What Will Apple's New iPad Mean for Third-Party Developers?

Apple has just announced its long-expected tablet device, and it's along the lines of what people expected: a 10-inch iPod Touch, basically. How is this going to impact social applications, especially social games? Essentially the same way that the iPhone, the iPod Touch and other devices already have -- the tablet, called the iPad, will expand the mobile device market. But by how much? We expect the impact to be significant, yet limited by Apple's existing distribution and monetization mechanisms. The combination of features is certainly promising. The app store comes built in. The 10-inch screen means there's more room for sophisticated apps. Wifi (with option of 3G) connectivity means apps can easily build to be multi-user; the data plans, provided by AT&T are also relatively low, coming in at $14.99 for 250MB worth of data per month, or $29.99 unlimited. The price of the device itself is surprisingly low, starting at $500 for the most basic model (no 3g plan and not a huge amount of data storage). Added up, these features make the iPad a device that people can buy relatively cheaply, take most anywhere and use high-quality apps -- a ripe market for third party apps. Video game publishers are already excited. The hardware specifications: - 0.5 inches thick, 1.5 pounds -- "thinner and lighter than any netbook," in the words of Steve Jobs - 9.7 inch IP LCD display - a 1GHz "A4" chip that decodes high definition video for up to 10 hours on a single charge - accelerometer - compass - speaker - mic - dock connector - besides the 10 hours battery life, month of standby life - Wifi - 3G option These features become even more significant when paired with Apple's software platform. For experienced iPhone developers, expansion will be straightforward: Apple has made it so that all 140,000 existing apps in iTunes can function on the iPad, with the option to double the pixel count to better fil the screen. It is also introducing a new software development kit for the iPad. And as a further incentive to developers, it says it will be featuring iPad-specific apps within iTunes -- the main distribution point for iPhone apps. Another obvious positive: The iPad is meant for a wide variety of uses besides being a place for third party developers. Apple has built a new version of iWorks specifically for the iPad, it has created an iTunes-like store for books -- hi, Kindle -- and it has worked with newspapers to help them create tailored versions of their content for the device. Of course, the device will also sync seamlessly with Apple's applications on its other devices -- contact book, calendar, mail, etc. All of these factors will make the iPad more relevant to people, in turn making the iPad a better way for people to find third party apps. Limitations The market for this sort of device is only half-proven, with Amazon's e-book reader, the Kindle, and netbooks providing the closest examples of successful products. However, the device looks very impressive, and on the whole we expect it to do well in the market, especially as Apple lowers prices from here on out, as it has done with other hardware. Apple thinks there will be "a whole 'nother gold rush for developers if they build for iPad." And we agree that similar to the iPhone SDK, the device will create new opportunities for third party developers. Specifically for games, monetization should also increase because they'll be able to start building free apps for the iPad that can integrate for-fee virtual goods -- the result of an iTunes rule-change last fall, meaning the first generations of iPhone apps did not effectively have this option. However, the usual downsides to development for iTunes are still present: the iPad lacks a "social graph" of active human relationships and doesn't have the built-in communication channels that come with it. The result is that there are limited ways for developers to find new users. Besides being featured in iTunes, methods for app growth include using social platform services provided by Facebook and MySpace, or gaming companies like Ngmoco, Scoreloop and Aurora Feint, or advertising and press attention. Meanwhile, Apple also restricts important ways of making money from apps -- specifically in-house virtual currencies within games. Many developers will likely build for mobile devices in the coming year -- and we expect many to do things like integrate Facebook Connect so you can play a game with Facebook friends. So far, though, no third-party distribution service has helped developers reach anywhere near the size and revenue run-rates of applications on social networks, as we detail in our latest Inside Virtual Goods report. We expect iPad applications to do well overall, but as the device is an extension of the iTunes platform, we expect its success to be hindered by Apple's ongoing limitions on distribution and monetization. [Thanks to the great live blogging by Engadget, Gdgt and TechCrunch. Screenshot credits visible in the watermarks.]

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What Will Apple's New iPad Mean for Third-Party Developers?

Eric Eldon

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