Although a lot of people are excited about ebooks, it's very difficult to get hard information on how the market for them is growing. We don't even know how many Kindles Amazon has sold, let alone more detailed specifics on the market.
So I was very happy Wednesday when the Book Industry Study Group (a publishing industry trade group) gave details from its recent survey of ebook adoption in the US. The survey was first revealed in January, but the press release was very sketchy and sometimes confusing. In its presentation at the Tools of Change conference, the BISG gave much more details on the results. My highlights from the presentation:
Ebook usage is growing fast, but it's still small. Roughly 2% of American book buyers over age 13 are active ebook users, meaning they obtained an ebook or a reader device in the last year. About half of those were first-time ebook buyers, so the usage of ebooks has probably roughly doubled in the last year. BISG is doing multiple waves in the survey, and says it found a 25% increase in ebook usage just over the holiday season, so it was a pretty good Christmas (and Hanukah) for ebooks.
The most-used device for reading an ebook is a personal computer (47%). Amazon Kindle is number two (32%), followed by Apple's iPhone and iPod Touch (21%).
Either there's something wrong with the numbers, or Amazon hasn't sold quite as many Kindles as some people think. More on that below.
What does it mean?
PC leadership is no surprise. There are so many PCs in the US that even a small percentage of PC users reading ebooks will swamp everything else. BISG said that the PC share of ebook reading is declining as other devices grow, also what I would have expected. I bet that in a year (or two at the most), a majority of ebook readers will be on non-PCs.
Apple is closer to Kindle than you might expect, but... A tidbit that jumped out at me was Apple's share of ebook usage. Kindle has gotten all the attention, but Apple has about 2/3 the share of Amazon in ebook usage without even trying. However, before we set off another round of "Apple uber alles" on the web, there are several big caveats:
--BISG didn't report on the number of books bought per platform. Based on my experience at Palm (which had an active e-reading community), I suspect that a lot of those iPhone book readers are pretty casual, buying a few books or publications to kill time when they are bored. I believe Kindle users are probably much more active readers.
(For comparison, about 4% of the Palm OS users in the US were reading ebooks at least occasionally in 2002. That total rose to about 8-10% if you included the Bible -- it was by far the most popular ebook. That amounts to about 1.5-2 million ebook users on Palm OS alone.)
--Apple and Kindle are also different demographically. After the presentation today, BISG told me that Kindle readers are older and more likely to be female compared to Apple readers. What we may be seeing is that if someone already carries an iPhone or iPod Touch, they're less likely to invest in yet another device just to read on it. Or maybe younger people just find it easier to read on a tiny screen. Either way, I think it's pleasant that Apple and Kindle are reaching somewhat different audiences rather than just stepping on each other.
--And of course the iPhone/iPod Touch installed base is a lot bigger than Kindle's. So as is the case with PCs, even relatively low ebook usage on the iPhone will add up to a lot of users.
How many Kindles are really in use? As far as I can tell, Amazon hasn't released any Kindle device sales figures, other than a quote referring to "millions" of users. Several analysts have jumped on the use of the plural as evidence that at least two million Kindles have been sold. But I think the BISG survey doesn't support that. Here's my math:
--About 2% of book buyers have ebooks and/or ebook devices.
--About a third of them have Kindles (that's 0.67% of active book buyers).
--If 0.67% of book buyers in the US is two million people, then there are 300 million active book buyers in the US. That is the entire US population, including infants and people who don't like books. I don't know what the base of active book buyers is in the US, but my guess is it's not over 200 million, meaning the installed base of Kindles would be about 1.3 million.
It's tricky to play with survey results when the percentages are this small -- the margins of error become very significant. But for now I think the BISG survey raises some questions, and I'm not willing to accept the two million figure for the Kindle installed base without some more rigorous evidence to support it.
Other tidbits
BISG is not going to release all of the information from the survey (that goes only to the companies that paid for it). So I took as many notes as I could during the presentation. Here's what I captured:
Ebooks are somewhat cheaper than hardcovers
On average, an ebook costs $6.25 less than a hardcover book. This is a huge issue to the book publishing industry, which worries that ebook sales will cannibalize hardcover book sales. My comment: Of course they do, get over it. The thing publishers should be looking at is the much higher margins they make per ebook sold. I don't know of many industries that resist moving to a higher-margin product, but publishing appears to be the grand exception. Of course, the thing worrying publishers is the decline of independent bookstores, and they're afraid ebooks will accelerate that. But the decline of the bookstore has almost nothing to do with ebooks -- it's being driven by online sales of paper books and predation by retail chains.
