Tablet, Phablet or Smartphone?

So how much would you pay for a tablet, or would you rather have a Phablet, or just a good smartphone? Does size matter? Do you have to be been seen with a 10”, 8”, 7” or a 5.5” device?

We find ourselves constantly asking what we want and what is the best fit for us? What is clear is that the only word that matters is ‘convergence’ and tablets may be just a stepping stone and far from the answer.

We have seen the emergence of eink readers and also their decline. Yes they may still sell and yes they may be good reading devices, but you don’t find many calculators around today as the functionality is absorbed into other more functional devices. The eInk readers are long past their sell by date and although the technogy still has legs the ereaders don’t.

We have seen many try to establish a tablet position on the back of the iPad. The reality is that many have failed and for a host of reasons. What is interesting is that the likes of the Kindle Fire and Nook which were aligned to retail brands and services have fared relatively well and driven down the price for many. Samsung and the Google offers have put in a respectable delivery but many more technology driven companies have failed.

Microsoft were determined to recapture the market with the Surface but it so far has lacked that something that it should have clearly had – the same OS and functionality as the laptop. The company is now writing off $1bn after missing sales targets, but isn't giving up and is unveiling two new Surface tablets.

Enter that supermarket Tesco with its Hudl tablet. Will it like the Amazon Fire appeal to Tesco’s customer base and offer a cheap but high quality alternative, or will it die a thousand cuts and have little style or designer appeal in a designer label world? It not just about delivering the cheapest, it’s also about creating something to be seen with. You don’t go to a black tie event clutching an Aldi bag. You may not want to be seen huddling up with a Hudl in public.

Having just upgraded to a Samsung Phablet, the Note 2, we don’t want to be carrying a luggable tablet around that has the same functionality, but is merely bigger. We don’t want to trying to manipulate spreadsheets and word documents on a smartphone that demands thin and nimble fingers and thumbs. The Samsung pen is a clear bonus and is truly amazing, but it’s the fact that Microsoft have given us a free Office app with our Office 365 licence so making all documents truly accessible and editable on the move. All our contacts, social networks, outlook email, gmail accounts, Skype and many more applications are now with us at all times. We can even watch our home security CCTV cameras and be alerted to disturbance and much more.

So it’s not just about, price, size, functionality and design but about lifestyle and that’s what make it easy to see today’s winners and hard to guess tommorrw’s.

Spotify For Trade eBooks?

Many talk about creating a ‘Spotify for eBooks’, but all too often they fail to grasp the differences between the media, marketplace and cultures and once again see all as the same. There is no reason to doubt that a subscription service will work for some book sectors, but there is plenty to question whether it could prevail across all sectors.

Academic, professional and educational sectors have a captive audience and market and often also have ‘must have’ content. This makes subscription services potentially viable in these sectors. There are questions about who can aggregate the offer and whether the subscriber is the user or a secondary intermediary service, but the content is often mandatory either way. The challenge is establishing that one stop shop and recognising that multiple ‘must have’ offers don’t always work in the eyes of the buyer.

Music, newsprint, magazines, film, TV along with services such as broadband and mobile service provision are ideal for subscription. The nature of these services also can lead to collaborative offers which can exploit additional memberships and add additional value. Importantly with regards to the content it is less about individual files and more about access to databases and collections.

Trade ebooks however have several challenges. The market and consumer reading is still very mixed between ebooks and pbooks, The readers are likely to only read a mere handful of books a year and often in an inconsistent and unpredictable time manner. Heavy readers tend to be eclectic in their habit and therefore do not want to be restricted to one genre and whereas ‘Twigging’ works best in a ‘must have’ market it is often far less important in a trade market where depth and range can be easily provided and search and discovery become more important.

The emergence of MOOCs such as edX and Coursera have started to radically change the content and business model in academic and education sectors. Jimmy Wales, founder of Wikipedia reflects on his own experience, ‘I was taking an advanced calculus class and my instructor was reputed to be a fabulous researcher, but he barely spoke English. He was a very boring and bad teacher and I was absolutely lost and in despair.’

‘So I went to the campus tutoring centre and they had Betamax tapes of a professor who had won teaching awards. Basically I sat with those tapes and took classes there. But I still had to go to the other one and sat there and wanted to kill myself.’

