Hardly a day goes by without some announcement of the next Tablet device. You know, the one that will finally beat the iPad? The most recent, and probably the most serious contender to date is HP’s TouchPad. It’s clear that they are taking a fast-follower approach to the market. If you watch their promo videos, you’ll see point-by-point comparisons to the iPad that include:

• A web browser, mail, and calendar
• The Kindle reader / bookstore
• Video calling
• “Social Networking” (although I couldn’t find the demo of what this was")
• Wireless printing

They also have a pretty neat “Wow-factor” differentiator: Touch another WebOS device to the TouchPad to transfer URLs.

The problem is that none of this matters, because none of this answers the question “Why should I buy an HP TouchPad over an iPad?”

Since they are at the same price point, and the iPad offers quite a lot more in terms of Apps, a larger screen, lower weight, and more developed ecosystem, the HP TouchPad is pretty much doomed from the get-go.

And I believe all similarly positioned “media tablets” are likewise doomed.

A Sea of Lemmings

Let’s think a little about how the Tablet market came about. Firstly, Tablets are not a new idea. Star Trek has featured them since the 60s. The Palm Pilot came out in 1997, and Microsoft has been trying forever to build a popular TabletPC or PocketPC device. There was some excitement when next-general Palm killers like the Dell Axim came out in 2002 and around the Ultra-Mobile PCs in 2006. Then the whole Tablet initiative seemed to get stuck in an inescapable rut for a few years.

Then Apple announced the iPad in 2010.

A strange cargo-cult-like phenomena started to happen. All of a sudden, it was like a light was turned on and every tech company was working to get their own Tablet out the door. It was like “Wow, Apple has proven that people really ARE willing to spend as much money on a keyboard-less netbook as on a PC. We just need to follow what they did!”. The logic was that if you could get an iPad-like device out there, hopefully for a little cheaper, you could capture some of this “emerging market”.

This is almost the definition of insanity. Does any tech executive seriously believe that they can build a rival hardware AND software platform overnight to compete head-to-head with the iPad? Apparently many do. Don’t forget that the iPad is built on the iPhone’s OS, service (iTunes), and App ecosystem, which has a 3-year lead.

These guys could have stood a chance, had Apple introduced the iPad at a higher price point. However, as I wrote about at the time, Apple made the aggressive and brilliant decision to price the iPad at $499, impossible for any credible competitor to beat, even a year later.

Wait, what about Android Phones?

If this is true, then how did Android phones gain overnight parity with the iPhone? Won’t the same thing just happen with tablets?

That sounds like an alluring analogy, but it it flawed.

Firstly, when most people buy a phone, even a smartphone, they are buying a phone first, and the platform second. It’s like buying a car and getting some brand of stereo that comes with it. Likewise, it comes time to upgrade my Verizon phone, so I go pick the one that most strikes my fancy, and oh, it just so happens to come with this Android thing. This isn’t the case with Tablets. People didn’t have a Tablet-need before the iPad came out. This is a new market (and for now can be rightly called the iPad market).

Second, with the iPhone, Apple was hobbled by the AT&T deal in the U.S. Had they somehow managed to launch the iPhone with multiple carriers, the story would have turned out quite different. Since most people are locked into multi-year carrier contracts, and there are significant (real and perceived) switching costs, this effectively limited Apple’s initial addressable market for iPhone.

Third, Apple made a huge pricing mistake with the first iPhone, making the purchase price too high instead of hiding it in the carrier subsidy. They fixed it when the iPhone3G came out – lowering the sticker price, but raising the data charges (so that you actually paid more for one after the 2-year contract was up compared to the original iPhone!). With smartphones, competitors can play all kinds of pricing tricks (“2 free phones with a 2 year contract”). Tablets don’t work well with carrier subsidies – most people buy one without 3G – so it’s a more direct shootout. Apple’s aggressive iPad pricing ensures what no competitor can beat them on price for similarly spec’ed machines.

So what’s a competitor to do?

In the consumer space, the only viable strategy in the short term is to attack from the bottom: Field a cheaper ($249) and smaller (7”) tablet that only promises to let the user do a few basic things really well:

• Read books
• Watch videos (Netflix, Hulu, and Flash)
• Facebook and Twitter
• Email
• Browse the web
• View their photos

Note that this isn’t just a cheaper device (like the Dell Streak), it’s a cheaper device with a ready-to-go service and ecosystem. Such a device could be fully cloud-connected and not need a lot of onboard storage nor even support 3rd party apps. It would be basically a super-Kindle, and my bet is that this is exactly what Amazon plans to release this Fall.

The reason this will work is that it has already worked: For the iPod Touch. While there are millions of people who are willing to pay $499 to get the full tablet experience, there are millions more who would pay $249. We know that this price point is achievable: Lesser known companies have already delivered hardware for less. What’s missing are the integrated ready-to-go services and marketing.

The majority of those iPad owners use them for the fairly simple needs above, at least most of the time. The iPad has already overshot the needs of a large segment of the population. This is an opening for an enterprising competitor to take.

I stumbled upon this gem today (via this article). It’s a video of a 45-minute long raw Q&A session with Steve Jobs by developers at WWDC 1997, when he was still an advisor to Apple and Gil Amelio was CEO. In it, Steve gives pretty clear answers to some tough questions, and gives us a glimpse into what it was like to turnaround Apple from the brink of disaster into the powerhouse it is today.

Though slightly dated, this video is a great case study for what great leadership looks like, especially in times of crisis. Keep in mind that this was before there was any indication that Steve Jobs would be the next CEO of Apple, and the fate of the company was hanging by a thread. There’s irony, given Apple’s reputation for secrecy, in how candid Steve is to this audience of 3rd party developers. There’s no question that Steve totally gets it about the industry. He doesn’t mince words, or try to BS his way out of hard questions. Equally remarkable is how clear and consistent his vision for success was, and how you can now trace much of what Apple has since accomplished back to the points he made 14 years ago.