Demographics
-Ebook buyers are 51% men (compared to 58% women for paper books).
-Ebook buyers are higher income than paper book buyers. Not a lot, but significantly higher income. No surprise there -- most poor people can't afford several hundred dollars for an ebook reader. Betcha they don't buy a lot of hardcover books either.
Cannibalization
Among ebook buyers, 11% no longer buy any paper books. 8% buy mostly ebooks, and about 30% prefer to buy ebooks. So about half of ebook users prefer ebooks to paper books. That's actually a lower percentage than I expected for something that is supposed to take over the world. But remember, half of ebook users are reading on PCs. What I really want to know is the percentage of Kindle users who prefer ebooks; that'll tell us how satisfied Kindle users are.
Preferred device used to read ebooks
-PC: 47%
-Kindle: 32% (and rising in later waves of the survey)
-iPhone: 11%
-iPod Touch: 10% Hmmmm! iPod Touch really is a PDA.
-Other smartphones (including Blackberry) 9%
-Netbooks 9%
-Sony Reader 8%
-Barnes & Noble Nook 8% (the BISG folks noted that Nook was just starting to sell at this point; they believe some users confused Barnes & Noble ebooks with the Nook device)
Genres of ebooks
-General fiction, 31%
-Mystery 28%
-How To 25% (but #1 over Christmas)
-Science Fiction
-Biography
-Business
I don't know where religion and travel went. I need to learn more about how this question was asked.
How many Kindles have really been sold? (And other interesting tidbits about ebooks)
I'm speaking about ebooks in New York this month
I'm giving a talk on the ebook business at a publishing industry conference in New York in late February. I should have some spare time between sessions. If you're in New York and would like to chat during that week, please contact me here.
My talk is about the many ways the ebook industry has failed in the past, but my real focus is on how to avoid those problems in the future. As you know if you've read this blog for a while, you know I am pretty passionate on this subject (link). With all the recent goings-on between Apple, Amazon, Macmillan, etc, we have a lot to discuss.
Here's a synopsis of my talk. If you have any other ebook questions you'd like to see me cover in it, post a comment here.
Check Out My Scars: Seven Lessons from the Failure of Ebooks in 2000, and What They Mean to the Future of Electronic Publishing
1:40pm Tuesday, 02/23/2010
O'Reilly Tools of Change for Publishing (link)
The tech industry has a long history of celebrating its successes and forgetting its failures. We honor the IBM PC but forget the DEC Rainbow and Kaypro II. We put the iPhone and BlackBerry on a pedestal but sweep the Qualcomm PDQ and Ericsson R380 under the rug.
That selective memory is often helpful in the development of a new technology, as it prevents companies from being held back by other companies’ failures. But it also makes tech companies prone to repeating the same mistakes over and over again. So it’s useful to look back at previous efforts to make ebooks successful, both as standalone reader products and as software for other mobile devices.
When you do that, there are seven lessons that emerge for today’s e-publishers:
1. Beware the chicken and the egg. Purchasing a dedicated e-book reader is a major decision for most users. Even though reader devices aren’t all that expensive, they cost a lot more than a couple of books, and so the user needs to have a fairly high motivation before they’ll buy. But the most enthusiastic readers – the people most likely to pay for an ebook reader – are also the people who care the about having a wide selection of ebooks available before they buy the device.
Meanwhile, publishers look at the uncertainties and expenses of preparing an ebook edition, and are reluctant to convert their entire catalogs unless they’re convinced that a huge installed base of reader devices will be available.
This creates a classic chicken-and-egg situation in which the publishers won’t jump on board until there are a lot of reader devices, and users won’t buy the devices until there are a lot of books available. This was the root cause of the failure of ebook devices in 2000.
Amazon and Sony, to their credit, have been trying to power through the chicken and egg situation through very aggressive marketing and price subsidies. They have made progress, but the reader market is not yet self-supporting, in part because of issue #2:
2. Ebook customers are cheap. It would be much easier for book publishers to embrace the ebook market if they could charge more for an electronic edition than they get for a hardcover book. That way they wouldn’t worry about cannibalizing their traditional channels. The reality is just the opposite—consumers generally view an electronic edition as less valuable than a hardcover. Even though an ebook is easier to carry, it’s viewed as evanescent, without the seriousness and tactile quality of a hardcover. As a result, many people are reluctant to pay more than paperback prices for ebooks.