We now have TED Ed, MOOCs, Khan etc all built around offering the best teachers, content to all irrespective of location. The emergence of the virtual and universal course is forcing institutions to rethink their models and here access to quality can be best achieved by a subscription model.

Even the software industry is ditching its perpetual licence model and starting to move to a subscription based one. This drive is being led by the likes of Microsoft with their Office 365 which is now offering subscribers full office mobile on the smartphone.

Streaming services and faster mobile bandwidth are changing media markets such as music, film, TV sports. We are now seeing a clear shift from download and buy, to own to subscribe to access on demand as much as you want. Large subscription based services such as Sky, Vodaphone, EE, BT are all now also having to offer complimentary and added value services to maintain their member bases and avoid churn. Vodaphone are offering new 4G contracts with either Sky mobile sports or Spotify bundled in the UK. In other words you can now subscribe to one umbrella service and get the others at discount or even free. It’s about community and lock-in based on a single subscription.  

So what about books?

Today we have a number of attempted subscription based services; Nuvem de Livros in Brazil and Argentina, 24Symbols in Spain, Oyster in US. We have the potential return of the subscribing library and offers such as Amazon’s lending library. However these have to compete with a market which is still in a heavy discount war and undergoing fundamental relationship and value chain changes. The subscription offers that have emerged are not doing anything new and it could be argued are appealing to students and so tapping into the ‘must have’ segment not the trade.

We also have the potential of our Read Petite venture and subscription model and we would argue that this is different content to trade ebooks and a different new marketplace.

Subscription models are appropriate where there is a high reliance on the access and ’must have’ content, the captive audience and the alignment with mobile and online streamed services. We would suggest trade ebooks are not there today and are unlikely to make that transition anytime soon. 

Shrinking Discretionary Spending

We are increasingly moving toward a subscription lifestyle which bodes well for some and could give others a few sleepless nights as consumers’ discretionary spending effectively shrinks.

Only last week we were discussing subscription models with a financial industry expert, who informed us that it is being predicted that some 10% of spending could be subscription based in the near future. That may sound a small percentage but when we remove the must buys on rent, utilities, food, clothing etc. it leaves little discretionary spending and that 10% suddenly becomes a much larger threat and leaves far less in the pocket.

So what does this mean to a media sector and who could be the winners and losers?

Film has increasingly embraced the subscription model with cinema clubs and mega download stores such as Netflix and Lovefilm.com. Television has also moved from its previous dependence on ad revenues to build significant subscription layered services which are aimed at reducing churn and locking members into a bigger package which invariably now includes broadband, phone and much more.

Software was once traded on a one off fee and a perpetual licence, but this makes little sense for the developers who have to maintain a growing and changing environment. We now have Microsoft Office 365 on an annual subscription and Adobe products such as their Creative Suite, Dreamweaver Illustrator and Photoshop going onto a monthly on demand fee model. Interestingly Adobe will still sell standalone versions but these will not be upgraded and today may date very quickly. Abobe are to offer the whole creative suite for a 12 month contract based on fees of £47 a month (£564 pa as opposed to today’s £1800). Software providers see this move as freeing them from the traditional 18 to 24-month upgrade cycle and enable them to release updates as they became available.

Music is still in flux but the likes of Spotify and Pandora have both established significant user bases based on a simple on demand subscription model.

Newspapers have all fallen in and out of love with paywalls for accessing their digital versions. The challenge is often the wealth of material outside of the service and often news is news and unless a specific source adds real value paywalls will continue to have mixed success.

STM, professional and academic publishing has generally been a subscription based environment.

So what about the book trade?

Some have introduced digital subscription models but unless there is a base of heavy readers and wealth of materials it often fails to hit the consumer button. The old book clubs had the opportunity to migrate their offer to digital but often failed to visualise the potential and execute the change. There are obvious potential opportunities for the likes of Amazon. They already have subscription based offers such as Audible, Lovefilm, Free time and that Trojan horse Prime. Being able to mix and match these with on demand offers would give them a substantial offer that very few would be able to match.

If you are able to get all you want, at the right price do you want to shop around? Does the subscription model enhance the consumer / provider relationship and effectively lock out others? We all would like to market and sell direct but for many this will not be practical and being inside the subscription tent may prove more rewarding than being outside it.