What would make an iPad Mini compelling? (HINT: Color e-Ink.)

iPad Mini rumors have been flying for a while now, and Apple is allegedly sending out invites today (October 10) for an announcement on October 17. ¹ This is different than my normal predictions and prognostications because, frankly, all of this is very murky to me. I’m really just thinking aloud, and writing what I think.

I should also emphasize that I think I’m very wrong here. The most logical iPad Mini would just be a smaller iPad with an almost-Retina display, amazing battery life, Lighting connector, and full-fledged iOS 6. But that’s boring, and I don’t see what it really adds to Apple’s product line. This post is really about how I think Apple could design an iPad Mini so that it adds something new and game-changing to the market place, but my predictions probably aren’t realistic.

Summary (in case you don’t feel like reading the whole thing)

I don’t really understand the niche that the iPad Mini would fill
If Apple does release an iPad Mini, they should’ t call it “iPad” anything – they should call it iPage
iPage should have a color e-Ink screen
To keep costs down, iPage would have to be a feature-poor iPad
iPage should run a lightweight version of iOS
iPage should start at $199 for a 16GB version (maybe the only one)
iPage should offer a $100 option for cellular connectivity

I don’t really understand the niche that the iPad Mini would fill

Will there be an iPad Mini announcement? It seems dubious to me, but the rumors are pretty loud and strong, so I have to give them a lot of weight. I don’t quite understand why Apple’s iPad needs a small cousin to compete with Kindle et al. The biggest problem with releasing an iPad Mini is the price point.

Price point – There’s been a lot written about this. The best piece I’ve seen is from Gizmodo: “The Single Biggest Question about the iPad Mini“. Basically, it’s tough to figure out where iPad Mini would fit into Apple’s pricing scheme. It would have to be cheaper than a “full-size” iPad (right?), which means it would land smack on top of the iPod Touch in Apple’s pricing structure. So, consumers could buy an iPod Touch or iPad Mini for the same price. That seems odd to me. I don’t think it’s a showstopper, but it would be strange to see an iPad Mini competing with iPod Touch.

I think the iPad Mini will have to start at $199 to compete with the “eReader” market that it belongs in. Presumably, the reason Apple would create this device is to compete with the Amazon and Barnes & Noble. To really compete in that world, $199 is almost mandatory. What’s odd is that Amazon and Apple have entirely different (opposite, really) business models. The Kindle is a loss-leader designed to give Amazon customers an easier way to buy stuff from Amazon ². So, there’s the stuff people buy (songs, movies, etc) from Amazon, then there’s the way for them to buy it (Kindle Fire, e.g.). Apple does the opposite: their stuff exists to make the Apple ecosystem a richer place so that customers will buy their hardware, which is where they make all their money. So, in order for Apple to enter this space, they’d be creating profit-making hardware to compete with loss-leading hardware.

To be clear, I think Apple can do this ³, I just don’t understand why they would. Apple could probably create a great sub-$200 competitor for the eReaders out there, but I don’t see what they would gain from that device. Apple doesn’t want to sell music or eBooks just to sell them – they only sell those things to make iOS devices more useful. Trying to figure out the utility of a $200 Apple eReader keeps landing me in logic whirlpool.

I’ve been pretty good about iPad predictions in the past ⁴, and I’ve followed the iPad very closely, but I don’t quite understand why an iPad Mini makes sense. All that said, why not get into a hypothetical “iPad Mini is happening!” mindset and make some predictions?

If Apple does release an iPad Mini, they shouldn’t call it “iPad” anything – they should call it iPage

I’d expect Apple to differentiate the iPad Mini from the iPad itself. The iPad isn’t an eReader, it’s a tablet PC. But the “iPad Mini” wouldn’t really be a tablet PC so much as a super fancy eReader. My guess is they would differentiate it from the iPad by calling it something completely different. iPage seems logical, except it conflicts with their Pages word processor.

iPage should have a color e-Ink screen

I think the next big display breakthrough will be color e-Ink with refresh rates that make it possible to browse the web and flip through color e-magazines. There has been a lot of ambiguity about the resolution of the “iPad Mini” display (mostly that it won’t be Retina, but will still have pretty good resolution). This could be because the new display isn’t the same technology used for current backlit displays.

