Explaining Southern California's economy

Raspberry Pi and the advent of the $100 tablet

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Apple's new iBooks 2 app is demonstrated for the media on an iPad at an event in the Guggenheim Museum January 19, 2012 in New York City.

Over at Fred Wilson's AVC blog, he writes about the gangbusters success of the Raspberry Pi, a very rudimentary Linux-based $35 computer that has no display or keyboard but can be plugged into a TV. And he comes to two striking conclusions, in as few words as possible:

When the cost of tablet displays comes down, which they will, I think we'll see sub $100 tablets. And I suspect that will happen in the next 3-5 years.

For markets that can be end to end digital, like education, this is a game changer.

Let's tackle his first point: a sub-$100 tablet. This is a disaster for Apple (keep an eye out for my post later today about how Apple can and can't get to $1,000 a share). Cupertino needs to defend its pricing model at all costs. As I've written before, price is the most important thing for Apple — not innovation or design. In fact, I'd argue that pricing, specifically pricing for a 30-percent profit margin, is Apple biggest innovation. At least of the Steve Jobs Second Act Apple.