[Viewpoint] Taking a bite of the Apple

We are living in the age of Apple.

Not the fruit, of course, but the company operating under the leadership of Steve Jobs.

It seems that Samsung Electronics and LG Electronics, which thought Apple would struggle in Korea, were shocked by the boom created by the recent release of the iPhone here. The two companies have focused so much attention on catching up with Nokia that they were unexpectedly blown away by Apple.

Last week, Jobs was at the center of the media universe as he unveiled the company’s new iPad product. The iPad, which is categorized as a so-called tablet PC, falls somewhere in between a cellular phone and a netbook, combining communications technology and computer functions on a portable device.

Jobs declared that the iPad will “fill the yawning gap between smartphones and netbooks.”

The tablet PC market has never got off the ground, and some have deemed it virtually dead.

But the iPad is expected to change that, possibly in a big way.

In the IT industry, the space between a cellular phone and a laptop is often referred to as the Bermuda Triangle, as every product introduced in this market has disappeared completely from the radar screen.

In fact, Microsoft founder Bill Gates predicted that the tablet PC would gain steam in the 1990s, but that of course never materialized. Jobs even previously introduced an experimental product named Newton but eventually gave up on the effort. It is an obscure niche market, and companies have had a hard time identifying the relevant consumer target.

However, the iPad is garnering different responses. Observers think that a new opportunity has opened up just because Jobs is heavily involved. He seemingly has the Midas touch when it comes to consumer electronics and computers, with everything he touches turning into gold.

Considering that Jobs has racked up some glorious accomplishments, that sentiment is understandable.

The iPod and the iPhone, which led Apple’s renaissance, were not created exclusively with the company’s technology. There were already various MP3 models on the market before iPod, and other companies had already introduced smartphones before Apple unveiled the iPhone. Yet those two products smashed the competition and essentially created new markets. So, many are people are betting that he will do the same with the tablet PC market.

Jobs ranks as a living legend in the industry. After he returned to Apple as its CEO, a pattern developed. The company rocketed to success by differentiating its devices from existing products with innovative design and other attributes.

But the key is Apple’s unique business model of integrating hardware with software and offering exclusive content. Apple introduced iTunes, a marketplace to download music to iPods, and the App Store, an online store for downloading various applications catering to iPhones.

Apple developed sources for exclusive content that can only be used on the company’s devices - in effect creating a monopolistic market structure where consumers must buy its product to enjoy the content.

Jobs is applying the same strategy to the iPad. The device can play music and movie files from iTunes and run applications from App Store. Users can also get newspapers, books and games. Apple has already inked or is negotiating contracts with newspapers like the New York Times, publishers like Penguin and many video game developers.

The companies that make netbooks, e-books, game consoles and navigation devices are bound to take a hit. The iPad alone offers all of this content, replacing these disparate offerings with one product.

However, there certainly is some skepticism over the iPad. The size and dimensions are awkward depending on what you’re using it for. It is less portable and handy than a smartphone, yet not as stable as a netbook.

Some ridicule it as a bigger version of the iPhone. It does not have a camera, and the battery cannot be replaced. Critics also argue that bringing together multiple uses and features won’t satisfy customers who want specialized devices that excel in a particular area, such as music or books.

Partly because of these concerns, Apple’s stock fell by more than 4 percent after it unveiled the iPad despite having surged for four days beforehand. Once the iPad hits the market in March, consumers will finally be able to decide if the legend of Jobs continues.

When presenting the iPad, Jobs said Apple is the No. 1 mobile device maker in the world. In the smartphone market and in terms of market capitalization, he is right.

However, in the overall mobile and IT market, Apple is not the leader. Samsung comes from a completely different lineage than Apple. While Apple leads the market in a few areas, Samsung offers various lines of appliances and IT products. If any one of Apple’s new products fails, the entire company will suffer a blow, while Samsung can respond more flexibly. There is some talk about a brewing crisis in Korea’s IT industry, citing the craze over the iPhone. However, not every Korean company can do businesses like Apple, and it might not be the best strategy either. Companies can adopt the innovative efforts of Apple, but betting the entire fate of a company on one product or monopolizing content isn’t the way to go here.

*The author is an editorial writer of the JoongAng Ilbo.

by Kim Jong-soo