The iPad and Innovation Theory

I’m not much for speculation – when people guess about how a product will do I think there’s much more luck involved in being right than anyone admits.  I wish all the futurists and prognosticators would keep a table of their bets, and honestly show how often they’re right or wrong. I think they’d be humbler in their bets if they saw their history.

That said, I’ve been asked again and again about my thoughts on the iPad. Rather than give a fairly useless bet, I’d rather teach a smarter way to look at new products and things.

A useful way to look at any new product is to do the following:

  • Pretend all the marketing is true
  • Assume many different kinds of people will buy it
  • Now ask: where will the time people spend using the new thing come from?

This is what I (and probably others) have called displacement theory – or evaluating one thing by thinking about how it will displace/effect usage of other things.  As we all have finite time, if  something new that enters our world the time spent using it will come from somewhere.  If people choose not to spend time with the iPad, even after purchasing it, it will fail. If they do use it, what will they be using it instead of?

This is an interesting exercise for designers and makers – it focuses you on people’s behavior, or how you imagine them behaving, rather than getting lost in the abstract wonders of devices and technologies are capable of, rather than what actual people will do with them (And the wise use techniques like ethnography to see what people actually do today, rather than surveys and focus groups where they merely say what they think they do, or what they think you want to hear) .

Think of all the kitchen / yard / tech gadgets people buy and never use – they failed to displace whatever else it was in those people’s lives they do with their time. They might have had interesting designs, but they were not sufficiently good to displace whatever else they use. Unless, say, it was an iFurnace, and it’s primary function is to work without human interaction.

For most of the people who buy an iPad in the first weeks, the time spent using it will come from time spent on laptops and possibly from books once its e-reader features are fully formed (Not to mention the endless demos they’ll do showing it off to their friends).

Industry analyst NPD listed the following stats based on their research into who might buy one:

  • Income $100,000
  • Age 18-34 (27% expressed interest in buying iPad — compared to 18% overall)
  • Reason for Buying: Time among 18-34 between loyalty and multi-touch screen
  • How They Will Use It: To play music or access the Internet

This isn’t a compelling list of reasons or statistics, and you’d have to read the full report to even have much faith on the accuracy of the data. But it suggests for the young and affluent the iPad is a tertiary device for accessing things they can access elsewhere.

Based on all this the success of the iPad will hinge on three factors:

  • People’s willingness to by a third device for internet access (First two being PCs and phones). The iPhone and iPod were much easier to sell as they replaced existing products with mediocre designs (cell phones and digital music players were awful until Apple entered the fray). It’s not clear to most consumers what exactly the iPad will replace/displace.  Much of this depends on the price point, and for now the iPad’s price and service are exclusively priced. Few people even at $100k in income are likely to bite. The problem to be solved is not as acute or tempting as it was for phones or music. There is a displacement price where the new thing is cheap enough to get people to quit spending time doing it the old way, and buy the new thing, assuming they believe it serves all the old needs and satisfies some new ones.
  • Unique experience benefits that arise from the iPad over laptops or books. Many things are promised, but some simple things like not having to deal with laptop lids, which compared to books, have more ergonomic issues than books or magazines. PC laptops are notorious for unpredictable and annoying on/off/sleep behavior mostly because of lids.  The convenience factors of an iPad on the couch while watching TV, or in the kitchen while cooking, might be some of the strongest user experience arguments. But it’s largely an argument of making passive experiences more convenient, rather than making a substantive improvement in quality of life – a very price sensitive place to be. For many it the choice to buy an iPad will compete against netbooks, cheap simple laptops. Until the price gap narrows, this won’t be a tough choice for most people.
  • The iPad’s ability to influence what competitors do in this space. This can be done without strong sales, as just having a competitor to kindle or tablet computers changes the behavior of competitors( See Google’s Chrome browser, as it’s a similar case).  Many people forget that sales are only one aspect of a successful product launch. If the launch forces competitors to change strategy, or allows for things to be learned for the next product, a “failed” product can be incredibly useful.

In the sense of the last point, the iPad has already been successful. It has already reshaped the conversation and forced every kindle user, or potential future kindle customer, to think differently about what their kindle is supposed to do, or not.

I’m a deliberate late adopter of most things – I care more about the content than the pipes they come on, so I don’t own a Kindle and am unlikely to buy an iPad. My life is pretty damn convenient at this point, so convenience rarely gets me to buy anything.

But I’m convinced these devices are the way of the future – there are too may good arguments for what web based devices can do for people who like to read, and as the price gets lower (would you buy one for $100? $50? $15?) the perception of positives (e.g. for travelers, one device that can carry 50 books is simpler than bringing 50 books)  will outweigh the negatives for many people. We’ll always have books made from paper, but there will be fewer people using them in 20 years than there are now.

15 Responses to “The iPad and Innovation Theory”

  1. David Heffernan

    You say that phones were terrible before the iPhone. True in the US but not so go the rest of the world. Also you may want to change some of the ipod references to ipad. I can’t help thinking that apple may not have differentiated these product names enough!

