Friday, July 15, 2011

Lower Cost Tablets Should Spell More Customers

In the age of competition, there are two classic marketing approaches - product differentiation and lowest cost. Each work and the consumer is left to decide the price/value proposition. Apple has led the revolution with a highly differentiated, higher priced iPad tablet, and competitors are coming out of the woodwork with their versions. From Toshiba, Rim, Samsung, and others have come competitive touch pad products. From Nook and Kindle first came the e-reader tablet and most recently from Nook a color tablet.

So now it is Amazon and Kindle's turn to release it's color, touch pad model. "According to a source who 'works with Amazon,' the company is keeping the tablet’s price low by building it 'with the bare necessities inside' (no built-in camera, limited memory). Another unidentified source, an Amazon executive with close ties to CEO Jeff Bezos, says Bezos decided last year that Amazon’s tablet would compete with the iPad on price—both of the device itself, and of the 3G connectivity." And also too with Barnes and Noble who's color Nook beat Kindle in sales volume in the first quarter of this year.

So an influx of competitors and low cost competition indicates to me that the tablet acceptance by consumers also leads to more need for content. Web access is nice, so too for video access to TV shows and movies, but the tablet size is most ideal for the consumption of newspapers and magazines. Color tablets reflect the look of the glossy publication and the interactivity that can come with the download of each issue enables a more robust and enjoyable reading experience. It also allows editorial to remain relevant, especially as consumers demand grows for updates, moment by moment. Lastly, it is the ideal platform for the convergence of all types of content, print, audio, video, all connected and interactively accessed.

Tablet growth is zooming and if content is indeed king, so too will subscription based programming opportunities. The content can't all be free and while micro-payments are nice, content companies need longer relationships with their customers, ones that works best in a subscription model. Tablets are leaving the plane of early adopters and reaching for mass appeal. Content companies should also be ready.