But the book enthusiasts who are likely to be interested in ebook devices are the sort of people who want to read the latest releases, rather than waiting for a paperback edition. They want hardcover content at paperback prices. So Amazon and Sony have been forced to subsidize the sales of ebooks, paying hardcover prices to publishers but collecting lower revenue from their customers.
This doesn’t bode well for the economics of the reader device market. Instead, a lot of people are hoping that other reader devices will emerge, like smartphones. That brings us to the third lesson…
3. Mobile usage patterns are hostile to most publishing. Most print publishing is built around the idea of an extended reading session – the customer settles down with a book or a newspaper and reads through it cover to cover. Mobile devices have a completely different usage pattern. People use them on the go – they pull out the device when they have a minute free, use it briefly, and then put it away.
The usage pattern is more like eating bon-bons than sitting down to a meal.
That means there are strong, natural limits on the amount of text content that many people will consume on a smartphone or other small mobile device. If you’re publishing a joke book, a mobile device may be the perfect distribution medium for you. But unless you are publishing in a country where most people commute by mass transit for long distances (Japan, Korea), extended reading on mobiles is likely to remain a niche for a long time.
4. Periodicals are promising. Combine points 2 and 3 and they indicate an interesting possibility for e-publishing: Magazines. Other than National Geographic, most magazines are viewed as disposable after they’re read. And many of them are read in short sessions rather than all at once. So there is not as much customer resistance to paying the full list price for an e-magazine, and the format is more compatible with a mobile device. Plus, an e-magazine can be delivered faster than a print version, giving the e-edition an advantage.
The challenge for magazines is that the ad-heavy format of a traditional print magazine does not translate well to an electronic device. On an electronic device, people expect to jump straight to content rather than thumbing past ads they way they do in a print magazine. That’s why software products that replicate a print magazine on screen haven’t taken off. The usage pattern is just different.
So the challenge for magazine publishers is to remake their business models, balancing much lower printing and distribution costs against reduced (or different) ad revenue. No one has perfected that balance yet.
5. How do you get a better experience than paper? Here are the first two sentences of Sony’s online pitch for its Pocket Reader: “Carry hundreds of books in your pocket. The Reader Pocket Edition lets you access up to 350 of your favorite books from anywhere.” The problem with this reasoning is that almost no one wants or needs to carry 350 books at once; you can only read one at a time. So Sony’s touting an advantage that’s not actually advantageous.
If they want to win over users, ebook companies need to offer a product that’s actually superior to paper. Amazon’s instant download of books is a good start, but another promising opportunity is the backlist. Even popular authors routinely go out of print on their less well-known titles, and once an author dies their work can virtually vanish from the marketplace.
For example, in science fiction the late Robert Heinlein is considered a giant in the field, but about half of his titles listed on Amazon.com are out of print.
The enthusiastic readers who make up the core market for ebook devices would respond very well to a device that made large numbers of out of print books available, but the process of getting them available has been very slow. This is another area where Amazon is making some progress through the application of money.
6. Beware the tipping point. For book publishers, there is an economic cliff lurking somewhere on the horizon. Once ebook reader devices do take off, there is a point where it will make economic success for a successful author to completely bypass print publishing and self-publish electronically.
The economics work like this: An author typically gets about 15% of revenue as royalties. But a self-published e-author could retain a much larger cut—up to 70% if e-book stores come to resemble the iPhone app store. At that royalty rate, an author would make more money as soon as about 20% of the book-buying public has e-readers.
The actual location of the tipping point will vary for different types of books, and the situation is quite different for new authors who can’t generate demand for themselves. But in general, e-publishing changes the economic balance between authors and publishers, and it would be healthy for publishers to get ahead of that transition rather than waiting for it the way the music business has done.
(In the session I’ll flesh out this analysis more, with pointers to help publishers identify where the tipping point is and what it’ll mean.)
7. Be careful what you wish for. Beyond the financial tipping point, there’s another trend that will likely affect publishing: the rise of free. In both music and consumer software, prices have been inexorably trending toward zero. On the Apple App Store, for example, ASPs are steadily declining. Authors and publishers both should be thinking now about how they’ll maintain the perceived value of written content, and what other models they might use to monetize it.
(In the session we’ll discuss what some of those models might be, based on what’s happening in other types of content.)
================
A couple of unrelated links:
--We've posted the Rubicon "Competitive Idea Book," a collection of famous competitive strategies designed to help companies think about their businesses creatively (link).
--Thanks to WAP Review for including my post about the iPad in the latest Carnival of the Mobilists.
iPad: The (attempted) Windows killer
(Well, you've got to admit, that's not something you'll be reading on most other weblogs today.)
