Each year I predict the lowest pricing we’ll see for a variety of tech products during Black Friday. Last year I predicted we’d see notebook computers selling for as low $299. In fact Walmart sold a notebook for $198 on Black Friday. This year I’m predicting the lowest prices we’ll see for notebook computers will be $250 – actually higher than last year. Tonight Walmart’s Black Friday circulate was leaked and it highlighted a notebook computer for $250 – consistent with my forecast and higher than last year’s price. You can see Walmart’s entire circulate here.
Amazon is now a library – sorta. Last week, Amazon launched the Kindle Owners’ Lending Library which gives Kindle users who own an actual Kindle device (and not just use the Kindle app on other devices) AND are Amazon Prime subscribers access to 5,000+ books they can “borrow.” A few things worth noting:
1) this is probably the first example of a subscription service for digital books. We have subscription services for other digital content (music, video, games) so books are a logical step. I assume all digital content will eventually be available either through a unit price or through a subscription service.
2) Amazon is quickly making all of their subscriptions a part of their Prime offering. Prime subscribers now have a digital video subscription (instant streaming of movies and TV shows), a digital library subscription, and a free two-day shipping subscription. With each addition, Prime subscription becomes more attractive to two audiences, the first audience is the group that actually wants the new additional offering and the second audience is the group that finds the new addition attractive on the margin (and of value when coupled with the entire suite of services). Ultimately this raises the number of overall Prime subscribers which in turn provides Amazon with more collective bargaining power and consequently the ability to increase the value of what is offered. In other words, Amazon can go to the studios or publishers or whomever and say, “hey we have XXX million subscribers to our video/book/fill-in-the-service and we’d like you to do/provide/settle for….”
The WSJ reported Barnes and Nobles is upping the ante on the Nook – giving it 2,000+ square feet of showroom in 40+ stores. That represents nearly 10% of the average store size.
Early this month I spoke at CEA’s CEO Summit. I outlined a few trends to expect at the 2012 CES. Here is a recap of what I said. More to follow….
One of the next sensors to become mainsteam on the phone will be a photoplethysmographic sensor.
By now you’ve all seen the rumors of Apple’s October 4th media event. Historically Apple’s newest gizmos would be available 3-4 weeks after the media launch. However, the iPad2 began shipping about two weeks after the media launch and it was my belief that Apple is shortening the window between announcement and availability. Today, AppleInsider is reporting Apple is denying staff holiday requests for 9-15 October which is consistent with an iPhone5 launch on the weekend of October 14th.
Last week Kindle announced their move into the libraries. You can read more here: (press release, NYTimes article, Kindle site on how it works).
There has been much talk in the past how Kindle, and eReaders generally, will play an influence role in education. This move into libraries will serve as an important catalyst. It will be years before eReaders become widely leveraged within library systems nationwide and years more before they become widely influential within public education nationwide but this marks an important first step (read the Economist’s recent Great Digital Expectations for a view on the current ebook landscape). While we are losing traditional book vendors, ebooks through libraries and hardware through other retailers will help drive adoption (RadioShack recently announced they would expand their eReader offerings).
Kindle books are now available at my local library and I’m testing the experience now. Kindle is enabling me to retain any notes or highlights, but importantly Kindle will also retain this information. As I’ve discussed before, this strengthens Kindle’s approach to social. More data creation will make a more valuable platform. It may also help sell more eBooks though I think the jury is still out on this particular aspect. If a user buys a book they borrowed from their local library, their notes and highlights will be updated in their purchased copy.
Many libraries are now working through the demand implications of a changing book environment. Many are allocating more dollars to their ebook collections and updating the borrowing window.
Most technology companies are cognizant of how network effects influence adoption, but fail to adequately stimulate these network effects. However, a few recent service launches by Apple recognize the influence network effects can have on the uptake of Apple devices. AirPlay and AirPrint both illustrate Apple’s understanding that the greater the sphere of influence iOS devices can have, the stronger the network effects and therefore the greater the consumer adoption. For example, Canon recently announced they would add AirPrint support to their PIXMA printers. This simple adjustment allows these printers to become more relevant to the iOS ecosystem, but also strengthens the relative position of iOS devices within the broader device ecosystem. Being able to sent content – either audio in the case of AirPlay or print in the case of AirPrint – to adjacent devices like speakers and printers directly from iOS devices strengthens the network effects surrounding iOS devices and will only strengthen the consumer appetite for these devices.
