Tuesday, January 26, 2010

Without scale new Apple tablet can not lead the mobile revolution, can only be a bit player

Not too many companies would schedule a major product introduction on the same day as the President's SOTU speech, but I don't think Steve Jobs is sweating it.

So rather than post a series of stories on the last of the tablet rumors, I've decided to post one story and update it throughout the day.

First thought: scale. Apple may produce the coolest smart phone, and have a dedicated consumer base of Mac fanboys, but Apple's market share is still dwarfed by Microsoft (OS) and the the major computer manufacturers. Even its iPhone, while a major player as a brand, still only has a less than 30% share of the smart phone business -- smaller still when considering all cell phone sales, of course.

This doesn't concern Apple in the least because they don't operate as a mass market company the way Dell or Microsoft does. Apple likes to be a market leader in certain select areas, and maintains nice margins. Microsoft may think it was smart when it produced their Laptop Hunter ads, but Apple must have smiled knowing that positioning themselves as the Nordstrom in a world of Kmarts was perfectly all right with them.

But there is one area where Apple has achieved scale: the iTunes store. The iTunes store changed the way people consume music. Apple did not invent digital downloads, far from it, but the iTunes store was the perfect answer at the perfect time for music labels fearful of the growth of illegal downloads. How can EMI compete with Napster and Bit Torrent? Why not create a legal download service?

Apple likes to point to the iPod as a transformative product, but the mp3 player existed before Apple introduced the iPod, but the combination of a cool new device with a way to buy content . . . The Perfect Thing.

So Wednesday Apple is set to do for publishing what it did for music? Apple as the savior of American (and World) publishing?

My hope is yes, but my brain says . . . ah, I don't know.  Here's why: you can use the iTunes store to download and play music, movies and the like onto your computer -- Mac or PC -- and you don't need an iPod or iPhone. The store makes this happen. Yes, you need an iPhone to take advantage of the iTunes app store, and Apple is raking it in selling apps, but that is still a small part of the store's powerful user base compared to the music store.

For a newspaper like the New York Times or a magazine like GQ, reach defines the attractiveness of the market. If a million people buy Apple new tablet they may believe that porting their publications to the new device makes sense (in fact, they have already made that bet, if rumors are to be believed).

But what about The Aberdeen Times or The Big Timber Pioneer? If tablet reading of newspapers or trade magazines is going to be the next big thing, reach and penetration will have to occur. Not only will it have to be true that millions of consumers want to read using an e-reader/tablet, but the phenomenon will have to reach into middle America. You want to publish a woodworking magazine on the tablet? How many carpenters will own a tablet in a year or two? 

If the Times ports its newspaper to the new Apple tablet using html, or Flash, or some other common platform, then this may simplify things.

The common platform for music is the mp3. Apple actually sells its music in a different format -- m4a. But the music can be recoded to the mp3 format for playing on other devices, or converted to .aiff in order to burn the music onto a CD. The music is portable, sharable and universal. Since it launched the iTunes store, Apple has continued to open things up -- not close them down. Now you can buy music downloads from Amazon, but this has actually expanded Apple's market. By giving consumers more ways to load up their iPods and iPhones, competition has given consumers even more reasons to buy a music player from Apple.

This is what we need in publishing. We already have one universal format: ink and paper. We also have html for web publishing. Will a new publishing format arise with the tablet? Or are we stuck using the same tools we've had for the past twenty years? This could determine whether tomorrow is the beginning of a publishing revolution or simply the continuing of media fragmentation. And that's the last thing we need. Some have warned publishers not to get too close to Apple lest they see their markets taken over, but publishers would be very lucky indeed if a whole new market for publishing content were to arise because of the moves of the company from Cupertino.

Update: Wired has posted a column 5 Features the Apple Tablet Definitely Won’t Have — But Should.

Item number four:
4. Salvation for the Struggling Print Industry
Newspapers have been on the business end of a nasty financial ass-kicking for the last few years. (And don’t make us talk about what’s happened to magazines — please.) A lusty piece of hardware coupled with an innovative, iTunes-based business strategy could make both daily rags and glossies profitable again.

Why it’s a pipe dream: With a rumored $1,000 price tag, we’re betting that even die-hard early adopters won’t be showing up en masse to buy the tablet. Financially, the print industry needs a new mass audience, not a small coterie of dedicated Mac lovers.

Second thought: so why are so many web sites that aren't involved in tech or the media writing about tomorrow's product launch?  Traffic.
Image and video hosting by TinyPic
The Apple tablet has become the next Tiger Woods story -- hard to resist when those traffic reports show a spike! I wish I were in that situation, after all, this has to be at least the tenth story I've posted involving the mystery device. But believe me, when my traffic numbers increase don't you know I would do the same thing in order to see my numbers spike, too!

The best way to spike those numbers is to post a rumor that sounds legitimate, or better yet post a picture that purports to be a leaked view of the actual product.  This blog used the technique when it posted a couple of pictures of the Apple tablet. His readers did not waste much time in pointing out the obvious Photoshop produced fake. Oh well. Nice try.

Update: Not everyone has substituted the Apple tablet story for the ol' Tiger Woods story. Seems the press is not yet through with trying to chase down the world's number one golfer.

Third thought: at what point does electronic media forms over take print as the preferred format (economically)? One of the answers to that has been that when a business model arises that makes New Media more profitable.

But think about this instead: many argue that because renewable forms of energy are better environmentally, one way to make sure the world moves in this direction is to penalize the use of fossil fuels by taxing them. In other words, rather than wait until renewable to less costly than fossil, make fossil more costly than renewable. Get it?

The same thing may be about to happen to print with the consolidation of competition in printing. Bloomberg reports that Quad/Graphics will be buying Worldcolor Press (formerly Quebecor World) thus eliminating another option for publishers.