Ten hours after the Apple iPad announcement, my overall reaction is that the product wasn't necessarily better or worse than I expected, but it was definitely different.
I expected an upsized extension to the iPod Touch, with a focus on watching videos, browsing, and playing games. The device can certainly do all of that, but Apple spent a huge amount of time demonstrating features I didn't expect -- e-mail management, productivity applications, and typing with the on-screen keyboard.
I know many of you think those are just checkoff items, and you may be right. We're all trying to read Apple's strategic intentions from a single product announcement, and that's hard to do. But here's how I view it: I believe Apple is serious when it spends five minutes demonstrating a feature, and I believe they actually said what they meant to say during the announcement. Specifically:
--Apple's identity is as a mobile device company.
--Netbooks suck and Apple can do something better.
--It's amazingly comfortable and easy to type on a touch screen.
(I'm not sure I agree with the last one, by the way, but we're talking about what Apple believes, and Steve sold the onscreen keyboard thing hard.)
If they really believe all of those things, then the iPad starts to look like Apple's idea of the next logical stage in the evolution of personal computing. It takes everything Apple learned from iPod and iPhone and applies that to a redesign of the low-end personal computer. It's Apple's vision of the netpad done right -- not a PC accessory, but a lightweight portable device that can replace the PC for many basic usages. The idea wouldn't be to kill the PC outright, but to nudge it toward the workstation space, in the process gradually eating away at the market share of Windows.
Yes, I believe killing Windows is still very high on Steve's personal to-do list. Always.
If you start from that assumption, a lot of the other things Apple said today make more sense. Why did they spend a year rewriting iWork for the tablet? Because you need an office suite in order to displace a PC (you don't need it for a media tablet). Why price that suite at just ten bucks a module? Because that profoundly screws up the pricing for Office on netbooks (the only way Microsoft can match that pricing is to destroy the value of its cash cow).
Why didn't we get a more comprehensive media store? I was expecting an entertainment tablet, and so I thought there would be a much more aggressive push for third party media developers. Apple did create the iBooks store, but they don't seem to be reaching out to individual authors the way I expected. And other media (video and animation) remains in iTunes rather than getting its own purchasing experience. To me, the iPad feels more like a netbook replacement that also does books, rather than a media tablet that also does spreadsheets.
Will it work?
If Apple's plan really is to displace netbooks, it faces some interesting challenges. One of the greatest appeals of a netbook is that it is a fully functional Windows notebook computer (cramped and awkward, but fully functional). Computer users have historically been very resistant to compromising on some core features. Will they accept a netbook that doesn't have a physical keyboard or a hard drive, and that can't run Flash and Java? And as Chris Dunphy (link) asked me today, will Apple give iPad applications more freedom to multitask than they have on the iPhone?
I don't know. And so I really don't know how the product will sell.
It doesn't help that the marketing for the iPad feels muddled. Apple's website tonight reads, "Our most advanced technology in a magical and revolutionary device at an unbelievable price." Ugh, it's a big bag of features. As I asked in my pre-launch post yesterday, who is it for and what problem does it solve? The question hasn't been answered crisply.
At least Apple got the base price of the product right. It's still above what I think most consumers will pay for a tablet, but Apple's within the realm of believability, and over time I hope the price will come down further. If it does, and if Apple markets it strongly, the product may be able to find its own market.
Meanwhile, I'm sure the iPad will have an important impact on some other companies. Namely...
Nokia: Step your game up. Several years ago, Nokia said it was re-creating itself as a computer company. Now Apple says it has re-created itself as a mobile company. Not just a mobile company, but supposedly the world's biggest mobile device company as measured by revenue. Whether that statistic is actually meaningful or something Apple manipulated through clever accounting, it must have driven the Nokia management team nuts -- which was undoubtedly Apple's intent.
Now Nokia has to decide whether it wants to compete with Apple in yet another product category, at a time when it already seems a bit overwhelmed. It's a very tough decision. (And please don't tell me the N900 is an iPad competitor. It's too small.)
Is Kindle in trouble? Not yet. The Amazon Kindle vs. iPad competition is going to be very interesting. My first reflex was to say that Kindle is in trouble -- iPad is a much more capable device, and the convergence advocates will tell you that a general-purpose tablet will eat a single-purpose e-reader. But Kindle is half the price of the iPad, even less when you factor in the cost of 3G for the iPad plus a service plan. Plus its screen, although only black and white, produces less eyestrain than a backlit LCD display. I don't think Kindle takes a big hit in the near term. In the long term, I am worried about Amazon's ability to compete with general-purpose tablets, but maybe Amazon's goal is to own the bookstore rather than the book reader. In that case, they should make sure the Kindle app works really well on the iPad.
