Saturday, October 1, 2011

Take Two Tablets and Call Me in the Morning

So, we find ourselves in the midst of the tablet wars, by which I refer to the competition forming around the new category of device that Apple introduced with the iPad last year.  Does this sort of thing give you a headache?

Well the classic old doctor's advice for what ails you is conveyed in the title of this post, the two tablets being aspirin pills, of course, and the clichéd response expressing the idea that doctors don't really pay attention to individual symptoms, instead giving a one-size-fits-all response, are dismissive of patient complaints, assuming that they are mostly minor discomforts (if not psychosomatic illnesses), and (this will take us back to the long long ago) unwilling to get out of bed and make a house call in the middle of the night.

But that's besides the point, and in this instance the two tablets are Apple's iPad, and the new device introduced by Amazon, actually a new version of their Kindle, called Kindle Fire, the original Kindle having been introduced in 2007, long before the iPad, so perhaps I mispoke in the previous paragraph, except that the Kindle was introduced as an e-book reader, a very specialized kind of device, rather than the more general purpose gadget that the iPad is.  The iPad also represents a separate line of technological evolution, as it evolves out of the iPod and iPhone, and is essentially an enlarged version of those devices.  So I suppose this is a case of convergent evolution.

And that is an interesting point, because most of the rivals to the iPad so far have been enlarged versions of Android mobile phones, Android being the operating system developed by Google to be used by non-Apple smartphones.  There are other operating systems as well, of course, including the good old Palm Pilot OS (in the process of going extinct), the Blackberry OS, and a Windows Phone OS, but Android has the lion's share of the market.  As the owner of a smart phone using Android, I can tell you that I am not impressed, as it's awkward and clunky, the interface not as well designed as Apple's, not as smooth either, and the apps (that's short for applications or programs) nowhere near as good as those for the Steve Jobs product.

So, it seems that none of the other tablets have really caught fire, and taken its place as a true rival and competitor to the iPad, but now there is speculation that the Kindle Fire might just fire up the consumer marketplace.

So, with all this buzz buzzing about, I was contacted by Bloomberg (not the mayor, although Mike, I'm willing to make time for a chat if you ever feel the need) for my take on the Fire storm.  So I got a quote in on a news story that appeared on Bloomberg's online site under the title, Amazon Bargain Tablet to Grow Market Without Being ‘IPad Killer’ and also in Bloomberg's Business Week under the same title.  The byline goes to Danielle Kucera and Sarah Frier, by the way, and the story starts like this: Inc.’s Kindle Fire is poised to help Chief Executive Officer Jeff Bezos lure bargain tablet-computer shoppers. It’s unlikely to dislodge Apple Inc. from its perch at the top of the market.

Let me interject right here that if anyone has  the vision to match wits with all that Steve Jobs has wrought, I think it's Bezos.  Amazon has proven to be enormously innovative in their approach to sales, for example, introducing forms of social media functionality to their website well before "social media" was a known phrase (for a vision of Amazon's potential, based on a partnership with Google, see the EPIC 2015 video, which I included in a post past year, The Tree of Knowledge of Google and Evil).  Anyway, back to the story:

The Kindle’s $199 price, at less than half the cost of Apple’s most affordable iPad tablet, holds appeal for consumers who want a low-priced machine for reading books and watching movies, said Herman Leung, an analyst at Susquehanna Financial Group. Consumers who want a bigger screen or the ability to chat over video will probably stay loyal to Apple, Leung said.
Bezos may ship as many as 4 million units of the Kindle Fire this year, in part by undercutting Apple, said Brian Blair, an analyst at Wedge Partners Corp. in New York. Still, Amazon will need to release a larger version with a faster processor to siphon share from the iPad, which according to EMarketer Inc. had 85 percent of the market at the end of 2010.
“I don’t see this as an iPad killer,” said Leung, who is based in San Francisco. The Kindle Fire “caters to a much lower-end consumer. A bigger screen and a more powerful processor over time -- those are the two main things that will enable them to get there.”

This point of view is one I also expressed in my interview, stressing that there is a market for those who can't afford or don't want to spend so much on a tablet, those who are unsure of tablets in general, or what they are good for, and for those wanting to buy them for children who might be prone to losing or breaking them.  Okay, so back to the article:

The Kindle Fire will have a 7-inch display, smaller than Apple’s iPad, the company said at an event in New York yesterday. The device will run on Google Inc.’s Android software and have a dual-core processor, Seattle-based Amazon said. The Kindle Fire offers Wi-Fi connectivity and comes with a 30-day free trial of Amazon Prime, the company’s $79-a-year membership service that includes streaming video and free two-day shipping.