One thing Apple really focuses on is making it easy and pleasurable for its users to consume content on its devices. They’re in the midst of a full-on Retina update to everything they sell. It’s time for the next big thing, and that thing could very well be color e-Ink. Other firms have tried this ⁵, but the bottom line is that current technology just can’t refresh fast enough to be useful. It takes too long to draw the screen, so flipping pages or looking at anything that moves just doesn’t work very well. If Apple solves this problem and makes a 7″ color e-Ink screen technology (I would call it “Perfect Print” or “Print Perfect” or something like that) that allows for page flipping and animation, that would be a game changer.

iPage with Perfect Print would introduce some technical challenges for the user experience. Swiping and scrolling would probably have to be rethought so that they’re more efficient and economical. Unless they’ve made huge strides with refresh rates, we won’t be able to just swipe down and watch our Twitter feed inertially scroll by – e-Ink just couldn’t keep up with that.

To keep costs down, iPage would have to be a feature-poor iPad

My guess is that these Perfect Print displays would be expensive, which means Apple would have to cut some functionality elsewhere to compete at the $199 price point. What they would cut, I don’t know, but I have a few suggestions.

iPage should run a lightweight version of iOS

I don’t think this device would run a full version of iOS, but a slimmed-down version (think Apple TV). Mobile Safari might look more like the “Reader” functionality available now – no video, but a clean way to read and maybe see embedded (static) images. Email should be ok. Newsstand would obviously be a big part of the device.

iPage should start at $199 for a 16GB version (maybe the only one)

The baseline iPage would start at $199. Storage would start at 16GB, and that may be the only option. I think on-device storage would be a great place to cut costs since most of the stuff consumed on the iPage would be eBooks and that sort of thing–all stuff that could just be “streamed” from the cloud. It probably won’t have a camera, and LTE would be extra.

iPage should offer a $100 option for cellular connectivity

Getting all that stuff from the cloud is obviously easiest using WiFi, but Apple likes to give customers full mobility, so I expect a cellular option for $100. The pricing for this option is tricky, as the iPad cellular option is $130, but I just don’t see how they could offer a $130 add-on for a $199 device.

Final thoughts

I don’t understand the need for an iPad Mini, but if they do it, they should call it iPage, start innovating color e-Ink technology, and make it $200 or less.

If Apple could revolutionize e-Ink and make it really sharp, with great color saturation and faster refresh rates, I might just buy one. Otherwise, I’ll probably just stick to my iPad.

Why there won’t be a New iPad refresh this Fall

There’s been some chatter that Apple might release a refreshed New iPad this Fall. I don’t think so. Here’s why.

Summary (in case you don’t want to read all the detail)

There won’t be a refreshed New iPad this fall
The Lightning connector is Apple’s final dedicated device connector
But the new Lightning connector isn’t worth of a full iPad refresh
Other “reasons” for updating the iPad don’t make sense either

There won’t be a refreshed New iPad this fall

I think it’s extremely unlikely that Apple will release some sort of “updated iPad” with a Lightning connector, faster processor, better battery life, some sort of “heat issue” resolution, or any of the other rumored improvements.

The Lightning connector is Apple’s final dedicated device connector

Apple’s new connector has caused quite a stir among those who rely on the 30-pin connector. I think the Lightning connector is great (I love it on the iPhone 5), and I think a decade of one connector is plenty. Frankly, I hate the 30-pin connector, and it seems anachronistic to me. Thirty pins? C’mon. We don’t need 30 pins. Going to a small connector is necessary because devices are shrinking, especially in the “thickness” dimension. Apple has gone to great lengths to squeeze every last millimeter out of their devices, and moving to the much-smaller Lightning connector is a logical step down that path.

I haven’t predicted this elsewhere, so I might as well predict it here: The Lightning connector will be the last dedicated device connector Apple makes. It’s built to be future proof, and will probably outlast its own utility pretty easily. Wireless charging will be mainstream within 10 years, and wireless syncing is already taking off. Wireless data speeds are increasing rapidly, and our ability to “soft-sync” (a term I just made up) is growing with features like Power Nap. This means we don’t have to actually wait for things to sync anymore since they’re always syncing in the background whenever they get the chance.

