Don’t let one bad Apple …

…spoil the whole bunch (and your future).  The Apple Tax, while totally unjustified, isn’t worth losing sleep over.  In the big picture, it’s really no big deal.

Although the iPad led tablet sales in 2010 (easy when you’re the only game in town), Apple’s position at the top doesn’t mean very much (it’s an early adopter market), and it won’t last long.

Research firm IHS iSuppli estimates that by 2013, the iPad’s market share will decline to less than 50% of the overall market. And although I’m not an industry analyst, frankly I think that share will decline a lot faster than that.  Here’s why…

For 10 years, Apple dominated the portable mp3 player market because it had no challengers.   And yes, the iPhone had a lead time of 3 years without any real competition in smartphones, but when Android phones hit the shelves, the iPhone was displaced from the top in 6 months.

Less than a year ago, the “extraordinary” iPad was launched and already it is facing serious competition from exciting new Android, WebOS, BlackBerry and Win7 devices hitting the shelves.   These devices are open, have more functionality (USB, memory cards, Flash, …) and will be cheaper than the iPad.  The iPad will be “just another expensive iOS device” in the not-too-distant future.

Okay, so let’s look at today…

15 million iPads were sold in 2010 – no doubt a great market for Angry Birds and other apps of general global appeal.  But most newspapers have a local audience.  And locally, most of their readers aren’t carrying around an iPad.

(Sidebar: if publishers think they have a product that can compete in a global market, they should launch a start-up for it and not jeopardize their core business).

Bear with me while I walk you through my logic on why iPads aren’t worth worrying about…

Pew Research’s State of the News Media 2010 reports that 71% of internet users, or 53% of all American adults, get news online today.   Only 35% of online news consumers have a favorite site (i.e. they are avid readers). And according to PEW, one in five avid readers (20%) would be willing to pay for their  news online.

So let’s assume that 2/3 of the 15M iPads were sold in the USA.  That means across the total population of the USA, about 3.23% own an iPad.  From PEW Research, we know that 31% of the population reads news online, 35% of those are avid readers, and 20% of avid readers are willing to pay to read the news.  So that’s the audience we’re really interested in, right?

If I just look at daily newspapers in the States and not even consider the 5K+ weekly papers, you can see that on average a newspaper has maybe 100 or so subscribers who are willing to pay for their daily newspaper on an iPad.


You do the math – it’s a very very small audience.

Now I have every confidence that tablets will be a major platform for newspapers  and NewspaperDirect is committed to offering more support on those devices than anyone else.  In fact, ND is already working with a number of manufacturers on their new tablets.  And while I cannot disclose the details (I’d have to shoot you), I can say “Be prepared to be pleasantly surprised”.   Many of these competitive products are significantly better than the 1st gen iPads and, from what I’ve heard, the 2nd gen too.

So instead of panicking over the 30% tax, let’s just “bite back” and focus on that multi-platform strategy we discussed before.  Sure, Apple is known for great innovation and creating a outstanding user experience, but it’s running out steam quickly with the iPad.

Stay tuned next week for more on the next generation of devices and technology that will make you feel even more confident about the future of your newspaper.

Gayle

  1. March 4, 2011 at 1:27 am

    So are you going to pay the tax, pull your app, or what?

    • March 4, 2011 at 5:30 pm

      Hi Nate
      We will always offer PressReader on the iPad. And if users register through pressdisplay.com they will get the same price they always paid. Not to worry.

      We’re also developing a new release of PressReader based on HTML5 so users can still access all their favorite titles throught the browser and save them to their device for later reading offline. We are covered on a number of bases for readers.

      All’s well here!
      cheers
      Gayle

  2. MissionMan
    March 4, 2011 at 1:46 am

    I think there are a couple of problems with your blog. Lets look at a couple of things:

    1. iPhone was sold in the US for AT&T only. This limited their sales market over Android but the iPad is not locked to AT&T in the US so this is unlikely to be a stumbling block. You also need to consider that the iPhone has now been opened up to AT&T’s competitors which opens a growth market.
    2. The iPhone has still had massive year on year growth, in fact, as many as they can make – 1.3 million in 2007, 11.6 million in 2008, 20.7 million in 2009, 40 million in 2010 and 16 million in 2011 already. They’ve predicted Apple will do 100 million phones in 2011 and 40 million ipads.
    3. Just because the Android market has grown due to point 1, doesn’t mean it will stay that way. Loyalty index shows most iPhone owners are happy vs other smart phones, so Apple is more likely to get their competitors customers than visa versa (http://internet2go.net/news/hardware/smartphone-satisfaction-iphone-android-pre)
    4. The Apple has surprisingly less tax when it comes to devices like the iPad, largely because of the volume of sales they produce. Most competitors are forced to make very little profit to compete while Apple still maintains a large profit margin.
    5. The competitors still fail to realise that this is not a feature and tech race. Its not about cramming as many things into a device as possible, and they should already have realised that with the phone market when all of them were trying to do as much as possible while forgetting to improve the user experience. Adding USB, SD etc is not going to do much as Apple have proved in the past.

    I understand where you’re going with this, but you have missed out on some very basic reasons as to why Apple has allowed Android to gather more market share and I don’t think they can be applied to the iPad. Reality is more than 90% of all tablets sold were iPads. A couple of competitors have appeared but very few have even touched Apple’s market share.

    • March 4, 2011 at 5:26 pm

      Hi MissionMan.
      Thanks so much for your comments. You make some very good points.

      I guess we’ll have to see what happens with the new tablets about to hit the market in 2011. I still think Apple will lose its tablet lead in the next 12 months. they were the only game in town in 2010, but I’ve seen some of the new devices not on the shelves yet and they are pretty slick.

      But thanks for adding value to my post with a different point of view for other readers to see – much appreciated!

      Cheers
      Gayle

  3. Laurence
    March 4, 2011 at 5:04 am

    The multi-platform strategy can work for publishers, but I really don’t want it to become a way of life for me as a reader! I could see a time when iPads are essential for viewing Netflix and NHL Gamecenter (for example) if they made content deals or had a better system for secure delivery, and Android tablets for PressDisplay and Zinio because of subscription prices, and Kindle for books. This would take a lot of the magic out of the tablet world. Personally I’d rather see Apple come to terms with reality.

    Also, regarding the PEW study, I suspect that a much higher percentage of tablet readers are more willing to pay for stuff than internet users in general. One would hope.

    • March 4, 2011 at 5:20 pm

      Hey Mark
      I agree with you in both cases – Apple needs to come to terms with their business model for sure. I also think there probably is a higher percentage of tablet readers more willing to pay for the news. I wish there was a study to confirm that.

      Cheers,
      Gayle

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