What are the limits to the iPad's growth?

Credit: jurvetson via Flickr

I spent yesterday at Asymconf, a  day-long event run by Horace Dediu of Asymco. Dediu has a background in engineering and business, including eight years at Nokia, and over the last few years his blog has become well known in certain financial and tech circles for its excellent graphs and analysis of the smartphone industry, with a strong focus on Apple.

It was a very unusual tech industry event. Not a single high-tech company or product was mentioned on stage until after lunch. In addition, the Wi-Fi didn't work and the isolated location -- IBM's Almaden Research Center, in the countryside near San Jose -- was out of the range of most LTE signals. This meant people actually had to switch off their gadgets and listen. And listen we did.

Dediu started the day with a history of California -- the land that nobody wanted, until gold was discovered. Within two lifetimes, "California" as we know it had been created. 

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Session two was a long discourse on the GDP-per-capita of various world powers in the modern era. The charts were arranged on a 1,000-year time axis to minimize small fluctuations and show grand trends, and as he demonstrated, once a country's economy is "switched on" and begins to industrialize, GDP-per-capita grows exponentially. More interesting, it does not level off. It happened with Britain first, then the U.S., followed by Japan and the Asian tigers.

(A side note: at 100 years old, IBM is the only tech company that warranted a line on any chart during this session. Apple, Microsoft, Intel, and even HP are babies on this scale. Google and Facebook are literal newborns.)

All this was a long way of setting up the question: what are the limits to growth? 

In the afternoon, the conversation turned to Apple and its recent stock price slide, including the big drop after its earnings call. The audience participated, and there was lots of talk about Apple's margins, lower-priced iPhones, the competition from Samsung and Android, and how Apple is unique among tech companies because it's a serial disruptor of industries (music, cellphones, PCs) and itself (the iPod mini cannibalized the iPod; the iPad cannbalizes the Mac).

All interesting, but the discussion had a clear consumer focus -- just as Apple's marketing does. The presumption (or hope, from the Apple shareholders in attendance) was that Apple would find a new market or markets to disrupt, like video entertainment, and its explosive growth could very well continue in this fashion.

I think this discussion played the iPad short, particularly in the enterprise.

Tablets are not a new market. They're a classic low-end disruption to the PC market -- the replacement for netbooks. 

Or put another way, within 10 years, almost every single PC sitting in a home or business today will be replaced. If I were Apple, and thinking big, I'd ask very seriously: is there any reason those replacements should NOT be iPads?

Let's see, as a thought experiment...