Apple iPad and Publishing Business: Partnership or Rivalry?

    The phenomenal triumph of the iPad was not a surprise - given Apple's solid experience in creating stereotyping concepts (not just devices!), It was quite predictable. Recall that on the first day of official sales, the company managed to sell 300,000 tablets, in less than a week this number reached 450,000, and on April 30, Apple reported on the millionth iPad sold. IT Business week will try to analyze the impact of the iPad not so much on the IT industry, but on the media market.

    “... And sometimes a revolution just sucks”
    (Linus Torvalds)


    Competition and its absence

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    Of course, Apple's next success could not leave its competitors in serene calm. Almost all the major manufacturers in one way or another reacted to the victorious debut of the iPad. Many vendors hastened to announce their own versions of the tablets - it is indicative that at the same time, some companies preferred to speak about the brainchild of Apple in very skeptical intonations, while others openly admired the iPad.

    ASUS CEO Jerry Shen emphasized that without Apple’s involvement, the tablet PC market would not have grown to the scale that is emerging now. Note that the presentation of the tablet ASUS Eee Pad is expected at Computex 2010. Analysts suggest that the first version of the tablet will run on the desktop version of the Windows 7 operating system. DigiTimes notes that the device will appear in retail sales in Q3 2010, and ASUS plans to sell about 300,000 tablets by the end of the year. In his speech at the quarterly conference of investors, Jerry Shen drew the attention of the public that tablet PCs and netbooks occupy different market segments - if netbooks store information mainly on built-in drives, then tablets are, in fact, client devices for cloud computing.

    Indirect sources indicate that the development of the tablet is underway at Nokia. Ashok Kumar, investment bank expert at Rodman & Renshaw, said the company plans to return to the tablet PC market.

    Another mobile vendor, Motorola, is not far behind. The head of the mobile division of the company Sanjay Jha (Sanjay Jha) during the final conference Motorola announced that the company is extremely interested in the market for tablet devices and is studying this market segment.

    This summer there will be an interesting novelty from Dell - MID based on Google Android. It is reported that a 5-inch version of the device will appear in the summer, a 7-inch version at the end of the year, and a 10-inch version at the beginning of 2011.

    However, the most significant event, according to IT Business week, is a statement by Google CEO Eric Schmidt, who announced that the corporation is developing its own tablet PC. This device is likely to become the most serious competitor to the iPad and, at the same time, another engine of progress for the entire market segment. It is known that Google’s development will operate under the Android operating system. Apparently, the tablet will support Flash and have a fully functional version of the Google Chrome browser. Analysts believe that the appearance of their own tablet poses a significant risk to the company, since this step can ruin Google’s relationship with vendor partners who find themselves in the role of competitors.

    It is noteworthy that the ambitious projects of Microsoft in the tablet PC market, apparently, failed. First, information appeared on the Web about stopping work on an exceptionally interesting Courier project (dual-display tablet). Following this, it became known that HP temporarily refused the launch of the Slate tablet PC, which was pompously announced by Steve Ballmer before the iPad. Recall that Slate was supposed to go on retail in the summer of 2010, one can only guess what made the company reconsider its decision. A number of experts claim that it was Microsoft’s position (or rather, the Windows 7 operating system that was hardly suitable for tablet solutions) that led to the revision of the Slate release date. Perhaps the acquisition of Palm will allow HP to develop its own solution based on a very good webOS.

    Success formula

    Thus, you can make sure that the success of Apple was the result of not only competent marketing and technical solutions, but also a terrifying inconsistency in the camp of competitors. Vendors were ready to confront Apple on the technical front, but the key success factor - software - was transferred to the shoulders of Microsoft, which could not cope with its mission. The question remains open whether this failure was a tactical move by Microsoft, a kind of attempt to narrow the tablet market, giving Apple the position of a forced monopolist.

    Experts believe that in this combination, Apple outperformed Microsoft, gaining support not only from users, but also from developers. By sharply raising the bar for the average price for iPad applications, the company managed to stir up the programmer community, rushing to rewrite iPhone applications and create new ones that were initially oriented to the iPad. The result was not long in coming: according to Steve Jobs, over the first five days of sales in the online store App Store more than 3.5 million applications for the Apple iPad were purchased.