But the new Lightning connector isn’t worth of a full iPad refresh

Despite the Lightning connector’s superiority to the 30-pin connector, it makes absolutely no sense for Apple to refresh the iPad mid-cycle just to include this new connector. Releasing a brand new version of the product just to accommodate the new connector strikes me as totally ludicrous. Apple is finally fully ramped-up on production for the current iPad hardware, and they would have to re-ramp part of their production line to accommodate this (or any) change. I don’t see the payoff for doing that. What do they gain by forcing an update to the Lightning connector on the already-successful iPad? I can’t think of a single benefit that wouldn’t be just as potent with the next iPad in April.

Other “reasons” for updating the iPad don’t make sense either

Faster processor – Most of the concerns from the Lightning connector carry over here. Additionally, the current iPad is still one of the most responsive tablets on the market. There’s no reason to rush out a mid-cycle update to cram in a faster processor. The cost seems pretty great (to Apple), but the benefit seems almost non-existent.

Better Battery Life – All the stuff above, just repeated here. The battery life on the iPad is market-leading and phenomenal. There’s no tangible benefit to doing a mid-cycle refresh to get a little extra battery life. I use my iPad daily, usually for multiple hours, and I only charge it every third or fourth day. My guess is I use my iPad more than most (but less than some really heavy users like traveling bloggers), so if I’m only charging every few days, most people are only charging every five days or so. That’s pretty amazing.

Addressing the “Heat Issue” – I think the “Heat Issue” is about 95% hype with no real substance. I’ve been using my New iPad daily since I got it earlier this year. Yes, it gets warm sometimes, but never so warm that I have to stop using it, or even that I have to use it differently. I also kept an eye on all the “reports” of New iPad running hot earlier this year–almost all of them basically said, “Well, it’s warm, but… not super hot or anything.”¹

Final thoughts

I see no reason for Apple to roll out a mid-cycle updated New iPad. It makes no sense. They would basically be spending a lot of time and money to address issues that aren’t actually issues. Not happening.

From The Archives: RAMSTICK

What’s the point of this post?

Well, I found this old abstract and thought it was interesting, so I’m posting it.

I’ve been interested in technology for a long time ¹. I’ve also been pretty good at anticipating new technology, but spent a long time thinking about coming technology without trying to capitalize on it ².

That officially changed when I started following Apple in 2008 (I couldn’t resist the iPhone 3G). I had a pretty good sense of where the firm should go, and I decided to make sure to record my thoughts so that I could compare the outcome to my actual predictions. I also bought some Apple stock in early 2010 (at $250/share) so I could finally make money on my predictions.

Before I started following Apple, I made several predictions that were pretty good, but they were usually just in passing conversations with friends. ³ In 2001, I had an idea for something I called “RAMSTICK”. I am going to copy and paste my original abstract below ⁴ because it’s pretty entertaining (I’m painfully formal, and it’s obvious I’m a pretty green college student). Note that there are several typos ⁵ that I’m not correcting because I’m literally copying and pasting the abstract below.

RAMSTICK

General Idea:

A “stick” of non-volatile memory that can be used for high-capacity storage of digital information. This stick would be small (1″ x 2″) and would be “hot-swappable” via a slot on a PC or other computing device. This stick would be similar to RAM (as in the memory in a PC or the sticks used for currently MP3 players and other portable, digital devices).

Reasons for RAMSTICK:

The RAMSTICK would be superior to current large-capacity technology because it could be used as an easily portable medium for large quantities of information.

It could be used for long-term storage of large quantities of information because it would be non-volatile and would be less sensative to extreme temperatures than current technolgies. This more tolerant temperature characteristic would be due to the difference in materials used to construct the medium.

This technology would have no moving parts, thereby making it less succeptible to loss of information by jolt, or high “G” subjection. This would make it more practical for hot-swapping and transporting than current technology.

This technology would be significantly faster than current “platter” based technology. Because there are no moving parts and all data transfer and access is based on electrical impulses and not moving parts. Access time would be significantly reduced, thereby increasing overall execution time for fetch and store instructions.

Foreseen difficulties with achieving this technology:

One of the limiting factors on RAM thus far has been the difficulty in storing easily accessible information in such a small space. It will prove difficult to make a small chip, based on current methods of RAM production, that will store large quantities of information (upwards of 4 gigabytes and perhaps as large as 60 to 100 gigabytes).