The one thing I'm sure Amazon should not do is attempt to compete with Apple in the general-purpose tablet business. That's like challenging the Australian national rugby team to a drinking match.
The mobile operators: Pay attention to your pricing plans. I think this will be one of the most interesting floats in the iPad parade. Apple is now making its second attempt to bypass the subsidy model used by the operators. If Apple had been willing to bundle a two-year wireless contract with the iPad, it probably could have gotten the device subsidized down to about $299 or $350. But the downside would have been a $60 or higher monthly service plan, with soft caps on the amount of video someone could browse. It will be interesting to see how customers react to Apple's choice, especially when other companies sell subsidized net tablets for very low initial prices. In the phone market, Apple had to give in and accept the subsidy. We'll see if history repeats itself.
It will also be interesting to see how AT&T makes out with the revenue from iPad subscribers. At first glance, $30 a month for unlimited data sounds like a bad deal for AT&T. But keep in mind that data plans usually include several hundred dollars for the subsidy; the operator supposedly doesn't even turn a profit until sometime in the second year. With these plans, AT&T makes money from day one. So it may be able to make a better profit than you'd expect. Still, it seems a bit odd for a company with a network as congested as AT&T's to be adding a device designed to stream high-quality video from the web.
PC application developers: Pain. If the iPad really is Apple's vision of the future of personal computing, it's an ugly world for today's PC application developers. By pricing the pieces of iWork at $9.99 each, Apple has effectively created a price ceiling for major productivity applications. How many PC app companies can make money at that price per unit? And remember, that's the ceiling. It's time to start rethinking your business model...
No matter how well the iPad sells, it's a very interesting experiment worthy of the Apple brand, and I'm sure it'll drive a legion of imitators from Asia. I wish we had a few more hardware companies like Apple who were willing to mix up the market like this; innovation would move a lot faster.
Two geeks watch the Apple announcement
Chris Dunphy (link) and I were 2/3 of the competitive team when we worked together at Palm. We did a chat session this evening watching a replay of the iPad announcement. With Chris's permission, here it is. This won't be of interest to all readers, but I thought some of you might like to see the raw reactions of two geeks watching Apple perform...
Michael Mace: Thought of the day -- this might be Steve's last major new product category launch. Probably is, even if he lives to be 90. Not many more categories for him to attack.
Chris Dunphy: There is still room for an iCar....
Michael Mace: ;-)
Chris Dunphy: That is one old-school industry that is crying out to be reinvented too. It could use his touch.
Chris Dunphy: Steve is looking good.
Chris Dunphy: Largest mobile devices company in the world now.
Michael Mace: Nokia will hate that.
Michael Mace: Entertainment device, as expected.
Chris Dunphy: Netbooks aren't better at anything. *laugh*
Michael Mace: Looks like you'd expect.
Michael Mace: Gee, Steve, the first thing you say is that you can CHANGE THE BACKGROUND PHOTO???? Who cares?
Chris Dunphy: Bigger frame around the screen that I expected.
Michael Mace: Need room for your thumbs to hold it.
Chris Dunphy: I notice it has an appstore. Of course.
Michael Mace: Of course. So far no surprises at all.
Chris Dunphy: The UI looks gorgeous. But again, not a surprise.
Chris Dunphy: If the two-hand typing experience feels good, that will be very nice.
Michael Mace: I am waiting for some sort of paint/draw app...
Michael Mace: Steve is holding back on the big stuff.
Chris Dunphy: Make the news scarce.
Michael Mace: So far the announcement is underwhelming, but I think he is setting us up.
Chris Dunphy: On the other hand... Fewer features, nail the experience is the Apple way.
Chris Dunphy: I am lusting.
Michael Mace: If you weren't, Steve would have utterly failed.
Chris Dunphy: I am guessing it will use the same iPhone / iPod cable to sync / charge. If so - it will be the perfect front-passenger-seat device for while we are nomadic.
Michael Mace: Ahhh, nice!
Chris Dunphy: Particularly once TomTom or Magellan optimizes a navigation app for it. Wow.
Michael Mace: Good point.
Chris Dunphy: I wonder how long until someone comes out with a dash mount....
Michael Mace: You should do it. That could be your new company.
Michael Mace: But beware the lawsuits for distracted driving.