    Not so scary Flash

    Despite a flurry of criticism from Apple for abandoning Flash support for the iPad, Steve Jobs remained adamant. In an open letter “Reflections on Flash”, Jobs examines in detail all the flaws of Flash that prevent this technology from being present in Apple products. The critical shortcomings of Flash Jobs include a deterioration in the compatibility and quality of software development due to the presence of an intermediate "layer" from a third manufacturer. A very controversial, but valid statement. But the second argument is difficult to disagree with - Flash is criticized by Apple for the "closed" nature of this technology. Indeed, Adobe tightly controls everything related to Flash - from functionality to pricing. Jobs mentioned the dubious technical implementation of Flash, emphasizing that the technology is focused on a PC with a mouse, but not on mobile devices with Multi-Touch. However, all this did not prevent Adobe CEO Shantanu Narayen from calling Jobs' claims a "smoke screen." In an interview with The Wall Street Journal, the head of Adobe sarcastically answered Jobs in the style of “whose cow would moo”, hinting at the many restrictions that developers for iPhone and iPad face. Apparently, the situation with Flash support in the iPhone OS is not destined to resolve in favor of Adobe - the company is not so strong as to dictate its terms. For developers, this only means that Apple once again showed clear boundaries that no one has the right to cross. On the one hand, such a policy does not increase the loyalty of the programming community, on the other hand, it is Apple that provides this community with profit,

    Apple and the publishing industry

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    About the coup that Apple made in the publishing industry, today is not only lazy. Even at the time of the announcement of the device’s functionality, Japanese publishers predicted a serious crisis of the local market, estimated at $ 21 billion. Note that Japanese publishers are fixing retail prices - so the emergence of a cheaper alternative becomes a real threat to the whole industry. Nomura Holdings experts claim that the iPad is capable of turning the local publishing market - and if you remember that the level of sales of e-books in Japan is four times higher than in the United States, it becomes clear why the appearance of the iPad was not enthusiastic in the country of the rising sun.
    Dotted over “i” June Hasebe, an analyst at Daiwa Securities Group. According to him, "there is a big chance that devices such as the iPad will allow authors to exclude publishers as intermediaries."

    At the same time, the American e-book market leaders - Amazon.com and Barnes & Noble - faced the opposite problem, when even with a flexible pricing policy, their activities were threatened by the iTunes Store and Apple's unpredictable moves. According to reports of information sources who did not want to introduce themselves, three officials at the companies mentioned suggested the possibility of transferring price control to publishers, that is, in fact, transferring the baton of competition with Apple into their hands.
    A number of publishers, by contrast, decided to make the most of the new content delivery channel. So the publisher Penguin recently held a presentation of children's literature, optimized for distribution via the iPad. Interactive elements have been added to many books, which look very impressive both in coloring books for preschool children and in physiology textbooks.

    Zinio Corporation, one of the leaders in digital publishing technology, has published subtotals of its iPad app, Zinio Magazine Newsstand & Reader. This free service entered the TOP-10 of the most popular iPad applications in the first two weeks from the moment it appeared on the App Store. Note that among the publications available to users of this application, there are also Russian publications: Cosmopolitan, Cosmo Shopping, Men's Health, Marie Claire, Harpers Bazaar, Psychologies, etc. Rich Maggiotto ( Rich Maggiotto), President and Founder of Zinio comments: “The Zinio iPad app gives users instant access to the latest periodicals from around the world located on our shelves. Our platform allows publishers and advertisers to take full advantage of the innovative features and high resolution of the iPad. Users of the new device can now not only flip through a magazine, but feel it in a new quality. ” The Russian office of Zinio shares the founder’s enthusiasm: “New digital technologies and reading devices allow publishers to become more inventive and realize new publishing opportunities, to make magazines more dynamic in the literal sense,” emphasizes Ruslan Khromin, vice president of Zinio-Russia. “The iPad is a device that can turn the tide of the print industry.” Note that the Zinio platform involves the use of one purchased magazine on different platforms - iPhone, iPad, Mac or PC. Users of the new device can now not only flip through a magazine, but feel it in a new quality. ” The Russian office of Zinio shares the founder’s enthusiasm: “New digital technologies and reading devices allow publishers to become more inventive and realize new publishing opportunities, to make magazines more dynamic in the literal sense,” emphasizes Ruslan Khromin, vice president of Zinio-Russia. “The iPad is a device that can turn the tide of the print industry.” Note that the Zinio platform involves the use of one purchased magazine on different platforms - iPhone, iPad, Mac or PC. Users of the new device can now not only flip through a magazine, but feel it in a new quality. ” The Russian office of Zinio shares the founder’s enthusiasm: “New digital technologies and reading devices allow publishers to become more inventive and realize new publishing opportunities, to make magazines more dynamic in the literal sense,” emphasizes Ruslan Khromin, vice president of Zinio-Russia. “The iPad is a device that can turn the tide of the print industry.” Note that the Zinio platform involves the use of one purchased magazine on different platforms - iPhone, iPad, Mac or PC. “New digital technologies and reading devices allow publishers to become more inventive and realize new publishing opportunities, to make magazines more dynamic in the literal sense,” emphasizes Ruslan Khromin, vice president of Zinio-Russia. “The iPad is a device that can turn the tide of the print industry.” Note that the Zinio platform involves the use of one purchased magazine on different platforms - iPhone, iPad, Mac or PC. “New digital technologies and reading devices allow publishers to become more inventive and realize new publishing opportunities, to make magazines more dynamic in the literal sense,” emphasizes Ruslan Khromin, vice president of Zinio-Russia. “The iPad is a device that can turn the tide of the print industry.” Note that the Zinio platform involves the use of one purchased magazine on different platforms - iPhone, iPad, Mac or PC.