Possible solutions to foreseen difficulties:

It may be necessary to design a new compression scheme for this technology. Perhaps if an efficient, dependable, large-scale compression can be accomplished, the large amounts of data as seen by the user may be reduced to smaller amounts of data capable of being stored on a RAM-like medium.

It may also be necessary to reconsider current memory-chip technology with respect to layout, materials and production techniques. It may be necessary to use new materials to achieve smaller electronic “parts”, so that more information may be exchanged and stored in a smaller amount of space.

Short summary of benifits to RAMSTICK:

Speed
Portability
Durability
Hot-swapability

Possible, specific uses:

This technology may be particularly benficial to modern server technology. Servers are regularly in need of “backups” and often have several hot-swappable storage drives to help ease the flow of large amounts of data to and from teh servers. Also, many servers currently necessarily utilize a “raid/SCSI” drive configuration to help speed access time for the information that is often accessed by the server. This technology would eliminate the necessity for “Raid/SCSI” interfaces as the access time of the information would be dramatically reduced. Because of faster acess time and the durability of this technology, backups would be quicker, more dependable and more easily stored. Also, once this technology is explored, simplified and expanded, there could be less of a need for frequent backups because of larger storage capacity.

This techology could also be used for other purposes such as storage of high volumes of information that may need to be accessed quickly. An example might be a chip designed for home movie viewing similar to DVD, but on a smaller, faster medium capable of higher bandwidths of information, thereby enabling the technology to be more intricate and subsequently more appealing to the entertainment driven consumer.

Genral purpose:

The general purpose of this technology would be to help alleviate the problem with current technologies’ slow access times. Platter and laser based technologies are all based and dependant on moving parts. Moving parts are slower, less dependable, more volatile and more likely to break than technologies based solely on electrical impulse without burden of moving parts. This technolgy, because of its lack of dependance on moving parts and its subsequent boost in access time could open doors for significantly higher bandwidth, thereby helping to move techology into a higher-bandwidth, more detailed era.

Reflecting on this abstract, 11 years later

I sent this abstract to a couple friends, and even tried to get one of my electrical engineering professors to look it over to see if we could do something with the idea. He totally blew me off, so I shelved it. A year later, a friend of mine emailed me with a link to a site that was just selling the first thumb drives and a subject of something like, “Look familiar?”

It turns out I was really describing two technologies that would emerge over the next several years. First, I was obviously describing thumb drives, which have run up to the sizes I described (they’re available in 64GB+ sizes now). Of course, thumb drives had become commercially available a year earlier, but I didn’t know that at the time ⁶. Second, I was describing SSDs, which are quickly becoming ubiquitous in mainstream consumer products (first in smart phones and portal devices, and now in larger capacities like the one in my MacBook). Again, this technology had existed for a while before I imagined it, but I was unaware of it.

I think I pretty much nailed thumb drive technology, but I missed a little bit on the SSD side. I anticipated the technology serving as an easy server backup mechanism, but it turns out SSDs are just generally more useful than HDDs. They’re providing a much broader service than just server backups.

Why is Redbox so much cheaper than Amazon and iTunes? (contd.)

A while back, I wrote about the price differences between Redbox, Amazon and iTunes for renting movies. My friend Andy emailed me to point out that I had missed a pretty big component of Redbox’s pricing scheme: Late fees. This was a pretty big oversight since it’s obvious that there will always be some people who keep a movie for multiple days. So I’m going to revisit this to make a better comparison.

Amazon and iTunes both rent for a fixed price, and then the movie simply becomes unviewable 24 hours after the movie has been started. Redbox charges $1 for a DVD for the first day, but they also charge an additional dollar for each day after that. If you keep the DVD for 25 days or more, then you own it for $25.

The time that people keep a Redbox DVD is probably distributed something like this*:

Redbox’s 10-Q for Q1 2011 says the Net revenue per rental was $2.20**. So the average renter keeps the DVD for 2.2 days and pays $2.34 (which is $2.20 plus tax in Gainesville).This is for all kiosk rentals, so it’s not just DVDs. But the point is that I’m guessing almost everyone will return the DVD in the first three days, but a few will hold onto it for several days.