A few of my favorite takeaways and snippets:

1. On focus: “Focusing is about saying no.” The very first question out of the gate was a hardball one about why Steve and the new management cut so many seemingly promising projects like OpenDoc. Steve’s response was that due to bad engineering management, too many projects had been started and allowed to continue in multiple directions without coherence. The result of which was less than the sum of the parts. The solution was to cut things, even locally promising things, that did not contribute to the larger goal.

2. On Better vs. Different: “It’s important that Apple be perceived as Much Better, not Different.” The key is to focus on the 10-20% of stuff that you can make much better, and reuse the rest. It’s a failed strategy to try to reinvent the wheel in every case.

3. On the stock price: “[focus on executing and] the press and stock price will take care of themselves… if people are selling Apple stock short, go out and buy some, that’s what I’ve done.”

4. On “Cloud computing”: Although he never used the word “Cloud”, here’s a segment where Steve Jobs gives a pretty spot-on description of what Cloud computing should be. 14 years later, you’ll find this eerily similar to what iCloud is now trying to do.

5. On where great products come from: “Every good product is because a group of people cared deeply about making something wonderful that they and their friends wanted.”

6. On the customer experience: “You need to start with the customer experience and work backwards to the technology.”

7. On the future of mobile communication: “What I want is a little thing with a keyboard that’s connected to the net… I don’t want a little scribble thing”.

After watching this, I only wish all companies were run by people with even half this level of candor and get-it-ness.

The concept of Combined Arms Warfare is as old as strategy itself: Diverse forces working in concert can decimate larger and less organized opponents. This week, Apple has demonstrated itself to be the ultimate master at orchestrating this level of integration across its entire product line. This is also the culmination of a decade-long maneuver.

The 10 Year March.

When Apple announced the iPod in 2001, there was more than just a little head scratching. Music players had little to do with Apple’s core (and diminishing) product line of desktop and laptop computers at the time. Most people assumed it was just a desperate move by a dying company. Yet, through incredible execution and focus, Apple was able to build an entire industry out of the insight that portable computing devices like the iPod and later iPhone were the way of the future.

The problem was that this created two Apples: The old (and at the time tired) Apple Computer, and the new hip music-focused Apple, Inc. - With the success of the iPod, and later iPhone and iPad, it seemed that Apple was in the process of ditching the latter in favor of a device-centric future. Over the last 10 years, Apple appeared to be fighting two different wars, one against traditional PC-dominated computers and another against the device makers of the world, and miraculously able to succeed at both at the same time.

That has changed as of this week.

The biggest news announced at WWDC ‘11 this week was of course iCloud, but the most striking thing is what iCloud, Lion, and iOS5 represent together: That Apple has now aligned all of its divisions and will henceforth be able to launch combined product offerings.

The iWorks suite gives the best glimpse of what this will look like: A suite of Apps across the desktop, phone, tablet, and cloud that all work seamlessly together. Before, you would compare buying a Mac against a PC depending mostly on what Apps could run on either platform, but now you have to compare the value of a Mac+iCloud+iDevices against a PC, which has no comparable offering. Similarly, it’s the same iPhone/iPad+iCloud+Mac against Android.

Each part multiplies the value of the others. It’s an equation no single-dimensional competitor can hope to match.

What’s Google to Do?

Doubtless, there are frantic strategy meetings going on at Google HQ right now. It seems bizarre  at first glance that they weren’t able to beat Apple to this punch, given their stature as a cloud-savvy company. After all, Google Apps have been for sale for a long time. Surely it can’t be hard to integrate them into Android? I’m sure that’s what teams of engineers are furiously working on right now, but there are at least 2 big problems with this:

1. Google is still fundamentally a Search/content/advertising company. Making money off apps and devices is not in their DNA. To succeed financially, they need to grab eyeballs who are willing to view ads and (even better) buy an advertiser’s good online. Apps are notoriously bad ad-revenue generators – even Apple can’t seem to make money off App-based advertising.

2. When they launched Android, Google basically made a deal with the devil: In exchange for rapid adoption and market share growth, they gave away most of the control over Android. Each carrier has tremendous leeway in dictating the contents and restrictions on the devices. You can bet they will demand their cut of any Google-hosted online service offering, and will certainly veto any efforts like iMessage or Facetime that could shift revenue dollars away from them.

Yes, Google is trying to claw some of that control back, but heck even Amazon is rumored to be planning their own line of Android-powered devices. That genie ain’t going back in the bottle.

The Power of Free.

Apple made a bold move by offering the core iCloud service free to all users. This may appear to be a cannibalization of their just discontinued MobileMe’s $99/yr. subscription, but it is a very powerful offensive and defensive play. Not only will this virtually guarantee overnight adoption by the vast majority of their user base, it is a price their competitors will find hard to match.

The reason: Apple makes their money from selling expensive devices with 40% margins. They can easily afford to throw in free cloud services that at most cost a few dollars per year to everyone who buys an iDevice or Mac. None of their competitors have that. Android actually costs money by Google to promote, and Microsoft makes a small fraction on OS licensing fees. If they could do it and wanted to, they would have certainly done so by now.

iCloud raises the table stakes of the mobile game. Competitors will be forced to respond in some form or another, and doing so will diminish their margins at a greater rate than Apple’s.

Completing the Circle.

I’d bet that it’s no accident that the design of Apple’s new campus (which was announced the same day as the WWDC keynote) is in the shape of a perfect circle. Steve Jobs is known to love this level of symbolism. iOS+iCloud+Mac represents the completion of the circle for Apple, and the core of all three divisions will soon be housed under the very same roof.