Chris Dunphy: HD playback - screen must be at least 720p?
Michael Mace: Weight is okay, but a bit heavy for reading comfortably.
Chris Dunphy: Custom silicon.
Michael Mace: Woah, their own processor. Wow!
Chris Dunphy: Their own CPU. Sweet.
Chris Dunphy: 64GB of flash. Nice.
Michael Mace: The first part of the announcement that shocked me. I expected their own support chips, but not the CPU.
Michael Mace: Ten hours of battery life is also killer, if it's real.
Michael Mace: That is the payoff for the custom silicon, I believe.
Chris Dunphy: Accelerometer and Compass... But what about GPS?
Michael Mace: Good point.
Chris Dunphy: No camera.
Chris Dunphy: No videoconferencing.
Michael Mace: Bummer.
Chris Dunphy: Ah, AppStore time.
Michael Mace: It's not an info pad, not at all.
Michael Mace: Pixal doubling. Sound familiar?
Chris Dunphy: 100% app combatibilty is a win for the developers.
Michael Mace: Yes, the app compat is critical.
Chris Dunphy: Developers will love this. Great for showing off.
Michael Mace: Nice how the app base gets leveraged to move them into new markets.
Chris Dunphy: New SDK out today. No waiting.
Michael Mace: Microsoft gets lapped today.
Chris Dunphy: Users do NOT need to re-buy their iPhone apps either. Sync and go.
Chris Dunphy: That is hugely appealing - it makes software an investment, not disposable.
Michael Mace: Nice point!
Michael Mace: Apple makes users happy by giving away additional copies of developer apps (being a cynic).
Chris Dunphy: With Palm - if you bought a new device, you often had to shed your old apps. I was trying to fix that....
Michael Mace: Yeah, and those Palm apps were in the same device category. Very bad to break stuff.
Chris Dunphy: Over the past year I have gotten into the habit of reading all my news via the New York Times iPhone app - in bed every morning when I wake up. This so fits the usage model I have for how I want to consume news...
Michael Mace: Nice. Will you still do it when they start charging?
Chris Dunphy: I think so... Depends on the price, and on what else is free.
Michael Mace: Nice, a painting app.
Chris Dunphy: That it syncs between iPhone and iPad is key too.
Chris Dunphy: I am still wondering at the screen resolution. An iPhone pixel doubled is just 640x960. That isn't great.
Michael Mace: They may be doing more than doubling. It would be hard to tell on a projected screen.
Chris Dunphy: It looks like when it is doubled there is still a black frame too.
Michael Mace: Now the beef.
Chris Dunphy: The print world gets reinvented.
Chris Dunphy: "Stand on Amazon's shoulders"
Michael Mace: Or on their faces.
Chris Dunphy: Either way - crushing them.
Chris Dunphy: Cherie: "I might actually get into reading books again."
Chris Dunphy: Indeed. I feel the same.
Chris Dunphy: The iPad is a Kindle killer. It is also Kindle compatible - thanks to the iPhone Kindle app. I wonder if Amazon regrets that now??
Michael Mace: No, they want to run the bookstore for everyone. If anything, they should have been pushing the app harder.
Chris Dunphy: True.
Michael Mace: The key is the terms for the bookstore. Haven't heard that yet.
Michael Mace: It's not a given that Apple's bookstore will be better than Amazon's. They have a long head start.
Michael Mace: The killer vs. Kindle, though, is that you can do both books and other forms of media. What I want to see is the video store.
Chris Dunphy: Yep. And books in color.
Michael Mace: Hmmmmmmm. iWork for the tablet.
Chris Dunphy: They are using ePub as a format for ebooks. Is that open? What is the DRM?
Chris Dunphy: I expected iWork browsing / viewing on the iPad... But if they turn it into a productivity tool....
Michael Mace: Except a tablet pretending to be a PC is a bad PC. Have they rethought the usage paradigm?
Michael Mace: Presentations make more sense than WP and spresdsheet.
Michael Mace: I wonder if it has video out? If so, it could be a really nice presentation device.
Chris Dunphy: This is a great oportunity to break people from the old Word / Excel UI paradigms.
Chris Dunphy: On a tablet, people won't have any expectations of things working a different way.
Chris Dunphy: No filesystem confusion.
Chris Dunphy: If iWork can be done using the SDK.... Imagine what other developers will be able to do. Serious apps indeed.
Michael Mace: Yup.
Michael Mace: If you accept that on-screen keyboard is acceptable, you can make it into a PC.
