iPad discussion spurs reflection on the PC as a bargain

During a discussion today about potential iPad sales, a friend and I got distracted by reflecting on the tremendous value delivered by a vanilla PC. Over on the Dell Web site right now, a basic 15″ laptop costs $499 and includes 320 GB of hard drive and 3 GB of RAM. So for the same price as an iPad, you’ve got a machine that can do the following:

• give each family member his or her own private and personalized set of files, programs, and bookmarks
• support the creation of almost any kind of document, plan, or project
• run nearly all of the world’s software development tools
• function as a videophone
• function as a television, DVD player (and burner), radio, and videogame
• be used almost anywhere in the world (multi-voltage power supply and standard 802.11 wireless adapter)

The machine exacts a price in terms of learning and administration, but it does a lot for $499!

So… can Apple sell a huge number of machines at the same price that do a lot less? Sure, at least to those who have an extra $499 for an indulgence.

Let’s look at Apple’s track record:

• Macintosh: substantially more expensive than competition, 2-5 percent market share
• iPod: comparable price/megabyte to competition, 55-70 percent market share
• iPhone: slightly higher price than other smart phones, 16 percent market share of smartphones (source), negligible market share of all mobile phones

There have been enough spendthrifts worldwide to keep Steve Jobs in Gulfstreams, even when an Apple product carries a premium price, but Apple has only touched the mass market with products that are close in price to competitors’ products.

The best predictor of iPad world dominance may therefore be how much it costs to buy a similar tablet from a competitor. I.e., if the competition costs about the same (see “Zune”), Apple could end up with most of the market.

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