iPhone 4: Who Needs the iPad Now?

Apple has taught us the art of integration. A sense of how hardware can beautifully work with software and other hardware. A paper book example of a homemade ecosystem, if you will.  Of course, it is just a matter of time until Apple will make a mistake. Everyone does and Apple will as well. I am wondering if Apple got too excited about its new iPhone and has shot itself in the foot. The iPhone 4 does not integrate with the iPad. There is little added value. And if you have to choose, which one do you buy? Exactly.

Even if you are not a nerd, and even if you don’t like Apple products for whatever pointless reason, you have to admit that the new iPhone 4 is the phone most of us would want, as long as we can afford it and a current 2 year contract is nearing its end. The iPhone’s spec list is as amazing as Apple’s marketing is able to wrap picturesque phrases around them.

Retina display. FaceTime. Gyroscope and 6-axis motion sensing. Razor thin design and a build structure that eliminates that phrase ‘form follows function’. Now we know form and function can co-exist in harmony if you put some effort into your product. Glass and brushed steel are great material choices. LED flash. A superb 5 megapixel camera that should outshine other common cellphone cameras especially in low light conditions. Head over to Apple’s spec sheet, but make sure you check your savings account first.        

An either-or decision?

One thing that has not changed is its cost, at least as far as pricing meets the eye, which is good and bad. You pay the same for the device ($199/$299), even if we hear that this new iPhone is substantially more expensive to build and AT&T has to pay Apple more money for each iPhone. Some of the additional hardware cost was countered with less cost for flash memory (which stayed the same at 16 GB/32 GB) and AT&T is threatening to charge you more money if you break your contract ($325 instead of $175). The general guess is that each 32 GB iPhone 4 costs AT&T a stunning $750 to $800. $299 is a great deal in that perspective, but you already know that you will give AT&T somewhere in the neighborhood of $2000 over the next 24 months (and more, as you are likely to keep the device or one of its successors.) Also, think about the fact that AT&T just shelved its flat fee plans, while you will transfer much more data thanks to this new HD display and higher-res movies and a 5 megapixel camera. You will transfer more data and are likely to pay more for your data plan than you have in the past.

So the iPhone remains an expensive gadget and if you are like me, you may have a family with financial priorities that you just can't expense every gadget there is. Most of us have to make choices. I began liking the iPad and was thinking about a 3G model to bring along on short trips or even business, even if I do prefer Acer’s stylish Ferrari netbook if I know that I will have to edit documents or images on the road. The iPhone 4 changed my perception of the iPad substantially and I wonder if the iPhone has just devalued the iPad.

If you think about it, the value of the iPad is its larger screen, which is easier on the eyes as far as most content types are concerned and enables its user to create content in a less painful way than on an iPhone. However, the iPhone is the more flexible device. It is smaller and more mobile. It is much more capable in terms of hardware. It does voice and data. It has two cameras, while the iPad has none. It has more applications. Both the iPad and iPhone are now eBook readers. So, what is it--besides the larger screen--that makes the iPad attractive? Not much. But there is a lot that makes the iPhone much more attractive.   

What is mobile? Nice to have vs. must have.

Ultimately, the iPad and the entire product category of tablets is a nice product you can live without, while a smartphone is increasingly a product you need and really, really want. 35% of all phones sold these days are smartphones, according to Gartner. Tablets may have a 3-5% share this year. May.

To turn a nice-to-have product into a success, you need to turn it into a must-have product. Apple has done a nice job with that by creating a closed ecosystem that can result in, conceivably, a never ending chain of must have products, as long as the DOJ does not step in or Apple does not screw up itself.

Our time is increasingly defined by the potential and natural limits of taking what is important to you mobile. I strongly believe that while a necessary complexity interferes with the concept of more integration, we are more likely to add or replace certain products in our life if they have a greater feature set and if they allow us to carry less baggage around. It’s the idea why Palm’s Foleo was a conceptual disaster that was stopped just in time. It’s why tablets of the early 2000s failed. It’s why you are likely to replace your iPod with your iPhone (maybe not in the gym where size matters.) If you introduce a new product, it needs to have a unique value proposition that caters to our needs and desires and not just rely on short-lived hype.

The iPad improved and reanimated a dead product idea that is 38 years old. It does most tasks you would expect from such a device and everything we would have wished the tablets of the early 2000s would have done. It’s wireless. It has a strong battery. It makes web browsing a snap (as long as you don’t get upset at missing flash.) But it lacks key features we would expect from such a device today. It does not have a camera. It does not have the responsive touch keyboard we would like. And it is terribly expensive if you run it over 3G. The iPad may be cutting into netbook sales now, but it’s still a niche product that needs to find its way into the mass market. Netbooks may not be as pretty, but the latest generation is very functional. Android tablets are ante portas and there is more support for Adobe flash that may be a tremendous catalyst to push Android netbooks and challenge the iPad on one of its key weaknesses. Apple may be the ultimate marketing power on this planet, but it still needs to give the iPad all the support it has to make it a successful product, simply because it is a product that appeals to many different usage scenarios and has significant shortcomings in each of them. Look at eBooks, for example. Would you replace your Kindle with an iPad. Hardly. The iPad is nice to have. Not must have. That is its problem.          
       
How to shoot yourself in the foot

Instead of supporting the iPad, Apple releases what may be its most powerful rival yet. The iPhone 4. I am sure Apple intended to market both products as complementary from the get-go. But I simply don’t understand how they interact. For god’s sake, AT&T has made iPhone tethering a useless product. You can pay extra for tethering, but you don’t get extra data volume. If you use the iPad in the way Apple wants it to be, a content consumption device, you will run over your data limit. Imagine watching Netflix movies with 200 MB or even 2 GB of data volume. Let’s be realistic, the iPad and iPhone are separate online devices with their own data plans.

If you are willing to compromise, you can do anything the iPad can do on the iPhone as well. Thanks to multitouch and the accelerometer, reading web pages is easy and comfortable. As far as portability is concerned, reading emails, looking at pictures or watching movies, the iPhone beats the iPad on the road any day. What can you do on the iPad that you can’t do on the iPhone? Yes, I know, it has a larger screen, but not even a quarter more pixels. But beyond that. Nothing substantial I know about. Somehow, it seems to me that the iPhone 4 could take out the iPad and a large portion of the category it just created all by itself as other smartphone vendors will have to follow the functionality of the iPhone.

The iPad needs an update. Now. I would not be surprised if iPad sales are tanking already and if we are all waiting for the iPhone to be on store shelves later this month.

In the end, the netbook may be the better iPad. It does things the iPhone 4 cannot.

Feel free to jump in and let me know what you think. Would you ditch the iPad for an iPhone 4?        

^{Wolfgang Gruener is a technology journalist and analyst. He was managing editor for the Tom’s Hardware news section from 2003 to 2005, before launching and acquiring TG Daily. Today, Wolfgang works with startups and publishes his thoughts and analysis on critical and emerging technologies and products at Conceivablytech.com.}