iPad's Success Impacts Competitors, Supply Chain

The Apple iPad -- and a tidal wave of wannabe devices that are sure to follow -- will have a major impact on computer design and manufacturing, according to iSuppli. The market research firm said that tablet design and manufacture should be approached by supply chains as a unique market, distinct from PCs and smartphones.

The thesis from the supply-chain-oriented firm is built on the fact that the iPad is assembled in a very different manner: The user interface, not the motherboard, is the starting point, said Andrew Rassweiler, director and principal analyst for teardown services at iSuppli.

"This approach is in the flavor of Apple products, in that user experience comes first. You can see it in the costs. The display and touch screen represent a disproportionate amount of the bill of materials," he told InternetNews.com. "Instead of starting with [a] chipset and motherboard, you start with, 'How does this feel to [the] client and how can we do that cost-effectively?'"

But in the case of the iPad, because it introduced a new and very large touch screen, there were financial challenges. Rassweiler said that for a while, yields for the iPad screen were very low and only one supplier, Wintek in China, is qualified to make them. Apple had trouble meeting iPad demand and was forced to delay the U.S. and European launches by a few weeks.

"To date, no one has produced a touch screen at that scale. So it created a supply-chain bottleneck in and of itself. So if others want to create that experience and go to Wintek or another supplier, they are going to run into supply issues, and if you go to Wintek, they have their priorities, which is their biggest and most well-known client," he said.

The main lesson that can be learned from Apple is addressing the total experience, said Rassweiler. Almost all of the components in the iPad, as well as the iPod, iPhone and Macs are available on the market. It's not about the pieces, it's making them work together, he said.

"To this day, I would argue most smartphones and iPhone killers fall short on the market in terms of the end user experience," said Rassweiler.

iSuppi projects shipments of the iPad to reach 7.1 million this year and 20.1 million in 2012. The firm also predicts there will be a host of competitors, including products from Google, Dell, Asus, and Hewlett-Packard.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.