Wednesday, July 20, 2011

iPad sales near 30 million: is the tablet market mature enough to sway critics and hesitant publishers?

I would think that yesterday's quarterly earnings report from Apple was not very good news for a lot of media observers. Yes, there are those who are radically anti-Apple, such as those behind a certain business news aggregation website, but that is not who I am thinking about.

Since its launch in April of last year, there are those who have been advising their media clients and online readers to hold back or ignore totally Apple's new tablet. One media guru who is well-known and advising a number of newspaper clients even proudly "reboxed" his iPad and as far as I can tell, had not written about the iPad since its launch. The iPad, you see, simply doesn't exist, and he'll be damned if he'll retract his initial judgement.

But if my math is correct, and Apple isn't playing games with its financial reports, the company has now reported 28.7 million iPad units sold. Meaning that as of this morning, one can safely say that they market for publishers wishing to create tablet editions for iPad owners has probably exceeded 30 million.
Is 30 million a big enough market for publishers to consider mature enough to make their investments?

Comparing some numbers might be helpful: total newspaper circulation is a bit hard to define because of the size of some papers, and the basic definition of what is a newspaper – do you include free weeklies, etc. But adding up the largest papers one sees that the market in the U.S. is around 48 million, according to the World Association of Newspapers. In China that number is double. But these numbers may include some duplication, and certainly leave out a lot of specialty publications. More importantly, they are counting circulation not audience.

The number that most newspaper publishers would be most interested in is penetration. Exactly how many people in the Chicago area, for instance, own and use iPads?

Newspaper publishers, unlike many book and magazine publishers, need market penetration. But publishing to tablets does not negate print distribution, only adds to it. Better yet, costs do not increase much as distribution grows. Unless a publisher has signed up with one of those third party vendors that wants to charge of the number of downloads (and why would one do this?) the number of app downloads is pretty much irrelevant. The only thing a publisher must consider as their circulation grows digitally is server capacity and reliability.

The lack of a good Android tablet competitor has probably slowed the growth of tablets somewhat. But Samsung, for one, is marketing their new offerings hard and will probably see some modest results – modest, that is, when compared to Apple.

My advice has remained constant through the first five quarters of sales: now is the time to begin publishing tablet editions, but a radically irresponsible level of investment will not be rewarded now, nor in the near future. But the market for tablet publishing has grown faster than most optimistic forecasts, and no doubt will continue to grow though the next two quarters.

Remember this: Apple sold over 9 million iPads in a quarter that did not include the holiday shopping season. No doubt that Apple's Q1 2012, which includes Christmas, will be incredible (especially if they decide to launch a new version in time for the holiday).