Why the Apple Tablet is not going to save the electric sheep

I’m pretty sure it’s a scene in Blade Runner where Rick Deckard picks up a newspaper with motion video images on an otherwise textual page. That’s the sort of sci-fi that old school media executives have been raised on for the last nearly thirty years. And as the sales of their newspapers and magazines have fallen into a neo-noir landscape of their own, it’s likely their dreams of Jetsons tablets and throwaway electronic papers have become more and more fevered.

Blade Runner is set less than a decade away in 2019. E-ink and tablet technologies are coming along pretty nicely, and ebook readers like the Kindle are finding some real traction.

Now, this month Apple is set to announce its own Tablet scheduled for release in March. It’s the big brother to the iPhone rather than little brother to a laptop. It looks like being the first great tablet. According to the WSJ, it’s likely to have a 10 to 11 inch screen with full color and be bundled with decent wireless Internet rather than just 3G, and it’s likely to be priced between the Macbook at $999 and an iPhone. I’d guess $499 with a 24 month wireless Internet contract.

At the same time, Apple’s App Store has just reached three billion downloads, according to TechCrunch, (which sadly failed with its own attempt at a Tablet device, the CrunchPad). Three Billion. That’s just for apps for the iPod Touch and iPhone with a tiny screen on a device from a single manufacturer. The market for applications for a larger screen Tablet with a fast wireless connection is likely to be massive in the next 3-4 years assuming Apple gets similar cult product status with its Tablet.

I think it could. The device size looks right to me. Small enough to be portable, but large enough for usable web browsing, video and games. If it’s got that gently ruggedized feel of the iphone and you can throw it around a bit, and if it has a day’s battery life, it will be compelling.

It’s clear that media executives see tablet computers and e-readers as a panacea for people ditching their dead tree products. They’ve formed their own consortium to provide an “itunes for content” and produce physical e-readers for magazines and newspapers. Clearly they don’t want an Apple to dominate magazine and newspaper electronic sales like Apple does Music with itunes, and lose out on the opportunity to control the electronic distribution themselves.

But, as a recent Slate piece pointed out, they’re missing the point and assuming there will be a large market for both dedicated e-reader tablets, and for content sales for them, and they’ll be able to count the sales like electric sheep.

Most people aren’t going to buy a purpose-built device to read magazines, newspapers, or even in most cases books. Some very decicated customers and early adopters might and are as the Kindle shows. But most customers won’t.

Most consumers will want a general purpose device that can play games, browse the web, read ebooks, play music and video and run Apps. A big iPhone. Something like the Apple Tablet.

The driving use for these tablets is definitely NOT going to be reading books, magazines and newspapers. That’s a fantasy. It is one activity of many that people will perform, and I think one of the lesser ones, except maybe with older users.

The biggest uses for an 11in tablet with fast wireless are going to be live gaming, video applications, and web browsing.

And consumers won’t use a dedicated “itunes for content”. They just want to get content from the web, or maybe download publisher apps along with all the other games, apps and content from a general App Store, and videos and music from iTunes. That’s how I use the WSJ iPhone App today. (As an aside, it’s a great little App, but I think it’s a scam for the WSJ to charge a separate subscription to customers already subscribing to the online Journal. That’s the kind of fleecing your best customer behaviour that holds back paid content everywhere.)

Whether Apple can maintain its proprietary dominance over Apps on these devices remains to be seen. Apple has been incredibly sucessful at using proprietary control to establish premium pricing and provide good customer experience, and as a result established entirely new product categories very quickly. But over time with the Android, ChromeOS and other portable and mobile alternatives like the Nexus One covered by TechCrunch today, and developer dissatisfaction at lock-in and unfair policies with the App Store, you’d figure the mainstream market will open up.

In the meantime, I suspect media executives will be left dreaming about androids and electric sheep, while the rest of the world wakes up to Steve Jobs bringing down Tablets from the mountain.


Why isn’t there more investment in new media startups?

There is clearly a mini boom taking place in early-stage high-tech startups at the moment.

That’s what I’m building, so it’s a topic close to my heart. I’ve got some thoughts on that boom that will keep for another post.

But I’ve always been interested in new media businesses too, and it surprises me there isn’t more investment interest and activity around new media-driven startups at the moment.

The conventional wisdom is that media startups and content businesses aren’t attractive, so VCs and angels aren’t interested. I can see how businesses that are built around just putting new content online aren’t going to be appealing.

However, as Clay Shirky’s great recent post outlines, we are going through the greatest period of creative destruction in the history of media.

Existing media businesses are getting smashed. At the same time, there is a lag between that smashing up of what exists today, and the creation of the new businesses that will replace them.

This has been accelerated by the downturn, but it is actually bigger than any single swing of the economic cycle.

Shirky points out that when you look at the introduction of the printing press, the media industry landscapes before and after bear little resemblence. There was no smooth transition or evolution from the old to the new.

The same thing is happening here. The great media businesses of the next century – the News Corps and Disneys – have yet to be created. They will make use of new media technologies that haven’t even been dreamed about yet but many will be driven by ideas around content and audiences. That is, there will be successful companies that are media businesses first, rather than only those that are technology businesses first.

Let me use Facebook as an example. Facebook is a social media business. But I would argue that it was a technology-driven startup not a media-driven startup. Its core competence is providing technology the helps people connect with each other and share stuff that matters to them. That is a business that sits at the intersection of technology and media. But it’s approach, I would argue, is technology first. So it is the sort of sexy company that attracts investment.

I think there will also be great businesses created that are media first.

It’s unlikely today that they would be able to get funding from the venture sector, and are likely to be created in spite of the venture capital model rather than because of it. It may take a few years before we even become aware of what they will look like.

They are out there, however. In the protozoic ooze of a million blogs and micro media businesses, I think there is the early DNA that will turn into the big media beasts of the next century.

My feeling is that they would struggle to attract investment in the way that an interesting technology-driven startup in the media space might, and there will be opportunities missed because of that.


The New York Times serves itself

The normal reaction of newspaper executives to Google’s dominance of web advertising has generally been to complain or cry foul.

Earlier this evening, however, I saw an ad running on the New York Times website that made me say “good on you guys” out loud.

The newspaper has introduced Self-Service Advertising, designed mainly for small businesses. It’s one of the most attractive alternatives to Google AdWords that I’ve seen from a newspaper so far.

Advertisers can upload their own materials, or choose from a library, customizing ad text, appearance, color-schemes etc. And they can choose campaign dates and whether ads should run nationally or locally. Best of all they can choose their financial commitment, and track their ads’ performance.

This is old news for Google AdWords’ customers. But I like the fact that you can target advertising for a premium content brand in context. And I think it adds something appealing to the mix.

I’m not saying it’s perfect, or a panacea to the newspaper industry’s problems, but I do think that this sort of experiment is important. It’s a more effective response to Google’s market dominance than either continuing to do what doesn’t work, or trying to blame Google for the industry’s woes.

And the NYT deserves praise and encouragement for trying new things.