Back in June 2009 I conceived of what Apple’s, then rumored, touchscreen device might look like and how it might be used. One month ago Apple finally unveiled the iPad ; it only mildly resembles my conceptual model but it does embody a simple yet versatile multimedia device with a lot of potential. Since its introduction some have dismissed the iPad as nothing more than an oversized iTouch and while this description is relatively accurate it fails the recognize its intrinsic utility and why it will be such a huge success.

My presupposition of the iPad on the left and Steve Jobs’ actual product on the right.

The iPad’s intuitive user interface will appeal to less tech-savy users. As mentioned in the January 31 podcast of Six Pixels of Separation the device will remove a lot of “metaphors and architecture… inherent to laptops that deter many older users from using those devices.” For similar reasons, as well as its compelling gaming and media apps, the iPad will also attract younger users, even perhaps pre-adolescents. It was probably with this segment in mind the Paint App was demoed during the iPad presentation. The next generation of children will probably be mastering a touchscreen interface long before a keyboard or mouse. With its lower price point and conformability for recreational purposes, I also think that the iPad will become the cool, if not the standard, educational tool for younger users, replacing laptops as the device students tote from classrooms to recess. Therefore it should come as no surprise that a recent AdMob survey indicates that the Pad will be particularly popular with both the young and the old.

I also believe that the iPad will find fans in other segments such as at-home moms or dads, and sales people; as said on the Marketing for Coffee February 3 podcast, “(the iPad) will be a sales machine in a box… a good presentation tool,” echoing my similar prediction in June.

Although these segments will likely provide the initial demand for the iPad, I sincerely believe that it will find a very broad acceptance in the long run, and that it will become the device for consuming media on a personal level, just as a television is the device for group consumption. How often have you seen somebody use a laptop or BlackBerry while watching television? It is pretty much commonplace but neither device is ideal- a laptop is large and sometimes unwieldy, and a BlackBerry or any other “phone” device  is too small and limited. Although the iPhone and iTouch greatly expanded the range of the latter category, they are still a bit too small. The iPad is the “Goldilocks” solution that fits the situation just right.

So if the iPad is so great, how many will Apple sell? Pricing is the critical factor to consider. Apple announced six different initial models, probably to give options for every budget and to increase market penetration. The lowest priced model, a 16GB Wifi iPad, will cost $499 while the high end 64GB 3G model will cost $829. It is worth remembering that the iPod Touch sold over 13 million during its first 15 months, and began at price points of $299 for 8GB and $399 for 16GB, not too far from the low end iPad model. It is also worth noting that the iPod Touch is Apple’s undercover hit- iTouches are estimated to be 40% of the 58 million iPhone OS devices sold worldwide. Given it genuine utility and the market performance of the iTouch , I believe that the iPad will exceed most analysts’ sales predictions, which range from 1.1 to 7 million units for the first year.

Today it was confirmed that Apple will be hosting an event on September 9 in San Francisco. The wording and design of the invitation indicate that the event will focus on music, most likely the iPod line and iTunes.

Last year’s invite clearly showed a thin iPod, hinting at the return to the “narrow form factor” in the fourth generation Nano, which was indeed presented at this event. The rumored announcements for this year’s event include:

• The Beatles library will be added to iTunes Store. This has been widely speculated since The Beatles remastered catalog is being released the the same day, but the event’s invitation mimics a song from The Rolling Stones; could this be a smokescreen?
• There will be adjustments to the iPod product line including an video camera functionality to the iTouch. Capacity upgrades are expected as always.
• Similarly, there will be price adjustments across the lineup.
• Finally, iTunes version 9.0 will be introduced. It may include new music bundling options and social features. A less likely subscription music service has also been rumored.

Regardless of exact proclamations the event is undoubtedly meant to support Apple’s iPod sales, which are normally strongest in the fourth quarter. This year however expectations are somewhat lower since iPod sales dipped recently in the third quarter, a first on a year-to-year quarterly basis. This is why I consider this year’s September event to be a quick reboot; a moment for Apple to reiterate its lead in the music sector, while buying the company some time to develop in other areas.

The iPod division, or segment, was the strongest contributor at Apple in 2006. Since then Mac sales have grown more briskly. Other segments have also consolidated themselves.

This all demonstrates how Apple, despite the iPod’s success, has not rested on its laurels and has developed its other products while diversifying its business interests. Apple has expanded from computer and software to music, video, mobile and gaming. Moving forward it will be interesting to see which new products and services Apple launches to further expand its stake in each of these sectors.

I personally believe that while a music subscription service would be quite challenging, a video subscription service would be a more natural market fit. Although Apple has done well with iTunes video sales, consumers normally rent access to TV shows or movies, rather than purchasing them outright. I am certain that Apple will eventually present a video subscription option in the iTunes store, perhaps within the next year. Gene Munster, an analyst at Piper Jaffrays, recently predicted that Apple launch an Apple TV set by 2011.

If the company does successfully move into music and video subscription services it could effectively become a media company, competing with the likes of Comcast, Netflix and Hulu. Apple is already leaves its digital music competitors in the dust. It is interesting to speculate how it would fare in the digital video sphere. I am sure the topic will be coming up in the months ahead, if information is finally revealed.

This week’s new iPhone launch piqued my interest again in Apple’s 10-inch touchscreen device, which is rumored to be released before the end of this year.

This device, let’s call it the iTablet iPad (Microsoft has a hold on the “tablet” category name), will be like a larger version of the iTouch. See below for what I estimated the size and shape to be, and how it would relate to Apple’s existing lineup of small electronic devices; from left to right: Shuffle, Nano, iPod, iTouch and iPhone.

