Daily Update: Apple’s New iPad Ads, Intel’s Missed Opportunity, Rap Genius Fires Co-Founder

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Good morning,

Ah, the American holiday hangover. Not much news; instead some extended thoughts on two of my favorite topics: the iPad and Intel. Oh, and Rap Genius.

On to the update:

Apple’s New iPad Ads

From Recode:

Here are two new ads from Apple, which wants you to know that the iPad can help you conduct a symphony or travel around the world.

The two spots, featuring Finnish conductor/composer Esa-Pekka Salonen and travel blogger Chérie King, are designed as answers to the “What Will Your Verse Be” spot that Apple debuted in January…Like many Apple ads, these two are particularly interested in promoting the notion that Work Can Be Done On An iPad.

I have written extensively about Apple’s iPad marketing (my three-part series from last year starts here), arguing they should position the iPad not as a PC-replacement, but rather as an enabler of all kinds of new activities. Even as recently as a month ago I urged people, Don’t Give Up on the iPad. That said, I do think it is very valid to wonder where do tablet sales broadly, and iPad sales specifically, go from here. These ads, despite fitting my proposed positioning, show why:

  • Orchestrating Sound absolutely shows scenarios that could only be done on a tablet (in fact, like many tablet-specific scenarios, the protagonist would likely benefit from an even larger screen). The problem, though, is that said protagonist is a famous conductor; how many people will truly relate to his story? In fact, this spot runs the risk of cementing the perception that an iPad is an expensive luxury, not truly necessary for the common person (i.e. the people who drive growth)

  • Exploring Without Limits has an inspiring and much more relatable protagonist (even though she is deaf) who uses the iPad in her travel adventures. However, nearly every use case could just as easily be accomplished with a phone, which, of course, would have the additional benefit of being much more portable (which is much more important to a traveler!)

Ultimately, I do think the iPad will unlock more and more new use cases, but that process is likely going to be long and drawn-out. Moreover, each of those use cases is likely going to be focused on specific niches, making them difficult to leverage in broadly-focused marketing. In the short-term, that means a continued slow-down in iPad growth. For Apple, the best strategy is to rework its App Store policies and promotional efforts to ensure developers who serve these niches can build thriving businesses, but even that will only show results over the long-run.

The more pessimistic take is that as phones increase in size (especially with the rumored large-screen iPhones coming this fall), they start to replace the use cases that tablets have already claimed, leading to not just slower growth, but an outright decline. I’m not fully in this camp yet, but I’m definitely moving in that direction; if Apple comes out with a larger-screen iPad it could be an admission they are concerned about the cannibalistic effects of the iPhone as well.

We’ll likely not know which of these scenarios is correct until next January’s earnings report (presuming larger screen iPhone come out this fall), but regardless, Apple itself is surely disappointed that the iPad isn’t nearly the growth driver they once hoped it was.

Intel’s Missed Opportunity

Beyond the fact we will both be panelists at the Postmodern Computing Summit, Jean-Louis Gassée and I share a certain fascination with Intel and their refusal to look reality in the eye. From Gassée’s latest Monday Note:

With no room to grow, PC players exit the game. Sony just did. Dell took itself private and is going through the surgery and financial bleeding a company can’t withstand in public. Hewlett-Packard, once the leading PC maker, now trails Lenovo. With no sign of turning its PC business around, HP will soon find itself in an untenable position.

Intel doesn’t have the luxury of leaving their game — they only have one. But I can’t imagine that Brian Krzanich, Intel’s new CEO, will look at Peak PC and be content with the prospect of increasingly difficult x86 iterations. There have been many discussions of Intel finally taking the plunge and becoming a “foundry” for someone else’s ARM-based SoC (System On a Chip) designs instead of owning x86 design and manufacturing decisions. Peak PC will force Intel CEO’s hand.

I completely agree with Gassée long-term prognosis (see The Intel Opportunity) but am concerned that Intel has already missed their best opportunity to embrace their manufacturing future. Specifically, while Apple was at the height of its battle with Samsung the phone maker, they were completely enmeshed with Samsung the chip maker, who continues to make the A-series of processors inside Apple’s iOS devices.

According to most reports, Taiwan Semiconductor Manufacturing Company (TSMC) has finally gained the capability to manufacture at least some of the upcoming A8 chip, finally giving Apple an alternative to Samsung. Now imagine if Intel had been willing to step in even a year ago, preferably two. I think it is very reasonable to expect that Apple would have paid a significant premium not just for Intel’s superior technology, but also for the fact they weren’t Samsung. Would that have been worth an extra $5/chip? $10? Who knows, but I think it’s very fair to assume it would have been material.

Whenever Krzanich does finally do the inevitable and open Intel up to manufacturing non-Intel designed chips at scale, Intel will still hold a technological advantage. The strategic advantage with the largest chip buyer in the world, though, will be gone. And Intel has no one to blame but themselves and their unwillingness to look reality in the face.

Rap Genius Fires Co-Founder

From Recode:

Rap Genius co-founder Mahbod Moghadam has been fired from the annotation service after posting appalling comments on the memoir of mass murderer Elliot Rodger, who killed six people in a shooting spree earlier this week.

In now-removed annotations on the site on the sick 141-page manifesto, Moghadam added a tasteless series of comments, including “beautifully written” and also “MY GUESS: his sister is smokin hot.”

In a weird way, this is an interesting counterpoint to my post yesterday on why managers’ don’t prioritize security, and how I hoped Target’s CEO stepping down would have a positive effect; sometimes it takes a few heads rolling to get the attention of everyone else. In this case, the speed with which Rap Genius reacted is undoubtedly related to the terrible publicity GitHub endured when they dragged their feet in dealing with an allegedly insensitive co-founder.

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