So here are the price comparisons (from the average renter’s perspective) updated to account for typical rental times at Redbox kiosks:

Redbox – $2.34
Amazon – $3.99 (71% more than Redbox)
iTunes – $4.99 (113% more than Redbox)

These numbers make it more plausible that the difference in prices is mostly due to a “convenience premium”. Is it worth $1.65 to go to a Redbox kiosk instead of just streaming the movie to a TiVo or PC? For me it was, but for many it won’t be. Also, when I went to return “Waiting for Superman”, the kiosk was broken, which meant I had to go find another one. If I had known I’d have to make three trips to Redbox kiosks to save a couple bucks, I probably would’ve just rented the movie from Amazon.

iTunes is probably more expensive still because of the Apple brand and the additional convenience that an iTunes movie can be watched on Apple TV, a computer or synced to an iOS device (iPad, iPhone, iPod) and taken mobile.

* In case it’s not clear: I totally made this up based on the reported $2.20 “Net revenue per rental”. I’m assuming that people will either return the DVD in the first nine days, or they’ll keep it the full 25 days and end up buying it. I stopped the graph at 10 days to make it easy to read, and I assumed that one in 1,000 rentals would end up being bought after 25 days. Also, I’m being lazy here and not trying to tease out the actual DVD numbers since I’m using the $2.20 they reported, which includes Blu-ray and stuff.

** I’m a little confused by their terminology here. What I really want is the gross revenue per rental, but I can’t figure out what that is. I looked at the Notes to Consolidated Financial Statements, but I still can’t tell exactly what the “Net revenue per rental” number is. For Q1 2011, if I just take “Revenue” for the Redbox segment and divide by the “Total rentals”, I get $2.20. But this doesn’t work for Q1 2010 (I get $2.19, but they reported $2.16), so I don’t know exactly where that “Net revenue” number comes from. It seems like the gross number just isn’t being reported. The Redbox Wikipedia page claims (via the New York Times) $2 per transaction as of September 2009, so that makes me think the gross number is $2.20 and also makes me wonder why Coinstar is reporting it as a “Net” number. It’s also possible everyone else is misinterpretting the “Net” number as the gross per-rental number, so the gross per-rental number might be higher.

Why is Redbox so much cheaper than Amazon and iTunes?

Last night, I rented “Waiting for ‘Superman’” from a Redbox kiosk near my house. This was my first Redbox experience.

I would normally just wait for it on Netflix Streaming, but I wanted to see the movie right now since it’s relevant to stuff I’ve been writing and discussing a lot lately. A friend had mentioned Redbox, and I had to go to the store anyway, so I checked to see if Amazon or iTunes could compete with the $1 Redbox price.

I ended up going with Redbox because I didn’t want to pay the premium being charged for rental by both Amazon Instant Video and iTunes. Here’s the breakdown:

Redbox – $1.06
Amazon – $3.99 (276% more than Redbox)
iTunes – $4.99 (371% more than Redbox)

What’s interesting is that it would seem that renting physical media would be more difficult and expensive than renting digital media. Someone has to service the kiosks, the physical media can be lost, stolen or damaged, etc. The rental terms are very similar – a 24-hour rental is standard. So why is it so much more expensive to rent from Amazon and iTunes than Redbox?

There could be a few things at work here:

A convenience premium. I chose Redbox because I decided it was worth the relative inconvenience of using a kiosk to save $3.93 over Amazon. My decision was easier because I was already going to the grocery store and the Redbox kiosk was directly on my way home from the store (I knew this thanks to the Redbox iPhone app – good job Redbox). Had I not already been going out, I may have chosen to pay the Amazon premium instead.
Price skimming. Online video streaming is becoming mainstream, but it isn’t yet ubiquitous. I would guess that the demographic who is most likely to rent a movie from Amazon or iTunes (the pseudo-early adopters) has more disposable income and may be more willing to part with the extra couple bucks. To wit, the technology required to stream instant video (at minimum a PC with a broadband connection, or an Xbox 360, PS3, Wii, TiVo, iOS device, Android device, etc.) is much more expensive than a standard DVD player.
Non-obvious operating costs for online content providers. Although I cited kiosk maintenance and the risk of lost, stolen or damaged media as potential cost drivers for Redbox, Amazon and iTunes may have different operating costs to worry about. They have servers to host the content, digital media licensing fees, the cost of upstream bandwidth necessary to stream video, etc. Those costs could actually be greater than the costs that Redbox faces for maintaining its kiosks.

What else could be behind the steep premium for renting movies online?