Tag Archives: iPad

My market-busting fBook Fantasy

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Having just put out a post on the cyclical nature of walled communities (see prior post), I was intrigued by another conversation from the Groundswell blog which introduces the concept of the ‘splinternet‘. (There is another more recent post here.) Check the comments on the splinternet postings, they’re as interesting as the article itself. Apparently, like the viability of the iPad, there’s a lot of conflicting opinions out there.

My take is that like watching the stock market daily or even weekly, watching the hype around Kindles and iPads can make it feel like everything is fragmenting and we’re all doomed to have to support a multitude of platforms, standards and devices. Wasn’t this supposed to be the age of ‘convergent media’?

Well, like stocks, there is short term volatility in the media environment too. But just as the market over time has made gains despite short-term volatility (especially if you didn’t freak out in 2008 and dump your holdings), so has the concept of open standards dominated the Internet. As if to underscore this, Google just announced its dropping support for IE6. Ask any developer and you’ll be told IE6 is a compliance nightmare. This is another block coming out of Microsoft’s crumbling garden wall. Over the years Internet Explorer has reluctantly been dragged like a stubborn child to accept the W3C compliance standards. The reason was simple, people started getting fed up with the IE experience and switched to Firefox, Chrome, Opera and Safari – all more broadly embracing of open standards.

Powered by the people.
Anyhow, all this talk of market dominance in music, books, TV, etc. got me thinking. The big reality is that businesses must necessarily follow the market. They tend to be slow to do so often waiting until many customers/viewers/people have fled. Today, the devices to play digital content (PCs, PDAs, smart phones and now, possibly, tablets) and to a lesser extent pipeline owners (ISPs and 3G networks) seem to be controlling the markets. Or are they?

The ability for a device or pipeline to define the dynamics of a business arrangement largely boils down to the size of the audience that device or pipeline delivers. Remember not too long ago when the iPhone first came out, its app store was full of gimmicks and half-baked cheapie apps. Only when enough people started using the iPhone (and enough buzz started flying around to make it safe to predict even more would soon buy one) did corporations begin hiring developers to build apps for it. It was the audience that grabbed the interest of the corporations and catapulted iPhone app development from a fringe hobby to a serious business.

Well, Apple says its iPhone/iPod touch market is 75MM people. Sizeable to be sure. In terms of delivering an audience, however, Facebook has 350MM users, or 450% of Apple’s. That’s massive. Suspend reality for a moment and imagine if Facebook built a hardware device. A tablet say (to capture the current hype, though personally I’d make it a bit smaller and more portable). I’ll call it the ‘fBook’.

Dream with me…
Certainly Facebook could afford to get into the hardware business with their current capital and resources. Certainly innovation is baked into their culture enough to do it well. If Facebook matched the basic lures driving Apple’s iPhone/iPod success – sexy touch screen navigation (in fact a parity technology), a robust community of developers (already existent), and a fast processor (also available on the market) they’d have a formidable device on just that.  Then, throw in a few bones for the people bitching about the iPad – like a camera and multitasking.

Now take this fBook device and give it a few killer features you can’t get through the other devices. Features that tie directly to the Facebook network and your Facebook friends. How about free video conferencing and calling to other FB members? And hell, why not strike up a deal and throw in Meetup and Foursquare-like functionality built in and integrated into Facebooks database of 350mm folks. Integrate Facebook Connect as well, of course.

Now, put a bow on it and offer the device at 20% less than Apple’s iPad to the first 100MM Facebook users who buy it. Then 15% off to the next 100MM. And 10% to everyone else on FB. Don’t just sell it online either. Rollout temporary ‘flash stores’ in big cities. Throw block parties, form lines, obstruct traffic – make it a media event centered around people coming together. You know, community and connectivity – core brand values of Facebook.