I do think that the ability to connect through mobile services is important, as WiFi is hardly ubiquitous (let alone free WiFi), and mobile services (e.g., along the lines of cell phone service) may well be the true moneymaker in this set up, where the devices can be sold at a discount or even at almost no cost to get people to pay for the connection, the practice we've seen used by cell phone carriers.  In Amazon's case, it may be worthwhile to do so to get consumers to pay for Amazon Prime, paying for the streaming content that comes with Prime, and for the additional content that can be purchased through Amazon.  Okay, we're on to the next section of the article:

Tablet Market Growth

Amazon is angling to grab a piece of a market that Cambridge, Massachusetts-based Forrester Research Inc. predicts will grow 51 percent a year through 2015. The company’s shares rose yesterday on optimism that the Kindle Fire will avoid the fate that befell tablets from Hewlett-Packard Co. and Research In Motion Ltd., which failed to gain traction with consumers.

Amazon gained $5.50, or 2.5 percent, to $229.71 on the Nasdaq Stock Market. The stock has risen 28 percent this year.

The company’s next device must offer more built-in features, such as video chat, an upgrade to the dual-core processor and the option of a bigger screen, said Wedge Partners’ Blair. The Kindle Fire also lacks a microphone or a connection to a 3G wireless network.

Amazon will have to beef up its application store after the company said one offered by Google won’t be available, said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco.

I also said that communications would be important, no surprise there given that it's my field, and the ability to offer some equivalent of Skype or Apple's FaceTime, and otherwise engage in two-way interaction would be important.  And I suggested that for the future it would be important to offer consumers some choice in the size of the screen, some preferring smaller tablets, some larger.  Looking towards further technological advances, a screen that could potentially fold out, like a paper map (the kind we used to get in gas stations and from AAA, before we turned to GPS navigational systems like Garmin, and those included on our cellphones) would be desirable, or one that could be expanded and shrunk in the same way that we do that with the virtual windows that we open up on our computers.  Now, on to the next new section of the piece:

IPad’s Advantage

“The iPad looks a little more elegant to the eye,” Sebastian said. “The iPad’s more powerful, and when you restrict it to Amazon’s Android app market, you’re missing a lot.”

Apple leads the market for mobile applications, the downloadable software that lets users access games, tools and other information. It boasts more than 425,000 -- more than 100,000 of them custom-designed for the iPad.

While the new Kindle will add to Amazon’s sales, estimated by analysts to rise 32 percent to $64.6 billion in 2012, the company may disappoint if the tablet doesn’t bring in revenue quickly, Steve Weinstein, an analyst at Pacific Crest Securities in Portland, Oregon, said in a note this week.

Sales of Amazon’s electronic books, movies and music on the device may help make up for the narrower profit margins that are likely to result from the low price, Blair said. He expects Amazon to sell out of the device this year.

And this is key.  Look to the software, the content, that's the difference that will make a difference for the marketplace.  The medium may be the message, but most people are distracted by the content, and consumers make purchases based on content more often than not.  And that's what Amazon has that no one else can offer, content up the wazoo! And the means to deliver it.   Okay, next section please:

‘Powerful’ Kindle Fire

“I don’t think it’s a question of stealing customers yet,” Blair said. “But it’s an iTunes-like offering of content, and that’s powerful. The number of people who really want the front-facing camera are going to be small relative to the people who want to pay $199 for this thing.”

Amazon may spend about $250 on each Kindle Fire, for a loss of more than $50 per device, Gene Munster, an analyst at Piper Jaffray Cos., said in a research report yesterday. That compares with a $350 cost of production for Apple’s tablet, giving the Cupertino, California-based company a profit of $149 per unit.

Apple started selling the original iPad in April 2010, and introduced the iPad 2 in March of this year. The touch-screen device, which has a 9.7-inch diagonal display, is already Apple’s biggest source of revenue after the iPhone. The company shipped 9.25 million iPads in the quarter that ended June 25.

Two other tablets have failed to make a dent in Apple’s dominance. Research In Motion’s PlayBook, introduced in the second quarter, shipped 200,000 units, less than half of what analysts predicted. Hewlett-Packard, meanwhile, discontinued its TouchPad in August -- only about a month after its debut.

Once again, the point is that it may be worth even taking a loss on the device, given the potential profits in software sales (by which I mean, not applications so much as music, videos, books, etc.).  But isn't that amazing, that the iPad is second only to the iPhone as Apple's biggest source of revenue? What isn't said outright is that the iPad is a bigger source of revenue than Apple's computers.  And that does go back to the view expressed by Steve Jobs, that the tablet is a replacement for the laptop, maybe even for the personal computer.  Now then, on to the last section, and finally to my quote:

‘Bad for Nook’

Amazon’s Kindle Fire could also take share from Barnes & Noble Inc.’s Nook Color electronic reader, which sells for $50 more and lets users buy and read digital books, Blair said. Barnes & Noble, based in New York, fell 91 cents, or 6.9 percent, to $12.30 yesterday on the New York Stock Exchange.

“This is going to have more content outside of just books, and overall better content at a better price point,” he said. “This is bad for Nook sales.”