Chris Dunphy: A PC without the baggage of the past.
Michael Mace: uh-huh.
Chris Dunphy: I wonder if they will let apps out of the sandbox.
Michael Mace: If they want to replace PCs, they need to.
Chris Dunphy: Having every app in a silo is very limiting for more advanced functionality.
Michael Mace: Maybe this is more about killing Windows than about creating a new category.
Michael Mace: How much is Steve a creature of his background and past experiences?
Chris Dunphy: Needs multitasking.... But multitasking done right.
Michael Mace: I mean, really, a spreadsheet for a tablet. The app that lends itself least to a touchscreen.
Chris Dunphy: Though - having a spreadsheet you can interact with on a tablet is huge for people doing work on the go.
Michael Mace: Sure, like Docs to Go.
Chris Dunphy: Even if "work" is just tracking stats in your garden.
Chris Dunphy: With a screen big enough to interact with.
Michael Mace: Not going into the garden with a $700 device.
Chris Dunphy: *laugh*
Michael Mace: If they are looking to kill netbooks, they need productivity apps. Have to replace them.
Chris Dunphy: Live life!
Michael Mace: $9.99 each GUTS the Office business model.
Michael Mace: Charge a bunch for the hardware and give away the apps.
Michael Mace: But also reduces developer incentives to do serious apps.
Chris Dunphy: Connect to a projector...
Michael Mace: This feels more and more like a flanking move to kill the PC.
Chris Dunphy: I wonder if that will work for media playback too.
Chris Dunphy: I can see a 27" desktop version of this.
Michael Mace: Some models with 3G and some without. Okay.
Michael Mace: 250 megs a month? That is a joke for video.
Michael Mace: Unlimited plan for $29 is better, but what is the limit?
Michael Mace: On ATT?? They do not have the bandwidth to handle that.
Michael Mace: Yeah, no wonder they throw in free WiFi.
Michael Mace: No contract = no subsidy.
Chris Dunphy: No subsidy = not carrier locked??
Michael Mace: Unlocked device, nice.
Michael Mace: But you will easily overrun your data plan if you use a lot of video.
Chris Dunphy: $29 for unlimited is cheap.
Chris Dunphy: 250MB is the email and browsing plan.
Michael Mace: But what's the hidden limit? You know there will be one.
Chris Dunphy: $30 is media consumption.
Chris Dunphy: There isn't on the iPhone.
Michael Mace: This will encourage much more video-watching by users.
Michael Mace: I am disappointed -- I expected a media store, not just a bookstore.
Chris Dunphy: "allmost all" - Not 100% compatible?
Michael Mace: Something will break. Always happens.
Michael Mace: Don't want liability.
Chris Dunphy: True
Michael Mace: I think Apple planted the $1,000 price rumor.
Chris Dunphy: Yep
Michael Mace: Ahh, okay, $499 is about right.
Chris Dunphy: $499
Chris Dunphy: Want.
Michael Mace: Bu that will be a stripped model.
Chris Dunphy: True.
Chris Dunphy: How much for 64GB.
Chris Dunphy: Ah - 3G is a lot.
Michael Mace: Yup, no subsidy for the 3G hardware.
Michael Mace: That's okay. They still hit the right price boundary (barely).
Chris Dunphy: 60 days.
Chris Dunphy: I bet there is at least $100 price drop for Christmas.
Michael Mace: Keyboard dock. Yes, this is about killing PCs.
Chris Dunphy: It is cheaper than the iPhone at launch.
Michael Mace: Yeah, and remember they needed to cut the price after they ate through the early adopters.
Chris Dunphy: Yep.
Michael Mace: But this is OK. It's a PC replacement, not a phone.
Chris Dunphy: Same plan this time.
Michael Mace: After all these years, it is still about killing Redmond.
Chris Dunphy: Does the keyboard dock go flat - that is an awkward shape to carry with you...
Michael Mace: You'll get third party stuff like Stowaway.
Michael Mace: They are reinventing the PC around touch. That's what this is.
Michael Mace: I picture Khan on the bridge of the ship, cursing at Kirk. Except Kirk's not getting away.
Michael Mace: To think that Microsoft tried to do this nine years ago, and blew it.
Chris Dunphy: It will be really interesting to dissect the SDK... If the SDK and apps are designed to scale up to higher resolutions, we will know for sure.
Michael Mace: I will be shocked if they are not.
Chris Dunphy: Ryan Block: "Yeah, you know, this video does a pretty good job of putting this stuff in perspective. iPad is pretty amazing — there, I said it."