Oh, and one more thing, add a $19.99 data plan through a carrier (delivering 350MM new customers would probably get Sprint’s or Verizon’s attention). This would cover the data infrastructure but also allow Facebook (the basic Web browser version) to remain free. If bandwidth was an issue, create a $29.99 plan for people who want the video conferencing and higher throughput features. Even at a fraction of the 350MM users carriers could afford upgrade their networks (mmmmm, GGGGGG66666666).

That fBook could deliver four times Apple’s audience. Or, put another way, if just 1 in 4 Facebook users took to the device it would still be bigger than Apple. That’s exactly the carrot they’d dangle in front of publishers, movie studios, TV networks, and record labels. Then Facebook would drop the big bomb, ‘We don’t want exclusivity from you Mr. Publisher. And we won’t offer it to you either.’ My Facebook would be all about open standards. The fBook would accept all formats and let the users decide where they buy their books and movies and music from. It would be left to the publishers to set the prices as long as Facebook gets $x.xx on each sale. And of course Facebook would offer its publisher-partners easy, ready access to the fStore.

For publishers not locked exclusively into iTunes of Kindle, this is access to millions of new users and the freedom to set their own pricing models to compete with each other. To those who are locked in, it’s reason to start complaining about those contracts. Who wants to turn down access to potentially 350MM people?

Okay, when I say wake up, you’ll return to February, 2010.

Wake up.

Admittedly the above was a dream. But there are three points I am trying to make:

1. Bring an audience and you bring a chance to define the terms – regardless of the heritage of your business sector. If you’re Twitter or Facebook and you’ve been focused on building a user base instead of sweating revenue, this suddenly begins to open some interesting doors. (You  should also at this time thank your investors for taking that not insignificant risk.)

2. All walled gardens can be toppled. Device development might be divergent (we all carry more hardware now than ten years ago) and pipelines may be parity but all content is converging into basic bits and bytes. Technologically speaking there’s no reason a device can’t play it all. Corporate wall-building is the only barrier.

3. Open is a very powerful market tool. Open is disruptive. Open is desireable. Delivering an open alternative to walled gardens puts immense pressure on those gardens. It also makes them look monopolistic, greedy and inflexible. Oh, and it gives the consumer a really great, useful, product with some shelf life.

Those are strong competitive wedges and reasons why I think the Splinternet is temporary and that Open will continue to be the driving factor that forces innovation, prevents lasting monopolies and generally results in a better marketplace for all.

The fate of iPad/iBooks/iTunes has been written before.

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Remember ‘walled gardens‘? It was a popular concept in debating the blossoming of social networks a few years ago. Today Facebook – having surpassed the United States and moving toward China and India in population – is far more open than the walled communities it was once compared to – AOL and CompuServe. But Facebook is still a walled community. On Facebook you play by Facebook’s rules. For the most part we citizens of FB are content. In exchange for giving up some of our freedom we get an easy to use interface and a safe way to explore and experience the fascinating tools of Web 2.0.

With this week’s announcement of the iPad I have been again thinking about walled gardens. Put aside the debates about the device itself. Consider instead the iPad’s contribution to a shift that is taking control of content distribution from publishers, studios and record labels and putting it in the hands of hardware manufacturers.

Unlike the battles over Beta and VHS, SD Cards and Memory Sticks, or HD DVD and Blue Ray, the stakes here are higher because the devices themselves now carry the stores on them. Once you buy a Kindle or iPad, you effectively lock yourself into the content they offer through their convenient, online and embedded stores. Conversely, for content producing industries that are struggling with the digital disruption, popular devices like iPods deliver literally millions of potential customers. So if iTunes says a song will cost $1.29, or Kindle pegs e-books at $9.99, what’s the label or publisher to do? Turn away millions of customers by rejecting the platform?

Companies like Apple and Amazon are vying to position themselves between content sellers and content buyers. They are, in this sense, becoming gatekeepers.

And if you have gates and gatekeepers, then you must also have walls.

