The Digital Edge Blog

Penguin Books seems to be aggressively embracing the concept of digital books. Take a look at this video:

While this is only a demonstration, it is clearly well developed conceptually. The model of using a traditional book framework as a ‘navigation map’ into additional content, applications, and services make complete sense. And it has the potential to redefine the economics of the entire publishing industry.

To make this happen in a way that can scale, the publishing industry (including Apple and other vendors) has to come up with a technical packaging model that moves beyond traditionally focused packaging like the ‘EPUB’ format. Having an open, commonly adopted standard for expressing/delivering these rich, interactive publications can shift publication from becoming one-off developments or publisher specific frameworks into a rich industry ecosystem. I believe that making this happen is the game changer the publishing industry needs. There is a lot to talk about on that front and I want to revisit and expand on it in a later post.

It’s exciting to see some momentum building behind the iPad. So much potential…

There has been so much written about the iPad itself over the few days that I don’t think my fawning over it would add much to the discussion.

Do I think there will be more in the released version than we saw in the presentation? Yes. Am I excited about the potential of the device? Without a doubt. Will I get one when it finally goes on sale? Absolutely! And though I am pretty pumped about ordering one, there is clearly still a lot of speculation in the media over the true market demand for a device like the iPad. Passions seem high on both sides. Given everything that we still DON’T know about the final functionality of the software/OS and about what types of new content will end up in the various ‘iStores’ by the time the iPad is released, I’d rather wait till then before jumping in to the fray.

Instead, for this post, I’d like to dig down a level and look at three of the less sexy things that were revealed during the iPad event that could actually end up being quite significant both to Apple and the industry overall.

Apple’s A4 Chip:

Outside of the release of the iPad itself, the revelation that it is powered by a custom Apple chip (handling both general and graphics processing chores) could be the most significant thing to come out of last weeks event. While the A4 chip will almost certainly make it into the 4G version of the iPhone, I also expect the A4 (or some variation of it) to also be at the heart of the next generation of AppleTV. This would likely be as part of a move of ATV onto the same OS platform as the iPhone/Touch/iPad, and would probably allow the box itself to be re-engineered to better support HD video (eg - real 1080p) and also to open it up to running games available from the App Store. As a big fan of the existing AppleTV, I see this as something that is long overdue. (I expect it to be announced before mid-2010.)

Another way Apple could leverage the chip this year could be the release of a successor to the Macbook Air based on some version of it. This could give Apple a way to deliver the dramatically improved battery life and graphic muscle of the iPad in the super-thin laptop form factor of the current Air (not to mention integrated “always connected” 3G/4G ). It could even end up running the iPhone OS, and provide the ‘Touch’ aspects either through a substantial trackpad area or directly on the display. While I’m not trying to predict specific product details here, I do see an opportunity for Apple in this segment as well - a hybrid offering blending the best tablet and laptop features for true ‘road warrior’ types.

Ultimately the most exciting thing about the A4 is that it frees Apple from Intel’s lock on mobile processors, and can give them the ability to change both the economics and overall direction of products they launch in this area. And in the hands of Apple, that holds some pretty big promise for the future.

The Touch Based Version Of iWorks:

Apple’s iWorks has been around for quite a few years now, and has matured into a full productivity suite offering word processing, spreadsheet, and presentation applications. While no where near as popular as Microsoft’s Office suite, each component of iWorks is well thought out and a pleasure to work with. Unlike Office on a Windows tablet computer, the new iWorks isn’t simply an extension of the previous version that makes it usable without a keyboard. Instead, iWorks on the iPad has been designed from the ground up to work in a touch environment. From the way various functional menus are displayed to the way task specific virtual keyboards appear in different contexts, every element of the product is designed to be part of a native touch experience. While I will need to spend some quality time with the new iWorks before passing judgment, it does appear that Apple has learned a great deal from iterations of the user experience they developed for iPhone apps, and have done a good job scaling it to more comprehensive applications on larger displays.

While this is impressive on it’s own, what may end up being the most significant aspect of the new iWorks probably isn’t in the code or design at all, but rather in the business model surrounding it. iWorks for the iPad will be sold through the Apple App Store, with each component application available individually for less than $10. That means the entire suite can be bought for under $30 - less than a third of the discounted price Microsoft’s Office 2007 Home and Student edition sells for on Amazon. By unbundling the individual applications, selling them for such a low price, and making them available through their App Store, Apple is clearly challenging the current economic model for the sale and distribution of traditional software applications. This is not without precedent for Apple - even beyond what they did with pricing in the iPhone App space. When Apple moved into producing professional media creation software (known for outrageously high prices), they were able to reset the price points for applications like video editing, compositing, and audio editing in a similar dramatic fashion. It would not be surprising to see this model finally slip over to the Mac, with the desktop version of iWorks taking on similar pricing and packaging to the iPad version - and possibly being sold through the app store as well.

Selling Books In The iBookstore Instead Of On iTunes:

I think the fact that Apple chose to build a completely separate ‘iStore’ for books is interesting. By approaching print publications as truly unique forms of media with unique content and marketplace dynamics, Apple stands a good chance at reshaping the ebook market and really challenging the current dominance of Amazon’s Kindle platform. I believe that what was shown at the iPad launch is simply the most basic starter functionality for this store. I see it ultimately having different business and functional models to address some unique opportunities found in this marketplace. For example:

• renting eTextbooks for a semester instead of buying them
• offering subscriptions to magazine and newspaper content via special viewing applications unique to each of them
• selling content that is pretty much static - like a daily newspaper - with options for dynamic updates
• integrating social elements to let people discuss or interact around specific titles - much the way a college study group or typical reading club might interact

There is a lot of room in this space to innovate. The upheavals we have already seen happen between Amazon and publishers like MacMillan (almost 2 months before the iPad is even released!) are a good indication of how dynamic this marketplace still is - and just how disruptive Apple’s entry into this space will be. By having an independent store that can evolve quickly and embrace new and unique ways of accessing media, Apple will have the flexibility they need to learn, adapt, and adjust. Success wouldn’t be achievable with a more static approach.

I am firmly convinced that the iPad will have just as significant an impact on the media marketplace as the iPhone did on the mobile phone market. The convergence of these two markets, and the increasing importance of mobile computing will continue to present incredible opportunities for Apple. I believe the three elements I’ve discussed here will be important differentiators for Apple as the aggressively pursue this new market.

I can’t wait for my iPad…