    The New York Times, one of the pioneers in delivering electronic content to the iPhone, drew attention to the promising market niche iPad. By the official start of sales, an application was released to access the electronic version of the publication with video viewing functions directly in the text material. Vice President of The New York Times Company Martin Nisenholtz solemnly announced that the newspaper looks “real” on the iPad platform.

    In general, the business model for the traditional media, wishing to go online, is quite simple: the publisher should either sell the entire application or take a fee for reading specific materials. GQ Magazine, for example, uses the classic scheme - for $ 2.99 a user gets access to an entire magazine. The Wall Street Journal prefers paying for specific articles of interest to consumers. The effectiveness of both models can be judged only after a few months, or even after a year, when more relevant statistics will accumulate than the traditional boom observed after the start of sales.

    Since we are talking about News Corp. (the owner of The Wall Street Journal), it would be appropriate to quote the head of the corporation Rupert Murdoch, who stated with pathos that the future of paper newspapers is predetermined. According to Murdoch, in 10-15 years, paper newspapers will completely disappear, and within the next two to three years, readers will gain full access to the press from mobile devices. In addition, Murdoch believes that free news resources are on the verge of extinction - and in the very near future, users will have to pay for access to news and analytics. In support of his words, the head of News Corp. announced that within a year the websites of its publications (New York Post, The Times, The Wall Street Journal, Sun) will become paid.

    The industry reacted very skeptically to Murdoch's statements. MediaPost author Eric Sass cited the Amazon Kindle device, also designed to deliver digital content, as an example. For 2007-2008 about half a million devices were sold - out of this number of users, only ... 10,000 people signed up for the digital version of The New York Times. Sass is convinced that the iPad will be a catalyst for development only for book publishers, but not for the media industry.

    However, this does not prevent leading publishing houses from announcing the appearance of an iPad version of their products one by one. Within weeks of the launch of the iPad, Conde Nast Publishing House announced the “tablet” version of Wired magazine, as well as a number of popular glossy magazines - GQ, Vanity Fair, Glamor, The New Yorker, and others. Thomas Wallace, editorial Director of Conde Nast frankly admitted that the publisher is just studying the demand for the iPad version of its products - it is studying the market, determining the right pricing policy and, of course, negotiating with advertisers.

    Another potentially lucrative segment of iPad content is textbooks. The Wall Street Journal reported in a poppy that a number of eminent American educational literature publishers (Pearson Education, McGraw-Hill, Houghton Mifflin Harcourt K-12, Kaplan Inc.) have signed an agreement with Scroll Motion to create electronic versions of textbooks specifically for the Apple iPad . Recall that Scroll Motion has a fairly significant expertise in the development of such solutions - it was this company that created Iceburg Reader for the iPhone. John Lema, Executive Director of Scroll Motion, is convinced that working with textbook manufacturers and, as a result, the global distribution of e-learning materials will usher in a new era in the education system.

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