Why Apple is Wrong About Convertibles

Patrick Moorhead / May 22nd, 2012

On Apple’s last earnings call, CEO Tim Cook responded to a question on Windows 8 convertibles by saying, “You can converge a toaster and a refrigerator, but those aren’t going to be pleasing to the user.” At first glance, this makes total sense, and from the company that brought us iPod, iPhone and iPad, this has wisdom. But as we peel back the onion and dig deeper, I do not believe Apple is correct in their assessment. As I wrote here, I have long-believed that convertibles would be popular in 2013 and I still believe convertibles will be a thriving future market, albeit not as large as notebooks or tablets.

Mashups between two devices are rarely successful, particularly in mature markets like PCs. I have researched, planned and delivered 100’s of products in my career, and very rarely have I seen two purpose-built products combined to create something real good. The problem becomes that by combining two products, the result becomes good for no one. The primary reason this becomes the case is that you have to make tradeoffs to make the combined product. By combining most products, you are sub-optimizing the separate product and what they uniquely deliver to their target markets. Convertibles have that possibility, but if designed appropriately as I outlined previously, this won’t happen.

Cars give us a few examples to work from. As the car industry matures, we see more and more specialization. There are now sedans, coupes, mini-vans, SUVs, mini-sedans, sports cars, trucks, truck-hybrids, etc. Specialization is the sure sign of a mature market as consumer’s tastes have gotten to a point where they know exactly what they want and the industry can profitably support the proliferation of models. Industry support is a very important in the industry must be able to afford all this proliferation. The auto industry supports this through common parts that are shared like chassis, engines, and electronics.

What does this have to do with convertibles? Ask yourself this question: If my SUV could perform like a Cayman Porsche, would I like it? Of course you would; it is called a Porsche Cayenne. The problem is, you could pay up to $100,000 for it. Want your sedan to drive like a Cayman? Just get a Porsche Panamera. The problem, again, is that is around $95,000. The expense isn’t just about the brand. Porsche invested real R&D and provides the expensive technology to make these “convertibles” perform well.

There are similarities and differences between the Porsche Panamera and Windows 8 convertibles:

  • Price: Buyers will only need to spend an extra $100-200 more than a tablet to get a convertible. Many will make that choice to have the best of both worlds. The average U.S. car is around $33,000 while the Panamera is around $100,000, three times the average. One argument Apple could have is that if future, full-featured tablets become $299, the added price could be too much to pay for the added convertible functionality.
  • Low “Sacrifice Differential”: This is Apple’s strongest point, as in many mashups, combining two products results in something that isn’t good for any usage model. “Fixed” designs will need to be less than 13mm thick and the “flexible” designs (ie Transformer Prime) need to be less than 18mm thick with keyboard. Otherwise, the convertibles will be too thick to serve as a decent tablet at 13mm or thicker than an Ultrabook over 18mm.
  • Transformation capabilities: Convertible form factors like the Transformer Prime can convert into a “notebook” with an add-on peripheral, but cars cannot. I wish there were a 30-second add on kit that could turn my Yukon into a 911 Porsche but there isn’t. Related to PC convertibles, if you have ever used the Asus Transformer Prime, you know what I am talking about. It is one of the thinnest tablets, and when paired with its keyboard, is only 19mm thick. One of the great features of the Prime is that the keyboard provides an extra 40-50% battery life boost that actually adds utility. Windows 8 for the first time supports the lean-forward and lean-back usage models. As a tablet, the users uses it with Metro. As a “notebook” clamshell form factor, the users can use Metro and then use Windows 8 Desktop with the trackpad and keyboard. This has never existed before and Apple doesn’t have this capability in iOS or OSX.
I do believe that convertibles ultimately will have space in the market as they serve to eliminate, for some users and usage models, redundancy of having two devices. OEMs must be particularly careful in how thick they make them. The original iPad was around 10mm and that was pushing some of the boundaries, particularly with reading books. The thicker the designs, the less desriable they become as they will not make a very good tablet. Flexible designs like today’s Asus Transformer Prime, when connected with Windows 8, could be a lethal market combination as it combines a thin tablet and a keyboard when you want it. Gauging by how much shelf-space is devoted to iPad keyboards, I must conclude that consumers are snatching these up in high volume.
I believe Apple is wrong about convertibles, but on the positive side, Apple’s warning gave the entire industry pause for thought. Interestingly, it provided the opposite effect of what I believe Apple intended, which was to freeze the market. Instead, it indicated that Apple was not going to do it, which motivated more OEMs to build, given they wouldn’t have to worry about Apple. While the volumes for convertibles won’t be as large as tablets or notebooks, I do believe they have a place in the market in the mid-term.

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.
  • Defendor

    Convertibles are a niche that will grow (I have already seen them for years) as technology on the HW/SW front makes them more livable.

    But for Apple, Tim Cook is correct. Convertibles are the antithesis of Apple’s simple design ethos.

