• by Mark Walsh  @markfwal, May 3, 2010

Apple today is trumpeting passing the million-sold milestone for the iPad in less than a month, with demand outstripping supply and the company working hard to get "this magical product" into the hands of more consumers, according to CEO Steve Jobs.

But it looks like the magic wears off in one crucial aspect in the 3G version of the iPad released Friday. While the 3G iPad is also off to a strong retail start, with an estimated 300,000 sold through Saturday, early reports on its video capability aren't promising. Compared to the Wi-Fi version, the quality of video-streaming varies depending on the app.

Ed Baig of USA Today called YouTube videos on the 3G iPad "dramatically inferior" to watching them on the Wi-Fi-only model. According to Baig, Apple made the decision to downgrade resolution on YouTube so users get continuous playback in more places as opposed to stuttering stops and starts. That doesn't sound like much of an improvement when people will compare video quality on the iPad to what they get on the desktop.

Videos on the Netflix app were better but also streamed at a lower resolution. Reviewers also pointed out that all sources can't be streamed on 3G, namely the ABC media player. That's because ABC doesn't currently support cellular networks. You'll have to catch the last episodes of Lost on the Wi-Fi iPad or elsewhere.

Further, video quickly eats into the 250 MB of wireless data AT&T charges $15 a month for. That amount powers about 35 minutes of YouTube videos or a few thousand Web pages and typical email use. That makes the $30 monthly unlimited plan effectively the only option for watching video on the 3G iPad.

Consumer Reports goes even farther, saying the new version is only useful for Web browsing and email. "Unless you want to spend another $30 a month to browse on a large screen, we recommend a pass." That's not to mention the additional $130 consumers have to cough up for the 3G model for continuous connectivity.

The problem is, video isn't just a nice extra feature on the iPad, it's arguably the device's killer app -- one of the chief benefits its larger screen delivers over the iPhone. Media companies, of course, are betting on the iPad as a game-changign media player. Saying you can't get video on the 3G iPad is a little like saying you can't get music on an iPod.

AT&T has said it expects the iPad will mainly be used on Wi-Fi because people don't want to add another wireless subscription. But the 300,000 3G iPads sold so far is about the same total the initial Wi-Fi version had in its first day. AT&T's history providing wireless data service for the iPhone via its 3G network doesn't inspire confidence about video getting better anytime soon on the 3G iPad.

For now, ramping up production of the Wi-Fi iPad looks like the best hope for video on the Apple tablet. Prospective iPad buyers may have to decide what's more important to them: watching video or constant Web access. Unless Apple starts issuing home and away iPads as a package deal.