Despite impressive Q4 results, Steve Jobs went to great lengths to justify Tablet sales and to kill rumours of the 7 inch ipad. The talk appears to be targeting the two nearest competitors – Samsung Galaxy Tablet and RIM’s BlackBerry PlayBook who have both launched 7 inch tablets. Combine this with Apple missing the analyst consensus figure with sales of 4.19m units (against analyst estimates of around 4.7m) and there appear to be interesting undercurrents to the tablet category as a whole.
Here are my thoughts with some questions I still have. Comments welcome:
Firstly, the figures. At 4.19 m sales, this represents a quarter on quarter growth of 28 percent. So, that’s good in any case despite the consensus predictions of the analysts.
Secondly, the argument for 7inch vs. 10 inch relates to screen size. Steve Jobs says that “The screen measurements are diagonal, so that a seven-inch screen is only 45 per cent as large as iPad’s 10-inch screen.”. In my view, this is an important factor but not the crux of the argument as I discuss below. In other words, focusing on only the screen size may be a red herring
As a category, tablets are not new. They have been around for a while with little success. This time round, there is a crucial difference with the iPad i.e. iPad is not just the device but also comes with content.. This sounds obvious but it makes a big difference and its a hard strategy to execute as I discuss below.
Late last year, Wired claimed that 2010 may be the year of the Tablet. This was based on two observations:
1) Subscription-based devices displaying newspapers, magazines and other media will be the main drivers for tablets
2) The adoption of a new business model much like phones today where the digital media content subscriptions will subsidise the device.
Most people would agree that, to some extent, this was a bit of wishful thinking and in the case of the magazine industry, clutching at straws for their survival. But nevertheless, content is the key here and we have to analyze not just specific devices and device categories(such as tablet screen sizes) but rather device+content combinations.
So, the real question has to be
1) What is the ideal content type for the devices? i.e. which content type is ideally placed to be consumed by the customer with the best possible experience? So, I am saying that – Content and device must be seen together for any analysis(including Steve Job’s analysis) to be relevant
2) How does that experience compare with other device+content combinations from the customer perspective
Based on this view, here are some thoughts and unknowns:
1) The iPad is primarily seen as suited for magazines. Of course, it could also be used for other content types like books etc. Magazine publishers have adapted to include features such as archives which do add value for subscriptions. There is now also a propensity to pay for content as demonstrated by iPhone apps. This combination i.e. iPad + magazine is the key driver for the iPad. Although this model remains unproven, it is still the best bet so far and the most critical element in the success of the iPad
2) The content industry has got wiser to Geeks bearing gifts! Most people attribute the success of the iPhone to many factors but they forget iTunes. iTunes came from iPod and iPod came under the spectre of Napster. Napster is relevant because content producers had a simple equation: 99c > 0c i.e. option to 99c was free. So they chose 99c. Since then though, content producers have become wiser. From movies to magazines to books, they have resisted attempts by the tech industry (especially Apple and Amazon) to set prices for their content.
3) The success of the kindle demonstrates the device + content theory. Kindle is ideally suited to read books and Amazon has good content distribution for books. So, kindle sales continue to show traction even if Amazon is not fully transparent about numbers . Barnes and Noble also seem to be going down the same route with the nook colour reader
4) The iPad meanwhile has some limitations as a book reader since it is heavier to hold up unlike other ereaders.
5) Apps for Tablets could be a red herring (in relation to content) because unbranded/long tail Apps have consistently demonstrated the ‘first in category’ wins. This is good for the Long tail but does not really make a difference to tablets since they are primarily consumption devices
6) For the same reasons, much as I am an advocate of the Open ethos, if we view tablets to be mainly consumption devices, then Openness does not matter as much (in comparison to the experience the device provides for content)
7) Again for the same reason, deep integration across the stack matters for consumption type devices. So, deep integration is good for tablets
8 ) Google’s Android strategy has yet to be played out and will be known only after Froyo. But the principle of a generic (Android) device will not be enough unless it is packaged with a content type if the above analysis is correct
9) Do books /magazines need a community? i.e. should a community come packaged with each book? Yes. Does it need open devices (by this – I mean non integrated/generic devices)? Or can a community be leveraged on the Web? Too early to say.
10) It is not clear what content type would suit the 7 inch tablets? Only RIM has so far come out in defence of the 7 inch format . But even then, no one indicates what type of content is ideally suited for the 7 inch screens. This is especially relevant in the context of customer choice especially Smart phones.
If no specific content type is found, I suspect these devices may be similar to many of the last generation devices(hardware only). In my mind, price alone is not a good enough differentiation.
So, if the above analysis is correct, the Steve Jobs is probably right mainly because I cannot see any distinct content type (books, magazines etc) ideally suited for the 7 inch tablets
@erichhugo suggested that a new format may be in order here(like Commando comics). As a kid I read them and I agree with Erich. Thanks
Commando For Action and Adventure, formerly known as Commando War Stories in Pictures, and colloquially known as Commando Comics, are a series of British comic books that primarily draw their themes and backdrops from the various incidents of the World Wars I and II. The comic, still in print today, is noted for its distinctive 7 × 5½ inch, 68 page format that became a standard for these kinds of stories. It has remained more popular than many other British war comics, and some would say British comics in general, despite its simplistic stories and simply sketched black and white artwork, with only the covers in colour.