    I also don’t think you make any kind of strong case for your “best of both worlds” claim.

    There are really two choices to build a convertible.

    Permanently attached screen like the Lenova Yoga. Which makes for very close to standard laptop experience, but a heavy cumbersome tablet. So nowhere close to best of both worlds, even improving technology won’t change this as in the future some super thin, super light convertible notebook, will still be heavy and cumbersome compared to the tablets of the day.

    Detachable screen. Here you can get pretty much a standard tablet experience, but you now have a kludgy attachment point, you have changed the traditional balance from sensible heavy base/light screen, to less sensible light base/heavy screen. You also have tiny cramped keyboard to fit the tablet dimensions. At best you have a kludgy, unergonomic netbook on the laptop side. Again nowhere near best of both.

    There will be a niche for these devices, but they will never be the best of both, they are still compromised like any other disparate mashup.

    I don’t see the design perfectionists at Apple ever being interested in this kind of always compromised design. To say nothing of the added complexities of dual interfaces in the software and switching between them and often being forced to use mismatched interfaces.

    • benbajarin

      Good thoughts. I don’t think this really has anything to do with Apple. I agree that it is highly unlikely that Apple do this but the question is whether or not it is in interesting form factor / differentiator for the Windows OEMs.

      We know consumers are interested in tablets and we are seeing much higher uptake of keyboard attachments, specifically with business and professional consumers. So the hypothesis is that Win 8 with an elegant (much better than we have seen designed today) hybrid notebook / tablet could present some appeal to at least some segment of the market.

      By no stretch of the imagination can we expect this to be the dominant solution but the point we continually make here with our analysis on this site is the point of segmentation.

      I tend to believe that if this form factor is done right it will appeal to a segment. Done right being the key point here. How big is the market, how will the software challenges be overcome, all of these things we have to wait and see but I think the dialogue around if this form factor can appeal to a segment and be a differentiator (for what that is worth with Windows) is plausible.

      Thanks again for the thoughts.

  • At Patrick,

    Yes, Apple is wrong and Asus will bring out a convertible and wipe out iPad and MacBook sales.

    Or not.

    • benbajarin

      See my comment below to Defendor.

  • Grwisher

    @Defendor – Your summary is what the article should have said in the first place. Agreed.

  • FalKirk

    1) Touch and pixel-specific user interfaces are inherently incompatible.

    2) There are only two legitimate reasons to use a pixel-specific user interface. First, certain applications thrive on pixel-specific input such as CAD, drawing, etc. Second, legacy applications.

    3) Once people realize that they can do (almost) everything on their tablet that they used to do on their notebook, they will opt for the simpler interface and more portable form factor of the tablet. The importance of legacy desktop applications will fade away much faster and much sooner than most realize.

    Yes, convertibles will have a hard time catching on in the market because there will be large, unacceptable trade-offs. But you’re missing the even bigger picture. The real reason convertibles will not be acceptable is because there is little reason to make those tradeoffs in the first place.

    The desktop is like an oven and the tablet is like a microwave. The oven can do a lot more things than the microwave does. But the microwave does certain specific things really, really well and really, really fast.

    When the microwave first hit the market, companies added all sorts of features to make them more like ovens. They added browning elements, they had special plates used for specialty items like bacon, they added all sorts of complicated partial power mechanisms.

    Today, 99% of our cooking is done with microwaves. And 99.9% of that cooking is done by simply setting the timer and hitting “power”.

    Today, we can’t imagine why anyone would want to make a microwave more like an oven. The oven, while extremely useful in limited situations, is inferior to the microwave in most every kind of everyday use.

    Tomorrow, we won’t be able to imagine why anyone would want to make a tablet more like a notebook. The desktop, while extremely useful in limited situations, is inferior to the tablet in most every kind of everyday use.

    Convertibles aren’t just trade-offs…they’re unnecessary trade-offs.

    • benbajarin

      I like the home appliance analogy. It would be good to think through more of these analogies of everyday / post mature product categories.

      Although, I am becoming increasingly convinced that the continual use of a microwave drastically increases the chance of getting cancer. Let’s hope that is not true of tablets 🙂

      • jfutral

        You had me with the appliance analogy until you tried to say the microwave is superior in almost every way over a range or oven. Microwaves make lousy bacon, hamburgers, quiche, breads, cakes, or just about anything that needs radiant or endothermic heating to taste great.

        But the point that a tablet does not need to be a laptop to be useful is the same, just as the microwave does not need to be a conventional oven or stove to be useful.

        Applying an external keyboard is a transitional solution to the lack of experience with working on a tablet as Apple has created it. Just as people freaked and thought they all needed external floppy drives (and soon to be optical drives) when Apple dropped the floppy from their line up. As time goes on no one will remember why they thought an external keyboard (at least on a tablet) was needed.