Again with the training wheels.
We’ve been here before. Recent history provides some insights that we might use to consider the future of Apple or Amazon controlling the distribution of digital content. AOL and Internet Explorer serve as interesting precursors to the current situation. In both cases, people demonstrated a consistent behavior that seems to be showing up again in consumer behaviors today.

That human behavior is this:

When the Internet was new (to the general public, anyhow), people were apprehensive and unsure. They asked for a safe entry point. Insert American Online. AOL was the Internet with training wheels. While most of us were discovering chat rooms and instant messaging, a minority of web surfing pioneers eschewed AOL and struck out on their own. They came back with stories of wonderful things you couldn’t get on AOL. The more people heard the more curious and discontented they became. Eventually, as all citizens of walled communities do, they started to think beyond the walls.

No sooner had the newly liberated masses escaped AOL for the wide open Internet than they began to again feel a little disoriented and apprehensive. The Internet was big and open and wild. While they didn’t want the walls of AOL they admittedly needed some help navigating this digital wilderness. Along comes Internet Explorer, conveniently bundled in your operating system. IE provided people comfort, usability and essentially training wheels via a familiar (enough) user interface and a brand they had known and trusted for some time (Microsoft).

As with AOL, some brave innovators opted not to dine on what Explorer was serving. Again people began to hear that IE rendered the web a certain way. In fact it sometimes ignored web pages completely. As with life in AOL, when those Internet pioneers came back with tales of something better beyond the confines of IE people again demanded the walls come down.

Today Apple and Amazon are providing the same training wheels as we get oriented to digital content delivery. We people are just getting comfortable with digital music and e-books. So, as with web surfing in the late 90′s and web browsing in the early millennium, we’re willing to accept the training wheels again. Shiny, touch-screen training wheels that make the whole experience easier.

“But today we can still go out on the Internet, using our browser, and pull down any content we want,” you might be thinking. That is true. But if you want to play content on the sexy news devices – the same innovative devices that deliver instant access to your online community, the convenience of portability, and of course the social cache that you’re cool – you by and large have to choose the content those device manufacturers are selling.

Just as it happened for ISPs and then Web browsers so I am guessing it will happen with mobile social/media devices. It’s easy to get swept up in the talk of paradigm shifts, but the empires built by AOL, Netscape, Microsoft, Friendster, MySpace, Facebook, Amazon and Apple are in truth fairly transient (at least by historic standards). Sometimes they last for decades. Sometimes just years. No doubt some pioneers are out there right now, toiling away in anonymity, hacking at the walls being built, sneaking content onto iPhone and iPads and Kindles. Some day they will return with wonderful stories of all the great things to be enjoyed were we all not tethered to iTunes or the Kindle store. At that time people will begin to chip away at the very walls being built right now.

The Internet is famous for the phrase ‘Information wants to be free.’ This ‘openness’ is an inherent conflict with its commercialization. In some sense, it is also a necessity. Again and again we may choose walls over wilderness eventually, but that gnawing sense that there is something better beyond the barriers we once sheltered ourselves in keep monopolies in check and force businesses to continually innovate.

iDoubt: iPad will not have the impact of iPod

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Ed Note: 01/27/10 I updated the name from iTablet to iPad to match today’s announcement re: the product name.

Now that the news of Apple’s tablet device has percolated up from the likes of Mashable to the Wall Street Journal it’s interesting to see how the story evolves. Mashable and other geekerati sites are rumor mills about features. WSJ’s article is about industry and use.

