iPad 2: The Analysts' Perspective

By  Martha Walz — March 08, 2011

When Apple introduced the iPad 2 last week with its usual fanfare, its manufactured excitement around the new device was in contrast to analysts’ reception of the device—and, indeed, the general public’s. The improvements made to the first generation iPad were merely incremental and only address some, not all, of the competitive advantages of several newly released tablets.
 
In 2010, Apple shipped nearly 14.8 million iPads over the trailing nine months of the year, approximately 85% of all media tablets shipped during the year and a significant increase over the 100,000 units shipped by all vendors during 2009, according to ABI Research. Will the iPad 2 keep this momentum going?
 
Basic specs
The iPad 2 features a 1.2 GHz dual-core A5 processor, front- and rear-facing cameras, HDMI video output, and a new operating system, iOS 4.3. It is available in black or white, a new option with the second-generation device. Pricing is the same as on the original model, starting at $499 for a Wi-Fi-only model with 16 GB of memory. iPad 2 will go on sale in the U.S. starting March 11.
 
“With no price changes or evolutionary additions to the original iPad’s capabilities, ABI Research expects it to be phased out quickly,” says senior practice director Jeff Orr. “Competitively, the addition of video cameras, a dual-core processor, and HDMI video output keeps iPad 2 in the running with other media tablets.”
 
Jim McGregor, chief technology strategist at In-Stat, agrees. "So, when you compare the iPad 2 to the most recent competitor, the Xoom from Motorola, you end up with two devices that are very similar all the way down to the basic specifications of the processors," he explains. "The Xoom has the upgradable options and Flash support, while the iPad 2 has a lower price tag and a more robust software environment, including both the OS and the applications."
 
“I don’t believe this is head and shoulders above the competition now coming to market (e.g., Moto Xoom, and other next generation Android Honeycomb devices, RIM’s PlayBook, HP’s WebOS device, etc.),” says Jack E. Gold, founder and principal analyst, J. Gold Associates. “I believe Apple didn’t really move the bar all that much from the original iPad, and from where many competitors are now targeting their newest devices.
 
“What was still missing (and I expected it to be missing) was Flash support,” Gold continues. “This is a key differentiator for the Android (and PlayBook) camps that provide Flash support. Despite Apple’s claims, Flash is and will be important on the Internet for many years to come.”
 
Enterprise considerations
Some analysts believe that Apple missed a big opportunity to court business customers with the newest version of the iPad. With many businesses testing or deploying iPads today, additional security measures incorporated into the new OS would have been a huge plus.
 
“Generally, IT is disappointed with the device and how hard Apple makes it for enterprise IT to deploy and manage on a large scale,” explains Gold. “And security is lacking (no HW based encryption). This, I believe, is where Apple missed a golden opportunity with iPad2 and iOS 4.3.
 
“In fact, Apple did not address these legitimate IT concerns at all with the updated HW and SW,” Gold continues. “This means third party ‘enterprise enablers’ (e.g., Sybase, Zenprise, McAfee, MobileIron) will need to be deployed to manage and protect the devices in a corporate setting. Apple could have provided more tools, especially by enhancing iTunes for mass deployments and more device management, and by including security in HW like they do in the iPhone (which, by the way, is more secure than the iPad at this point).”
 
The verdict?
Given an influx of branded competitors from the PC and mobile handset markets (including ASUS, Dell, LG, Motorola, RIM, and Samsung), ABI Research does not expect Apple to maintain its 2010 market share indefinitely.
 
 “With competitive devices coming to market that are approaching the usability and features of iPad, and that offer true enterprise features, I expect iPads in business to become less attractive, at least until Apple decides to focus on the IT requirements of the devices,” agrees Gold.
 
“Overall, I think Apple fans who want the latest tablet will buy this (or upgrade from an existing iPad). But I don’t see any overwhelmingly compelling capabilities that would make people sitting on the tablet fence go out and have to buy one, despite some attractive apps that Apple introduced,” he concludes.

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