Posted by David Tucker in ipad, ios, apple, google, tablet

In the year since the initial tablet release, Apple has gained a 75% share of the tablet market. With the release of the iPad 2, the tablet market has exploded overnight, and Apple’s market share is sure to grow considerably. Fortune recently reported that iPads are mostly sold out in the United States and that from the initial sale, 70% went to new buyers. If that number holds true, there are potentially 350,000 new tablet users overnight. If you add this to the large amount of users who recently purchased a new or used first generation iPad, this number could easily top 400,000. Apparently, many users have been weighing their options for tablets, and the release of the new iPad was the catalyst many of them needed to make a purchase.

This rapid expansion of the user base will have a huge effect on the tablet landscape, because this will trigger a rapid expansion in overall investment into the iPad ecosystem. This will take many shapes, but many development companies may sideline their Android tablet efforts in favor of iPad alternatives. You can expect venture capital groups to begin leaning heavily on startups with an iPad focus. This effect won’t be just limited the companies and organizations, but it will reach the end users as well.  With this new pool of users the amount and quality of iPad applications will increase greatly over the next six months.

Increased Power

When I initially sat down with my iPad 2 and began to explore, the speed increase was evident over the first generation iPad. Apple’s dual core A5 chip has breathed new life into the device. The additional power provided by this chip can open the door for new processor-intensive applications that just were not possible with the iPad 1. Traditionally sluggish applications seemed to have found new life with the hardware update.

The new architecture in the iPad 2 was touted to be twice as fast with its graphics being nine times as fast. While those numbers might be a bit exaggerated, the initial tests reveal that they are pretty close. This additional power can be seen when using resource intensive applications like Infinity Blade. However, it should be noted that this extra power won’t be used purely for gaming, but it has the potential open the door for a whole new level of consumer and enterprise applications.

Lights, Camera, Action

The one downside of the new iPad 2 is the lackluster performance of its cameras. The cameras are average at best, although the inclusion of the front and rear-facing cameras opens new possibilities for applications on the iPad. The inclusion of cameras make augmented reality, realtime image analysis, and the much touted two-way video conferencing possible. When paired with the increased processing power of the A5 chip, it won’t be long before technologies like advanced facial recognition or complex real-time image manipulation are available on the iPad.  

In addition to have a new way to get visual elements into the iPad, Apple has introduced a new way to get them out with the release of the iPad 2.  Apple is selling a new accessory which will allow uses to connect their iPad to the television using an HDMI cable. The iPad’s image is displayed on the screen in any orientation. This is a huge advantage for anyone who uses an iPad while presenting or to simply watch a movie on your Flat Screen TV. With this addition, the iPad 2 could even be considered an integral part of your home theater setup.

A New Type of User

One interesting element that accompanied the release of the iPad 2 was the release of GarageBand and an updated iMovie for iOS. At this point, a majority of the iLife and iWork suites have an iOS counterpart. With this we are starting to see a group of users who don’t see the iPad as an auxiliary device but rather as a primary computing device. For the average user who just wants log onto Facebook, write a term paper, and surf the web the iPad is sufficient. I was surprised to hear that a few people waiting in line with me for an iPad didn’t have a laptop and didn’t see the need for one once they had their iPad.

Industry Specific Solutions

With an increase in both devices deployed as well as general computing power, I expect to see a large rise in industry-specific tablet solutions. Two industries that have become the focus of many VC groups are healthcare and education. Both of these are industries that have a lot to gain from tablet devices in general.

Education

Numerous school districts are either currently putting iPads into the hands of students or are seriously considering it. In some cases legislatures are even considering state-wide deployments. With this being true, you can be sure that textbook companies are investing heavily in the iOS ecosystem.  

One of things that is interesting here is that in all of the conversations I have seen in regards to education, the term tablet is rarely used. Instead, the decision makers call out the iPad specifically. Part of this is certainly due to a marketing effort by Apple who has reached out to many of these school districts directly. However, this is also due to the fact that the iPad is the only proven tablet that has had significant time in the market with a large user base. I would be surprised if any school district chooses to go with an Android or Windows based tablet without a large investment from Microsoft or Google (which will certainly happen in some cases).

Healthcare

The iPad is emerging at the perfect time for healthcare. With the recent move to electronic medical records and an increased focus on efficiency in our nation’s hospitals, the iPad has emerged as a potential solution to address both of these issues. For those of us who have recently been to a hospital, we can all attest that putting patient information only a touch away would benefit everyone as long as privacy can be ensured.  

In addition to administration support, you can expect even more applications for the doctors and nurses actually providing the care. Early iOS solutions like Airstrip and OsiriX will continue to evolve while many new players will join in. With the amount of money spent on healthcare in the United States, you can be sure this will be a point of interest for VC as well.

As a side note, we are even seeing the iPad being a huge success where healthcare and education meet with the first interactive medical textbook being released recently on the iPad.

Competitors

The landscape is quite different than that of the initial iPad launch. There are now direct competitors in the space including the Motorola Xoom, Samsung Galaxy Tab, and a host of devices almost ready to be released on the market. At an initial glance, Apple has one large advantage over all of these: Apple already has a proven device.  

Many initially thought that the Xoom would be the main competitor for the second generation iPad, but since its release that has become less of a factor. The initial released placed the Xoom at nearly $800 while many users complained that the software felt like more of a beta release. Twitter is littered with posts of users who are frustrated at the lack of applications built to take advantage of the Xoom’s power, as well as frustrations with the overall user experience of the Xoom.

The main advantage that the iPad has over the Xoom, and similar devices, is the overall platform and ecosystem. Many users have a large portion of their media library in iTunes, and purchasing applications for the iPad is dead simple. Holding a Xoom is nice but leaves the average users wondering how to bring in their movies, videos and music. Apple already has a litany of iPad applications as well as the fact that any iPhone application can also run on the iPad without modifications. We know that Google recently made changes to their store process in an attempt to make it easier for Android users to purchase paid applications. At the unveiling of the iPad 2, Steve Jobs announced that over 200 million users have their credit card information saved with their Apple accounts and can purchase applications by simply entering their password. This is great news for companies and developers alike who are deploying solutions to Apple’s App Store.

Conclusion

The explosion and success of Apple’s Ecosystem has no rival. While other platforms and tablets can compare hardware specs the bottom line is it will be very difficult to catch Apple in this arena. There is no doubt that the original iPad was a huge success. However, with the extremely successful launch of version 2, this is a market segment that has caught everyone’s attention. This week tablets moved from a novelty to an essential piece of the device culture within the United States. Analysts are expecting equally compelling roll-outs in many countries over the next few weeks. Is your organization prepared to embrace this emerging and powerful platform?

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