Michael Mace: Suck-up.
Chris Dunphy: I need to see the video feed.
Michael Mace: He is misreading things about the third category. This isn't -- it's the eventual successor to the PC.
Chris Dunphy: The PC survives.... It just goes back to being a workstation for high end.
Michael Mace: Diminishing market over time.
Michael Mace: Just like laptops are displacing desktops. It's a continuum, but Apple has refreshed the restof the hardware base.
Michael Mace: But the market for PC apps is now officially trashed. The top price for a major app is $9.99
Michael Mace: How does an a big software company survive in that world? They don't.
Chris Dunphy: They keep selling to the workstation crowd that pays big bank.
Michael Mace: Except as a high-end professional app. On PC equivalent of workstations.
Chris Dunphy: A focused announcement - no new laptops, no iPhone OS 4.0....
Michael Mace: Yup. Wise of them, I think.
Chris Dunphy: Some big unanswered questions... Multitaksing? GPS? Filesystem / apps sharing data?
Michael Mace: Yup.
Chris Dunphy: HD video out?
Chris Dunphy: No "one more thing"....
Michael Mace: Bummer.
Chris Dunphy: " The AT&T network access can be purchased -- or canceled -- at any time directly from the iPad."
Chris Dunphy: The network is a big dumb pipe, with an on/off switch.
Chris Dunphy: I wonder if you get billed via iTunes. *laugh*
Michael Mace: Actually, a narrow dumb pipe.
Michael Mace: The wireless network cannot handle what millions of these devices will do to it.
Chris Dunphy: Accelerate WiMax and LTE deployments.
Michael Mace: Not enough.
Chris Dunphy: "I consider not supporting flash a feature, not a bug."
Michael Mace: Was the Flash quote from Steve?
Chris Dunphy: No - me.
Chris Dunphy: (In a Facebook thread)
Michael Mace: I can't imagine they can keep Flash and Java out now. It'll cripple them as a PC replacement.
Chris Dunphy: I think they will - for at least a year.
Chris Dunphy: Flash and Java = slow and crashy.
Chris Dunphy: And they want to control the runtime. Just like the iPhone.
Chris Dunphy: It is a walled garden still.
Chris Dunphy: Apple is the gatekeeper.
Chris Dunphy: You know - this is going to be head-to-head with Chrome OS.
Chris Dunphy: I can see a future play out just like the phone market.... The iPad dominates the high-end, and Googles Chrome OS powers the army of low-end.
Chris Dunphy: Microsoft is the one who gets left out.
Chris Dunphy: Watching the UI in action.... Nice.
Chris Dunphy: It's running iPhone OS 3.2.
Chris Dunphy: Wow - not even a 4.0 number jump.
Chris Dunphy: I wonder what is coming in 4.0 then. Interesting.
Chris Dunphy: The iPad could get a major upgrade come summer. Right after the competition starts chasing after where they are today.
Michael Mace: It will get harder and harder for them to keep all versions of the OS in sync.
Chris Dunphy: It will work with standard bluetooth keyboards. Score.
Chris Dunphy: Not much to keep in sync if the iPad and iPhone use the same OS.
Chris Dunphy: Good job for them accomplishing that.
Michael Mace: I guess you just have to design for the full range of hardware you'll be running on. It is more to test, though.
Quick take on the Apple iPad: It's a PC, sort of
I need some time to think about it, but after listening to the feed of the announcement and chatting with my friend Chris Dunphy, my quick reaction is that the iPad is more like a PC than I expected. That's not necessarily a bad thing. I had been thinking of the tablet as a new, third category of devices focused on content consumption. The content play is in there, but focused on print only rather than video and other forms of media, at least for the moment. But given its features and software, and especially the iWork suite, the iPad is actually more like a low end PC-displacement product: The PC reimagined as a portable, touchscreen device. Content delivery is a part of that rethinking. Nine years after Tablet PC, somebody got it right.
The iWork pricing of $9.99 per module is a knife aimed at Office, and a disturbing precedent for all traditional productivity app companies. If you're in one of those companies, you need to rethink your business model quickly.
I'm not saying the PC is dead (not at all), but it looks like Apple is trying to gradually move up from the smartphone space to chew chunks out of the PC market. So maybe the iPad really is a response to PC netbooks, which is what my Apple alumni friends said a year ago. In some ways the iPad is worse than a netbook, in some ways it's better. I will be very interested to see how it sells against netbooks this fall.
I'll have more to say after I've had some time to digest the announcement. In the meantime, your comments are welcome.
