A 128 GB iPad! (Is Apple Reacting, Instead of Innovating?)

The big news from Apple this week wasn't all that much news at all. As rumored, they announced a 128 GB iPad 4. Which I'm sure is awesome. But is it really necessary? Or interesting? It certainly has no power to stir the hearts of men. It's just a spec bump. It's barely worth writing about - I can't imagine that Apple is going to move a ton of these at $799.

But it feels strange that Apple even thought this was necessary. I agree with Citibank analyst Glen Yeung, who feels that this was a "defensive" move, perhaps made in reaction to Microsoft's upcoming Surface Pro.

Apple? Doing things in reaction to Microsoft releasing some product? In 2013? Has the world gone upside down?! Dogs and cats, living together... mass hysteria!

And yet.... Mr. Yeung may be right.  It's hard to argue that the iPad mini was a defensive move, intended to compete with the Kindle Fires and assorted Android tablets in the low end of the tablet market. And now, 128GB of storage in an iMac, just before MSFT releases their own 128GB behemoth.

I'm sure that Apple sees the tablet market as a wide spectrum, from casual users on iPad Minis, up to "standard" users with iPads, to power users with these new "laptop replacement" tablets. And they want to compete across the entire spectrum. I get it.

But these attempts to "preempt the field" have a cost, too. Apple just had the best decade of any company, ever - and they didn't get there by competing in every market. Their success happened for two reasons -

First, because Apple created new markets, and dominated them for years. They didn't invent the MP3 player, but they certainly brought it to the masses. They did the same thing with the touchscreen smartphone. And the tablet.

They held a ridiculous share of each of those markets (and still do, with the iPod, as it's a fading market and there is no remaining competition.) They dominated with smartphones, until competitors moved in. They certainly dominated with tablets, and what we're seeing now is an attempt to hold onto that dominant position in the tablet market.

However, in doing so, Apple MUST remember the second pillar of their success: Apple justifies higher margins, because they have built and maintained a perception as a "premium" brand. Apple does NOT hold a big share of the PC market - but they make more profits than the rest of their competitors combined. The reason, in primary part, is that MacBooks and iMacs are gorgeous and high-powered.

People will begrudgingly buy another $699 PC from Dell. They aspire to spend $1300 on an iMac.

Apple wants to compete across the tablet spectrum, and that's fine. And adding an additional "high end, premium" model isn't as big of a problem as adding a "low-end, economy" model. But every time they release a product in order to answer a competitor's product release, they do so at their own peril.


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