    1. Scott Berkun

      I think, as a rule of thumb, it’s bad to have two different products at the same company that are distinguished only by a single letter :)

  2. Green

    Hehe, you said “i-pad”

  3. Jérôme Radix

    “e.g. for travelers, one device that can carry 50 books is simpler than bringing 50 books”.

    I only have 2 (maybe 3) books underway I read at the same time. It’s easier to have those 2 or 3 books on travel in my bag than to have a iPad which can break and ha

  4. Jérôme Radix

    “e.g. for travelers, one device that can carry 50 books is simpler than bringing 50 books”.

    I only have 2 (maybe 3) books underway I read at the same time. It’s easier to have those 2 or 3 books on travel in my bag than to have a iPad which can break and must be recharged every few hours… And I don’t travel more than 2 or 3 weeks which is not enough for me to read more than 3 books of 300 pages (because if I travel, I don’t spend the entire day reading books)

    If I really move from one city to a new apartment or house in another city, having many books is not a big problem even if it weights a lot.

    I think we are very far from replacing books by electronic devices. An iPad or a Kindle will replace books if it is as convenient as a book can be :
    – it should be very tough (like tough PCs), I should not be afraid to put it in the sand on the beach directly under the sun or under the water, I should be able to drop the e-reader from 2 meters high without any problem.
    – it should be very pleasant to read on it for hours even when the weather is bright.
    – it should be very light-weight
    – I should not pay every time I want to reread a book, or if I already own a paper version of the book. I must be able to lend my books to any one without any added cost.

  5. drmstream

    Great observations, Scott.

    I travel a lot and there’s a usage pattern that the ipad will conceivably enhance that focuses on medal and information consumption and commentating.

    The form factor should make watching video, browsing the ebony, engaging in longer form commenting and reading books

  6. Dan

    Here’s an attempt to complete the last comment. :)

    You make a bunch of great observations.

    I travel a lot and there’s a usage pattern that the ipad will conceivably enhance that focused on media and information consumption and commentating.

    The form factor should make watching video, browsing the web, engaging in social media and longer form commentary, and reading books easier to do than either my iphone (or the nexus one I’ve been trying out that caused me to post an incomplete comment filled with typos) or my laptop.

    The price is a barrier to significant volume at the outset, I think, but their is a distinct set of uses that are currently getting distributed across a couple of different devices without optimal personal design functionality.


  7. Maarten

    So the setup of this post is “I’m going to show you how to analyze the likely success of a product like the iPad, but then I’m not going to come to an explicit conclusion.”

    Really? Don’t get me wrong Scott, I like your writing, but that’s an awful lot of words in service of no conclusion. You knock prognosticators for not keeping a track record, but you yourself opinionate without putting a clear prediction out there. How can we know that your analysis is indeed a smarter way to look at the market if we don’t know what your analysis actually says and can’t come back in a year to see if you got it right?

    So you’re not giving an explicit bet, but reading between the lines of the three factors you discuss, you seem to predict that the iPad will be a success as a thought leader but not in sales numbers. We’ll see.

  8. Wisepreneur


    I really like your displacement theory. I would like to also suggest the idea of utility. Displacement is more likely to occur when the value of displacing is more than the value of continuing the same behavior.

    By the way, isn’t the iPad just a bit like the failed Newton?

  9. desktop gadgets

    Sometimes I am really asking myself who is ready to such a high price for an average product. I guess the style of the Ipad is worth a lot of money.

  10. Elisabeth Bucci

    Actually you forgot a point: the iPad’s easy user interface will win over people that still haven’t fully made the transition to making computers part of their lives.

    I spend about 3hrs/wk as a volunteer teaching seniors computer skills in their homes. One of the things that strikes me the most is how utterly counter-intuitive the current computer user experience is. Clicking on a mouse, the screen layout, opening and closing windows, cut-and-paste: all of these need to be learned and are not obvious. We take for granted how these things work because we have evolved with the computer. Imagine that you know nothing about computers and have to learn starting today how to use them: then you will appreciate my point. The learning is all the more complicated if your hands are frail, if you have arthritis, and your eyesight is weak. (This will be us in about 20 – 40 years.)

    Before you tell me that this is an insignificant part of the market, I have seen the same thing with much younger baby-boomers: people who are uncomfortable and scared around computers. There are a lot more of these people than you might think. They hide, because they are afraid to admit how uncomfortable they are around computers. I personally know many of them.

    I believe the iPad might just break down that barrier. No more learning a strange language, just move icons around, just turn the pages like you would a real book, etc. It seems to be more intuitive.

    The only problem is the price. But, as always, the market might just take care of that on its own.

    I won’t be buying an iPad anytime soon but…I can see how this just might be a game-changer. And, yes, it will replace laptops and netbooks for the category of people I just mentioned above.



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