While initial hype and limited sales may come from the feature-obsessed technophile fringe, marketplace success (other than good PR for Apple just by putting it out there) will lie largely on the uptake by non-geeks. Ultimately this will come down to usefulness. It’s tempting to compare the revolution created by the iPod to what could happen with the iPad (or whatever it will be called). I don’t think it will be the same and here’s why:

Music vs. Magazines & TV
The popularity of music has never waned. Everyone listens to music. Many people, especially young people, have parts of their own identity wrapped up in it. In this way the content was never the problem for consumers, the distribution (and cost) were. MP3 compression solved these problems by making music portable, small (in terms of file size and physical size) and cheap (or free). The iPod became the defacto distribution system for MP3 files. Apple’s brilliance was in seeing the future of music in MP3 before anyone else did. They got the first mover advantage and combined with an elegant user experience iPod dominated while others have been playing catch-up. Today the eBook is solving a similar problem – portability and cost improvement. Fewer people read books than listen to music and so that revolution will be smaller.

Magazines and newspapers (one of the target content types for iPad) have a different problem. Yes, physical magazines and newspapers are more cumbersome than digital versions and would benefit in the way eBooks do from digital delivery but that’s not why newspapers and magazines are failing. If it were, moving them online and making the content free (the same tactic that revolutionized the music business) would’ve begun solving the problem. It hasn’t. Website magazines and newpapers have not stanched the bleeding and the publishers have not been able to restructure their businesses to live in the lower-revenue environment they now finds themselves in. (Neither has music entirely, but its made some progress by managing bands differently.)

Let’s start with news. News travels at Twitter-speed now, undermining the new industry’s role in ‘breaking news.’ What’s they’re left with is depth and commentary, two things they can do more professionally than amateurs with Twitter accounts. Newsweek and others have moved to an editorial/commentary format. The jury is still out on whether its interesting enough for people to keep paying for.

Beyond news there’s gossip, celebratory voyeurism, and niche interests. Perez Hilton is doing gossip and celebrity voyeurism better than People magazine. Niche interests also struggle with specialty websites. Even commentary is a tougher market as bloggers wedge their way onto the shortlist of respectable commentators.

So will making InTouch, People, Newsweek, The New York Times, the Wall Street Journal and other publications available on the iPad make their content more relevant to people than it is today? I’m not so sure. The reality is, increasingly people with limited time are choosing different types of content. They’re less reliant on traditional magazine and newspaper publishers not because of the distribution system, but because there are more content options available. Publishers are destined to get a smaller piece of the pie. By my observing, people can get traditional publications online and free today and they’re still choosing alternatives anyhow. Secondly, to get the same content I can get free on my laptop or iPhone now on a tablet I need to drop $1000 and potentially purchase a subscription. Why would I do that?

Television is the other traditional medium that the Journal points to as being a target for the iPad. The problem again is more likely a matter of content. Watching TV has not gotten harder or more cumbersome. In fact the TV experience has been improved and made more accessible by home theatre, flat screen television, and Hulu-like web-based services etc. Yet viewership declines on programs across the board. That tells me the channel isn’t really the problem, the relevance of the content is. With only 24 hours in a day people choose what interests them, and now they can find anything they want. An increasing percentage of that content is coming from alternative providers like video game creators and pro-am content creators. Hollywood has fewer ‘hits’ in a year because people are finding interesting things elsewhere. Sure, there will always be a market for TV, but I don’t think making people pay to view it on an iPad will increase these programs ratings or share of market.

The last issue is pure practicality. If I’m already watching a downloaded movie on my iPod Touch will a 12″ screen experience on the commuter train be worth the extra $1K and the bulk in my bag (which is already heavy with a laptop)? The tablet is less portable and more expensive and delivers the same material on a larger screen. One more device in my backpack for something I can already get on devices I have? No, thanks. Short of some remarkable new functionality I can’t see how the device becomes indispensible the way my laptop and phone are.

I’m sure there will be endless hype about the iPad. Having impacted music and telephony so significantly in recent years the expectations are high and Apple has something of a Hand-Of-God reputation. But they miss like anyone else and 5 years from now, my guess is, this will be recorded as a ‘miss’ in terms of a revolutionary, game-changing device. It’s destined to be a fringe toy like the Air netbook, the original Apple Cube computer and even Apple TV. All were interesting and innovative products but they just didn’t fit in with most people’s lives.