The MacPad Will Come - but Software Convergence Will Come First

Despite all the fantastic numbers delivered by Apple (Nasdaq: AAPL) when it revealed its latest fiscal quarterly profits this week -- such as an eye-popping 94 percent net profit year-to-year increase -- one question and one rambling answer from Apple CEO Tim Cook made me sit up in my chair. The question: Will Apple create a converged iPad/MacBook with a built-in keyboard?

The question came from Tony Sacconaghi, a longtime Apple-watching financial analyst with Sanford C. Bernstein's research division. In his preamble to the question, Sacconaghi first noted that Apple and Cook have been fairly clear in their belief that tablets will eclipse PCs in volume at some point, as well saying they are discrete markets.
"There seems to be a lot of work, particularly on PC-based platforms, towards trying to combine the PC and tablet experience going forward in part because Windows 8 will be able to -- is a touch-based operating system as well. Can you comment about why you don't believe the PC or the Ultrabook and tablet markets or your MacBook Air and tablet markets won't converge?" he asked. "Isn't it realistic to think in a couple of years we're going to have a device that's under two pounds with great battery life that we can all carry around and open as a notebook or close up in a clever way and use as a tablet? Can you comment on why you don't think that product might not come or why you believe these markets are separate?"
Cook's answer, of course, is revealing and yet fuzzy at the same time.
"I think, Tony, anything can be forced to converge," he said. "The problem is that products are about trade-offs, and you begin to make trade-offs to the point where what you have left at the end of the day doesn't please anyone. You can converge a toaster and a refrigerator, but those things are probably not going to be pleasing."
This answer starts to imply that no, Apple isn't going to create such a device.

The Tablet Market Is Huge

Cook then shifted his answer to the growing size of the tablet market, noting that IT analyst firms IDC, Gartner (NYSE: IT) and Forrester also seem to think tablet sales will exceed PC sales sometime around 2015. And he noted how fast the iPad has rocketed to 67 million units sold, with a trajectory that seems to be heading into the stratosphere.
"I could not be happier with being in the market, and the level at which we're innovating in both the product and the ecosystem here is incredible," Cook said.
And yet the notebook side of this question, the other product that's different from the iPad but serves a similar mobile use, is the MacBook Air, a product in which Cook says Apple is continuing to innovate. The appeal of the two products, though, from Apple's perspective, is that the consumers are looking for different things -- they have different requirements.
"You wouldn't want to put these things together because you wind up compromising in both and not pleasing either user. Some people will prefer to own both, and that's great, too. But I think to make the compromises of convergence, so ... we're not going to that party. Others might. Others might from a defensive point of view, particularly. But we're going to play in both," he explained, ending his answer.

What Cook Didn't Say

Cook clearly did not reveal any sort of detail about converging the MacBook Air with the iPad. On the surface, he seemed to say it just wasn't going to happen, and yet I'm not sure that the guy, as meticulous as he is, ever really misspeaks. He didn't say Apple isn't going to build a converged device -- he just said Apple isn't going to create a device that leads to compromises in the experience. And he didn't exactly address Sacconaghi's question of whether a super-light and clever folding mechanism could come in two years.
The real answer, in my mind, has three layers:

1. Apple can and will build a converged device -- basically, we'll get a touchscreen-MacBook-Air sort of computer. Is it a tablet or a notebook? Will it run iOS or Mac OS X? Or both through some converged OS? Right now, they are two different underlying technologies, but Apple most certainly either has a roadmap in front of it or its actively surveying possible routes. The least common denominators are a keyboard that produces real, tactile feedback and is efficient to use ... along with a touchscreen.
2. I don't think a converged device from Apple will appear soon. Heck, even if Apple could produce such a tweener device and delight almost everyone, I don't think Apple will in the near future. Why? It doesn't have to. I've seen, time and time again, Apple make small (yet strong) incremental updates that let it ride a whole new year of sales. Case in point: The move from the iPad to the iPad 2. Apple could have included a camera in the original iPad, but it didn't have to. Apple waited until the iPad 2, and boom, there's millions of upgrades in addition to new sales. The move from the iPad 2 to the (new) iPad was mostly about the high-resolution new screen. Did Apple call it the "iPad HD?" No. No need to. Why clutter the name of the product when it's dominating so well?
   And that's the key here. With the existing form factor -- and developer ecosystem -- ramping up so quickly, Apple sees zero pressure to offer a new choice of product. Zero pressure.
3. Converged apps and "appy" integration will come first. The challenge for Apple isn't creating one device to rule them all. Why sell one cool device when you can sell multiple devices? The pressure is connecting the wicked cool iOS-based apps with a customer's MacBook environment. iCloud is the first key because it will help/let app developers create apps that synchronize flawlessly with one another. This is a great start. What's better? Apps that take the best elements of touch and delivery on an iPad and let me interact with them via the multitouch trackpad (and later, the screen).

Here's a case in point: iBooks Author. The program is an awesome app with a serious limitation -- I can only use it to create iBooks that run on the iPad. I can't create the same file, the same book, to run on my Mac and my iPad. That sucks. And it's only worse if I wanted to be able to create an iBook easily that would also be available on my iPhone. In terms of convergence, I tend to believe that Apple is looking to converge the entire experience, and right now, converging a device based on a idea of a hardware-focused need will take a back seat to bigger, broader issues of ecosystem immersion.
In the meantime, iPad users will have to settle for third-party keyboard case combinations and hold their faces up to the glass during the Windows 8 convergence party -- or more likely, ignore it altogether while happily tapping and swiping on their iPads.

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