The device can be seen as an extension of the iPod family, but what will it do? The iPad will probably have the following features:

• Multi-touch user interface, similar to the iTouch and iPhone.
• Accelerometer, although the functionality of this will be somewhat different given the larger size of the device.
• Rear or side external audio speakers, similar to iTouch.
• Video and audio output, a first for an Apple small device, but necessary in order to support many of the functions I believe this device will fulfill.
• Wifi for web browsing and connecting to iTunes and the App Store.
• Bluetooth for external devices (headset, keyboard, mouse, game controllers) and for peer-to-peer applications.
• Run on the new iPhone OS 3.0, which offers a variety of new functions including direct App Store movie and TV show downloading, In-App purchasing, Peer-to-Peer connectivity, Voice over Internet functions and Push Notification.

Given these features the iPad will transcend all current product categories since it will fill a variety of functions:

• Game Platform: The iPhone and iTouch have clearly demonstrated their ability to compete in the portable gaming market. I believe that Sony’s latest PlayStation Portable (PSP), the 3.8 inch screen PSP Go, revealed last May and releasing in October, is a direct response to Apple’s smaller gaming products. A 10-inch screen will extend Apple’s presence in the gaming market, towards the higher end. Also, since the iPhone OS 3.0 communicates with many accessories, the iPad may probably support Bluetooth gaming controls, which will make the iPad Apple’s first entry into the console game market. There are also rumors of Apple launching a premium game section in the App Store, which might be the direct software component of this strategy.
• E-reader: Clearly the Kindle is a device that has received great reviews and acceptance in the marketplace, but while its black and white digital ink technology facilitates text reading, it is not ideal for color periodicals. Apple is already beginning to cater to this market with iTouch and Iphones Apps like Iceberg Reader which offer both subscription or single pay systems through in-App purchasing. While the Kindle will probably remain the staunch choice for book readers the iPad could take the majority of the color periodical subscription market.
• Multimedia Display: I expect the iPad will become the choice device for multimedia-to-go. It would be much more practical and comfortable for watching movies on trips, instead of carrying around a portable DVD player or a laptop. It could also be shared for viewing between two people unlike an iTouch or iPhone. The new iPhone OS supports direct movie and TV show downloading, signaling where Apple might be going with the iPad.
• Presentation Device: The portable size and touch screen capabilities of this device will make it an innovative device for animated presentations. Just see how much touch screen technology is in vogue now, popping up every day on CNN’s Situation Room and in movies like Quantum of Solace. Salespeople who want show clients some extra pizazz will use the iPad.
• Sporty computer: I also believe that the iPad will be used by many as their ‘second computer.’ I am thinking about businesspeople who already have a company laptop. The iPad will fit that need as their fun computer, for using Facebook, reading Golf Digest online, and watching videos. For all the reasons I listed above, iPad will be the device that they take on vacations. Similar to how some people have two cars; iTablet will be the sporty roadster they use on the weekends.

There are probably a number of other functions I haven’t thought of; I never expected the iPhone to be used a medical device for example. All in all, the new versatile device is sure to overturn many established parameters about electronic device categories, which will appeal to many different consumer segments. If it launches before the Holiday season Apple has another breakout hit on their hands.

Yesterday Apple announced the latest addition to the iPhone lineup, the iPhone 3G S, which will be offered in two models, 16 GB and 32 GB configurations, priced respectively at $199 and $299. Simultaneously, Apple dropped the price for the existing 16GB iPhone 3G from $299 to $99. This is a heck of  a deal. Given the amount of talk regarding Apple releasing a low priced $99 phone I was wondering if they were going to introduce some sort of bare-bones “shuffle” iPhone. I should have realized that they would simply drop the price on an existing model. Price drops have repeatedly occurred during the iPod’s family history.

The area of the bubbles denotes the storage capacity of the devices. There seems to be three repeated trends here:

1. Maintain existing product lines at lower price points.
2. Introduce new luxury product lines with new features (iPod Video, etc.) at higher-end price points.
3. Introduce new economical product lines with less features (Shuffle) at lower price points.

The iPhone family, although just over two years old, displays similar trends.

I do believe that Apple is being very conservative in their pricing, probably as a result of the economic pressures most consumers are facing. This is clearly indicated by the new prices for an iPhone 3G ($99) and a MacBook Pro ($1,199). Interestingly enough Apple is maintaing the prices for their iTouch family (starting at $229). I believe that these will drop once Apple finally releases the new 10-inch computer tablet that has been catching a lot of press.

Today Apple anounced the release of its 40th iPod model, a new Ipod shuffle model that has 4GB of capacity with a new ‘VoiceOver’ feature. The larger capacity, new feature, and lower price are all hallmarks of how Apple has evolved its iPod line during the past eight years. The following graphic displays all the 40 iPods Apple has released, categorized by their main features or product families. Each bubble indicates an individual iPod model, and the size of the bubble denoting the capacity of each model. Since the iPhone is considered to be a distinct product line none of those models are included here.

New models with premium features have regularly been introduced at higher price points. The fourth generation iPod “Photo” with a 60 GB capacity is the first example of this. A more recent example is the Ipod Touch which offered internet browsing and gaming capabilities, also at a premium price point. While Apple has innovated in its iPod features it has also gradually lowered the prices while increasing the capacity of existing iPod lines. This two pronged approach of continual innovation and increased value has garnered Apple continual sales growth, which will surpass a total of $200 million this year.

It is interesting to speculate how Apple will continue this strategy during the next five years, and which possible new iPod features it will come up with.