iPad sees off old partnerships

Specifics of Apple's iPad launch sent shock waves through a number of industries that see their futures linked to mobile internet devices.

The iPad uses the A4, a processor developed by Apple's new in-house semiconductor team.

While Apple's iPad launch titillated consumers, specifics of the announcement sent shock waves through a number of industries that see their futures linked to mobile internet devices. For the microchip industry, the launch heralded the entry of a new competitor in the market for powerful, energy-efficient chips for mobile devices. The iPad uses the A4, a processor developed by Apple's new in-house semiconductor team, which came into existence when the company acquired PA Semi, a small microchip designer, in 2008.

Major microchip companies including Intel, AMD and Qualcomm have made the mobile device market a high priority in recent years as demand for powerful hand-held internet devices has boomed. Apple's opting to use its own chip is a blow to these companies, analysts said. The chip is significantly more powerful than those on offer in other high-end mobile devices, and Apple's claim of 10 hours of battery life for the iPad means the company has made major advances in energy efficiency.

The nature of the chip, which semiconductor analysts say appears to be one of the best in the industry, suggests Apple is following through on a pledge that Tim Cook, its chief operating officer, made in a BusinessWeek interview last year. "We believe that we need to own and control the primary technologies behind the products we make," he said. Observers had long speculated that the iPad would include a new electronic distribution system for books, magazines and newspapers, helping the market transition to a paid online economy much as Apple's iTunes Store has done for the music business.

But the launch of the iPad was notable for the lack of such a system, promising only a method to purchase electronic books from major publishers. While demonstrating the device, Steve Jobs, Apple's chief executive, made a point of browsing the free websites of prominent newspapers and magazines, commenting on how well the iPad displayed the pages. And mobile network operators, which have historically held a powerful position relative to device manufacturers, were also pushed to the margins by Wednesday's announcement.

The launch and global roll-out of Apple's iPhone was driven by partnerships with such operators, who prepared special plans and often enjoyed exclusive access to the device in their market. In contrast, the iPad will be sold globally, independent of such networks, and not locked to any specific operator. And the iPad uses a new format of SIM card, known as the microSIM, which is about half the size of the standard cards in use by mobile phone operators around the world.

No network outside of the US currently uses the format, meaning operators including Etisalat and du will need to invest in the new SIM format to be able to offer mobile internet connections for the iPad. @Email:[e-mail]