The Kindle Fire will expand the tablet market, rather than take customers from Apple, said Peter Misek, an analyst at Jefferies & Co. in New York.

That’s because Amazon has created a new part of the market by targeting bargain hunters, said Lance Strate, a professor of communication and media studies at Fordham University in New York.

“With the other Android products, what we get is kind of a cheap imitation of the iPad,” Strate said. “What Amazon has is something is different, with a separate set of advantages and disadvantages. You’re not going to beat Apple at its own game, but Amazon can create its own.”

And if they had to pick just one thing that I said in my interview, that wasn't too bad.  What Amazon offers is its amazing library of content, and its innovative use of the cloud to access it.  Kindle books are accessed online, Amazon Prime has its streaming content accessed online, and their new music service has the content stored in the cloud, that is online on Amazon's servers.  And that's not to mention Amazon's algorithms, through which they are able to suggest new content to us based on our previous choices.  Amazon is coming from a very different place than these other companies, and the Kindle Fire represents a new species that can create its own niche, one that may eventually encroach on Apple's. 

By the same token, I don't think that the Kindle would have survived otherwise, as it was too specialized to capture the interest of a large part of our post-literate population, which is why I wouldn't hold out much hope for a dedicated device like the Nook.  So, this is not just an opportunistic move on the part of Amazon, but one born out of the most basic of survival instincts.  Survival of the fittest, Darwinism of sorts as applied to technology, but of course this is also a case of intelligent design, no blind watchmakers at work here. 

I do think tablets are an important development in new media, simply because laptops, no matter how thin and light, are awkward to use as reading devices.  When you think about how we read a book or magazine, we hold the page up relatively close to our eyes, certainly closer than we typically look at other things in our environment.  And it's not so easy to do that with a laptop screen. 

This was brought home for me several years ago when a trip to the optometrist resulted in a prescription for progressive lenses which, he explained, are adjusted for three different distances, as opposed to bifocals which only are designed for reading and distance.  Computers have introduced a third, middle distance, further away than other reading material, but closer than the distance viewing associated with driving or watching a movie of TV program.  The tablet lets us bring the computer screen back into reading distance. (And personally, I don't like the progressive lenses myself.)

To connect this to Edward T. Hall's observation that there are four distances common to human interaction, intimate, personal, social, and public, reading brings text into our intimate space, or to the border between intimate and personal.  Distance viewing puts objects in social and public space.  We relate to the computer largely in personal space, as we would relate to another human being in informal conversation.  That says a great deal about our relationships to our computers.

So, my point is that, for reading, even reading blogs and text on websites, the tablet makes much more sense than the laptop or desktop computer, and this also holds true for watching video on the small screen.  Although it is nice to have the screen stand up on its own, as is the case with the laptop, it is much more important to have the freedom to adjust the angle of viewing easily, as we can do with handheld devices, given the fact that changes in angle affect the perceived brightness, quality and intelligibility of screen content.  The tablet format also works well for recording sound and video, as we have already seen is the case for cell phones, although the addition of some kind of stand to prop it up (like the HTC EVO) would be desirable.

The only reason for the clam shell laptop is the keyboard, but perhaps you've noticed that keyboards have become more and more virtual over the years.  Sit down at an older computer, and you realize how computer keyboards once were designed to mimic electric typewriters, which in turn were based on the design of the manual typewriter.  Whether the virtual keyboard on a touch screen can take the place of even the slightly raised keys of current laptops and desktops remains to be seen, but for those of us who know how to touch type, it may be that the main issue is having a full size keyboard, and the vibrate function might possibly provide enough haptic feedback to make it work.  Maybe. 

Or maybe the tablet may be the technology that finally frees us from the thrall of the 19th century QWERTY keyboard layout.  Maybe.  I suspect that the desktop computer at least will still be the preferred option of professional typists, and many writers.  But for taking notes, doing email, status updates, even blog posts, and maybe more, the tablets may be good enough.  And who knows, they may also signal a return (or retrieval, to use McLuhan's favored term), of handwriting, the scribal document, albeit one working in tandem with software that recognizes the script and translates it into a digital print format for further editing and word processing.

Whatever the future holds in store, it's clear that the tablet revolution is only beginning.  Remember that Moses had two tablets too, and that started another kind of revolution back over 4,000 years ago.  But not before the first two tablets were broken and discarded, and new ones took their place (and were themselves eventually replaced by scrolls).  And that all took place after the burning bush, another kind of fire, and that long after the bit (or byte) about that original apple.  So now, let's see who it is who can really lead us into the promised land, shall we?


Mike Plugh said...

The scroll is next, I imagine. When flexible materials are produced that allow us to roll up the screen, the rigid tablet will go away.

Lance Strate said...

I'm not sure it will, Mike. We still use cardboard to back up paper, or look for something hard to write on, even if it's another person's back. And book pages are backed up by the collective weight of the pages of the book as a whole. Tablet, after all, means little table, and we've been creating mobile versions of writing tables ever since...