Apple shipped 40.5 million iPads last year, giving it a 62 percent tablet market share, according to the AP. But perhaps more impressive than this near-monopoly is the fevered buzz that precedes an Apple upgrade. Over the last week, tech aficionados have had their ears to the ground (or the Twitterverse) for rumors about the new iPad, unveiled today.
The new iPad, with its host of upgraded features, will be available on March 16, starting at $499. Yet the particular technological upgrades may not matter; what is important is that they're happening at all. While techies drool over the new iPad's super-sharp display, five-megapixel camera, and speedy connectivity, the majority of consumers may simply be drawn in by the Apple brand—and the fact that it's now stamped on something new.
For these customers, "the image has overcome the need for emphasizing any particular attribute," says Pradeep Chintagunta, professor of marketing at the University of Chicago Booth School of Business.
"They don't need to be looking for [new features]," he adds. "They're pretty much guaranteed that if they're buying the latest version, they get the promise of getting the most recent bells and whistles and something that most companies won't be able to offer."
In part, this is a function of Apple being the undisputed leader of the new tablet market. An upgrade not only pushes the technological envelope; it builds the brand and distances Apple from already-distant competitors.
"What they're doing is they're simultaneously competing with themselves and competing with a paranoid vision of what they want to avoid in the medium- to long-term," explains Shane Greenstein, a professor at Northwestern University's Kellogg School of Management.
By upgrading the iPad, he says, Apple improves upon its successful iPad 2 and appeases the company's loyal fan base, which expects periodic updates. In addition, the new iPad tightens Apple's grip on the tablet market by drawing in the large population of people who do not yet own a tablet.
Greenstein adds that Apple's upgrade wasn't driven by sales; iPad 2 sales have remained strong. Unveiling the new product, however, may draw in a new wave of customers.
"They will use the new upgrade as a way to get a bit of publicity and try to get the attention of a new adopter, because they're still in the new adopter phase," he says.
The new iPad launch may bring those newbies into the Apple fold without even having to entice them to buy, explains Chintagunta. Because the market isn't yet saturated, an iPad 2 owner allured by the promise of voice activation can be enticed into buying the new iPad, then passing the old one off to a friend who does not yet own a tablet.
All of the upgrades and brand-building are in anticipation of the day when tablets become as ubiquitous as personal computers. Once that happens, the game will change, says Chintagunta.
"Once the market gets saturated and everyone has a tablet, then it will become a market share game, where buying one company's product takes business away from another company."
When that happens, Apple's large market share and brand loyalty could prove vital at maintaining its success in the tablet market. But the top of the heap is a precarious place to be.
"It's happened that even companies that are very well known for quality can screw up occasionally," says Chintagunta, who points to Toyota as an example. The car company had to recall millions of vehicles in 2009 and 2010 due to unintended acceleration, hurting a trusted brand.
It's hard to imagine a life-threatening iPad malfunction, but the product still has a nearly snag-free record. Apple could remain the top tablet seller for years to come if it can maintain that record. It's a tall order, but it's the price of being at the top.