        For the typical consumer, the laptop is the new desktop. Or lug-able, if lug-ables were ever thought of as a desktop replacement. But I imagine soon enough even CAD will be useable on a tablet. Some makers are already trying, but I haven’t tried them out yet. I really need AutoCAD or Vectorworks interoperability, in one form or another.

        Joe

        • FalKirk

          “You had me with the appliance analogy until you tried to say the microwave is superior in almost every way over a range or oven.”-jfutral

          That’s not what I said at all. I said “The oven can do a lot more things than the microwave does. But the microwave does certain specific things really, really well and really, really fast.”

          I later went on to say: “The oven, while extremely useful in limited situations, is inferior to the microwave in most every kind of everyday use.”

          Perhaps I could have written this last sentence a little better. I wasn’t trying to say that the microwave was superior to the oven, only that it was superior in most of the everyday tasks that we do over and over again. I think this is analogous to the desktop and the tablet. The desktop clearly does more and it clearly does some things better. But the tablet, like the microwave, it at its very best when its asked to do small, uncomplicated tasks quickly, efficiently, with little setup and even less fuss.

          • jfutral

            Your conceptual premise I completely agree with. As for the particulars, you’re arguing semantics.

            Joe

      • Rich

        Ben, what scientific evidence do you have that the application of a 2.35 GHz signal to food drastically increases the chance of getting cancer?

    • Starman_Andromeda

      “Today, 99% of our cooking is done with microwaves” !!

      According to whom?! 🙂 That’s clearly a bogus statement. Or, have you forgotten the stove top, the range, on which people cook? 🙂

      I was surprised that the article didn’t discuss the difference between convertibles and convergibles… especially, the omission of the venerable 3 in 1 or even 4 in 1 copy/scan/print/fax all-in-one printers!

    • Wouter v. Dam

      “Today, we can’t imagine why anyone would want to make a microwave more like an oven. The oven, while extremely useful in limited situations, is inferior to the microwave in most every kind of everyday use.”
      Speak for yourself please.

      I did not think the quality trade-off of my combi-microwave oven unnecessary. At the time that was the only way I could have both an oven and a microwave in my small kitchen.

      Such kind of hybrid products generally do offer a distinctive feature, even if it only really resonates with a niche segment of the market.

      That said, anyone can easily fabricate this particular hybrid on their own. There are tablet casing with keyboards integrated in them for when you’re traveling, and linking the tablet to a regular keyboard is a good option for at home. This kind of freedom actually trumps having to always work with the cramped keyboard that comes with the convertible tablet.

      • FalKirk

        “I did not think the quality trade-off of my combi-microwave oven unnecessary.”-Wouter v. Dam

        You are the exception that proves the rule. How many people own a combi-microwave oven? One percent? One percent of one percent?

        There will always be people who want and need and profit from owning a convertible computer. But they will not be the majority or even a significant minority. Like you and the combi-microwave, they’ll be the exception that proves the rule.

        • Ravi

          Well, as someone who has bought a microwave and an oven in Singapore, I can tell you that combi-microwaves utterly dominate the market – to the point where it is difficult for an expat to find good specialized devices. Just because you don’t understand / agree with a segment doesn’t mean that segment isn’t real and significant.

          Separately, as a Transformer owner, I will say that adding touch to existing laptop and desktop screens is astonishingly natural. I didn’t stop using my mouse or trackpad and keyboard, but I had to actively train myself to realize that I couldn’t touch those screens. I think laptop and desktop screens adding touch as an option is an underappreciated factor that will grow the continuum of convertibles.

  • shockme

    I would agree that Apple was wrong about this if EVERY person purchasing an iPad went on to purchase a hardware keyboard. The question is whether the number of people adding a keyboard (or who would like to add a mouse if they could) makes up a large minority or even a majority of users.

    Windows 8 seems a much more likely candidate for a convertible user since half the value of a convertible is the running of legacy Win32 applications. But that will only work for Win 8 devices not the lighter and more power efficient Windows RT tablets.

    I personally wouldn’t mind one from Apple that ran Mac OS applications, but I find that it is more useful to have both optimized form factors going at once.

  • I wonder which is cheaper to upgrade a single unit item or a hybrid?

    Btw the convertible is a niche market.

    • Paul Wordman

      Here’s a News Article a way to continually upgrade with a Bring Your Own Brain Device

      ClamCase ClamBook BYOB Laptop Shell Uses Smartphone as CPU
      http://ppci.me/b/FXBN

  • Paul Wordman

    Patrick, I don’t think you missed much on this subject and on May 2nd, I wrote an article with a subject sub-head of “List of Fuel Additives Driving Convertible Hybrids”.

    The article titled “Driving Convertibles & Merging Laptops + Tablets = Hybrids” also has a list of form-factor types that are even now coming to market.

    Here’s the short link to the article if anyone is interested – http://ppci.me/b/FXAE

    -Wordman

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