A little over a week ago, HP decided to exit the WebOS tablet market and began to liquidate the HP Touchpad at the firesale price of $99. It should come as no surprise, these disappeared quickly. As I recently wrote, increasingly the future of tablets (and like devices) will be Web apps so good browser-enabled devices
will find traction within these markets if they are competitively priced. In the last 6 months I’ve constantly been asked what it will take to find traction in the tablet marketplace. I’ve suggested a $300-$350 price point would significantly stoke sales. A quick analysis of the secondary market pricing (ie eBay) of HP Touchpad’s suggest the $300-$350 price point is close.
I pulled data for 6,180 ended eBay auction listings for “16GB” “HP TouchPad” tablets. I narrowed my results by only including those listed as new. The closing prices ranged from a total price (closing price + shipping cost) of $110 to $1400. I excluded a few outliers that closed with a price below $110 or above $1,400. The data come from auctions ending on or between August 14th and August 27th.
I further narrowed the 6,180 observations by excluding all listings that didn’t end in a sale. I was left with 4,623 ended listings for a total value of 1,135,956.14. Here are a few summary statics and graphs of the underlying data.
Bids
Of the 4,632 listings nearly a quarter (23.8 percent) were ended with the Buy-It-Now option. An additional 12.4 percent ended with just one bid and 6.6 percent ended with a Best Offer price. A total of 69.6% of the listings ended with bids for a total of 60,469 bids. Remember I’ve excluded all listings that didn’t end in a purchase so we are only looking at purchased items. For the listings that ended with bids, the average listing received 18.8 bids and the median number of bids was 19.
Shipping
Shipping for the 4,623 listings ranged from $0.00 to $50.00. Of the 4,623 listings, 1,981 offered free shipping (42.85%). Including free shipping, the average shipping cost was $7.49 and the median shipping cost was $8.00. Including free shipping, 56.5 percent of the listings had a shipping cost below $10.
Price
The real story in the secondary market for HP TouchPad tablets is what happened to price and volume. Prior to the price cut, about 5 new 16GB HP TouchPad tablets sold each day on the secondary (eBay) market. Now, the secondary market is averaging about 600 tablets each day and this was nearly 1,000 completed listings on the Monday immediately following the price cut.
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Prior to the price cut, the secondary market price for HP Touchpads was about $350 – roughly 70 percent of the MSRP. With the official price cut, the secondary market price also fell quickly though it didn’t fall as low as the HP price of $99. The secondary market price dropped to and remained at about $250 – a decline of nearly 30 percent but still 150 percent above the liquidation price of $99.
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The $250 price point is a bit lower than the $300-$350 range I’ve been suggesting as the needed price point to significantly drive tablet unit volume. However, because some buying risks do exist for the secondary market, the price point for the primary market will naturally be higher than the price point in the secondary market. As I showed above, the secondary market had a 30 percent price discount to the primary market in advance of the price cut to $99. A simliar discount now would suggest a primary market price of $350.
Update: as TechCrunch reports, the cost on a Touchpad might be around $300 – close to the market clearing price. This uggests HP could sell the hardware near cost and cross subsidize with content sales.
Pudits like to point to apps (and importantly the availability of apps) as the deciding factor in the success (and failure) of tablets and other app-oriented devices. Most developers have the bandwidth to support at most two (and sometimes three) development platforms. The largest app developers – the Pandoras and Kindles of the world – will allocate resources for greater development. These business models are built on the ubiqitious availability of their offerings, but beyond say the top 20 percent most developers will only be able to support one or two platforms. With this, many suggest only the two largest platforms (iOS and Android) will survive thrive because their users will have access to the lifeblood of mobile computing devices – apps. Other platforms will still see development of course. This development will be focused more on niche applications and then of course the 20 percent who are developing for most available platforms.
But HTML5 is coming (quickly). There is an increasing amount of HTML5 Web app development happening. This will drive the app ecosystem to the cloud and means that any browser-enabled device will be able to compete against devices with large native app ecosystems. This will significantly open-up the battle within device hardware. The recent firesale of HP’s TouchPad tablets highlights the market dynamics at play. Despite selling for $99, the secondary market price for TouchPads is close to $250. Despite the fact that large-scale developement will slow significantly for WebOS devices, these devices have strong video and audio feature sets and a small selection (the 20 percent) of native applications for some of the more popular tablet activities collectively covering most of the services consumers are interested in.