laptop for the majority of people. It will probably become even more functional than a laptop with time, since a good deal of the iPad's value will come from the tens of thousands of applications that have yet to be developed for it by smart people all over the world. Meanwhile, virtually all of the iPhone apps work on the iPad, but the good ones are going to have to be revised to take advantage of the iPad's bigger screen and much faster processor and much longer battery life.
In short, there so many good things about the iPad that I can't believe it won't be a success. Defining where that success will come from, though, is difficult. This little gadget has tons of potential, and it can only add to Apple's bottom line. I continue to believe that Apple's future will be driven by an ever-expanding and innovative product line, and by an expanding share of the computer, laptop, tablet, and smartphone markets.
Full disclosure: I am long AAPL at the time of this writing.
Posted by Scott Grannis at 11:58 AM