Goldman really likes its new iPad | FT Alphaville

Goldman really likes its new iPad

Apple’s stock took a beating on Tuesday, after reports that the iPhone 4’s ‘death grip‘ issue is a hardware problem sparked pressure for a product recall:

Unlucky timing then for what was a frankly ecstatic note on the same day from Goldman on the stock market implications of the iPad.

Yes, really.

Goldman’s argument was — how can we put this? — artfully simple, as it’s based on the Five C’s of user experience, apparently:

1. Consumption – iPad focused squarely on information consumption versus information production: At its core, we think the iPad’s industrial design suggests a radical departure from previous PC-centric designs. The very idea of a device that looks like “just a big screen” suggests what users should do with the device – namely consume information, with limited ability to manipulate it. The lack of a physical keyboard suggests that the primary purpose of the device is not for inputting large amounts of information, but instead selecting among options, or performing light editing using a soft keyboard.

2. Content – iPad relies on tight integration with content sources: By linking the device directly with its iTunes and App Store products, Apple has created an easy-to-use, direct conduit between users and a vast library of content that is custom-tailored for the iPad (including movies, TV shows, music, e-books, magazines, games, and productivity applications) – as well as the full spectrum of content currently available on the internet.

3. Connected – Multiple options ensure the iPad is connected to the internet: By integrating options for both WiFi and 3G connectivity, Apple has helped ensure that users have constant access to the content sources described above. We would contrast this to the existing situation in PCs, where the penetration of 3G connectivity remains very low, and the amount of setup required for WiFi (in terms of steps to complete and complexity of the configuration process) remains relatively high.

4. Constant operation – iPad is an “instant on” device with all-day battery life: One of the most readily apparent differences between the iPad and notebook or desktop PCs is the iPad’s long battery life, which at 10 hours is 2-5 times longer than a notebook (depending on screen brightness). In addition, the iPad allows the user to “turn on” the device instantly – within 2 seconds – and begin using it immediately. This is in sharp contrast to existing PCs, which typically take 15-60 seconds to resume from a standby or sleep state. We believe this makes the iPad more responsive to a user’s spontaneous needs for information – such as checking the weather, a movie time, or sports scores.

5. Commerce – Apple’s ecosystem ensures that users are always “ready to buy”: By fully integrating a user’s payment profile information for iTunes, Apple removes the “barriers to buy” for consumers. In other words, by streamlining the purchase and delivery experience to a single click for nearly all types of content, users are always “ready to buy,” and are able to act on their impulse to buy much more directly than if they were required to input credit and billing information with every transaction.

Nice to see all those CFAs being put to use. The background to all this enthusiasm of course is that Apple has already done the profit machine trick with the iPhone:

Well, unless there is a pesky recall of hardware, that is…

But back to Goldman’s excitement for the iPad. The bank reckons that tablet thingies like it will eventually cannibalise the market for (and makers of) netbooks and laptops. Bizarrely enough, Goldman even asked 90 hedge fund CTOs about their tablet plans:

If only all analyst reports were this fun. Well, this one’s not so fun for Microsoft — which was the chief stock panned in the note, because of ‘risk from iPad traction’.

Yes, really.

More fun for London-listed ARM though, which makes chip thingies for the iPad. Shares in the company were turbo-boosted on Tuesday, apparently on renewed rumours (often rebuffed in this parish) of an Apple takeover:

Call it the iPad Effect, or something. Full note in the usual place.

Related link:
2010: The Year Apple Enters a New Golden Age – Bullish Cross
Apple, Google and Microsoft sued over patents – FT
Short ARM tactics – FT Alphaville