Survival of the Fittest Device: Will iPad Kill the Competition?

By: Institute for Media and Entertainment in Uncategorized

TabletWithin two months of its April launch, the iPad had already sold more than 2 million units, scored some 8,500 iPad-specific apps which have been downloaded over 35 million times, and grabbed about 22 percent of e-book sales, says Apple CEO Steve Jobs. And that’s just the beginning: Market research firm iSuppli pegs total iPad sales to reach 12.9 million units by end of 2010, 36.5 million by 2011, and 50.4 million by 2012.

“The iPad is shaping up to be the ‘Tickle Me Elmo’ of the 2010 holiday season, with product demand expected to vastly exceed available supply,” said iSuppli Director of Monitor Research Rhoda Alexander. Indeed, iPad’s current status as the “it” gadget has led many to ask: Can similar devices — be they e-reader or tablet — stand the heat and remain competitive in the long run?

iPad vs. E-Readers: The Fight Over Territory

There are those, including Amazon CEO Jeff Bezos, who prefer to differentiate the multi-functional iPad from dedicated e-readers like Amazon’s Kindle, and insist there is room in the market for both. And perhaps this is true: As some studies show, e-readers seem to appeal to more mature consumers and avid readers, while the iPad attracts a younger audience.

Recent research by chipmaker Freescale Semiconductor, for instance, found that the average e-reader buyer is 43 years old, earns $72,000, buys two e-books a month and sees reading as his or her primary entertainment activity. Meanwhile, tablet users are younger and use their devices not just to read books but also to keep up with their Facebook pages and Twitter feeds. Another survey, this time from advisory firm Changewave, yielded similar findings: In terms of preferred activity, iPad users primarily surf the Web (83 percent of the time), check e-mail (71 percent), use apps (56 percent) and watch videos (48 percent). They spend less time reading e-books (33 percent) or magazines and newspapers (28 percent).

Regardless of the target audience, however, the iPad — which can be, and is indeed also being used as, an e-reader — now appears to be gaining market share in the e-reader market. The above-mentioned Changewave survey shows, for instance, that while the Kindle commanded 62 percent of the U.S. market as of May, the iPad is fast gaining ground, netting 16 percent of the market within weeks of its release and eclipsing other dedicated devices like the Sony Reader (7 percent) and Barnes & Noble’s Nook (3 percent).

Indeed, whether they compete directly or not with the iPad, some e-reader manufacturers are feeling the strain. Already, several have closed up shop (Audiovox and Plastic Logic both canceled their devices, while iRex filed for bankruptcy). Moving forward, research firm Forrester estimates that tablets will likely outpace e-readers in overall sales, and that 59 million tablets may be sold by 2016, compared to 29.4 million e-readers.

Because single-purpose devices are typically less expensive to produce than multi-functional tablets with computing abilities, one way dedicated e-readers could still thrive and protect their “territory” is through pricing. So it’s no surprise that the Kindle, Sony Reader and Nook have all recently slashed prices. The newly-launched next-generation Kindle, for instance, now sells for as low as $139 (a fraction of the iPad’s $499 starting price), and has quickly become Amazon’s fastest-selling Kindle device.

iPad vs. E-Readers: The Fight Over Functionality

Aside from target market and cost, another essential difference between the iPad and dedicated e-readers is in overall user experience. Not only does the iPad have a color display, but it’s also more “interactive,” allowing users to surf the Web, play songs and movies, run a multitude of apps, etc. Likewise, now that publishers like Penguin Books, Simon & Schuster and HarperCollins are offering “enhanced e-books,” iPad users have access to additional material (such as audio and video files, maps, live links, etc.) to complement their reading.

Dedicated devices like the Kindle, on the other hand, focus only on one purpose — long-term reading — and the Kindle does it well. For instance, compared to the iPad, the Kindle has a longer battery life (lasting weeks, not hours), a hi-contrast e-ink screen which mimics printed paper, and a no-glare display which can be read even under bright sunlight. Furthermore, at 8.5 ounces, it’s about the third of the weight of an iPad and easier to carry around.

Indeed, Amazon says the Kindle’s lack of “bells and whistles” (such as color, touch-screen controls and computing capabilities) is intentional, as these could compromise the reading experience. As CEO Jeff Bezos said in a recent Wall Street Journal interview: “For the vast majority of books, adding video and animation is not going to be helpful. It is distracting rather than enhancing. You are not going to improve Hemingway by adding video snippets.”

The question, then, is: How will consumers react to the functionality differences between these two devices? Could the iPad’s added features change “the e-reader game” as well as consumer reading habits, or will it simply open up a new market that didn’t previously exist (say, those who wouldn’t necessarily read traditional books, but would be attracted to the interactive e-book format)? For now, it’s too soon to tell. As Penguin Books CEO John Makinson said during a recent company announcement: “We don’t know or understand at the moment what the consumer is prepared to pay for. We will only find answers to these questions by trial and error.”

iPad Vs. E-Readers: The Fight Over Content

Finally, when it comes to iPad vs. e-readers, there’s the question of content availability. The Kindle catalog, for instance, currently boasts more than 670,000 books, newspapers and magazines. Meanwhile, Apple’s iBooks, the iPad’s own e-book reader app and store, reportedly only had 60,000 e-books at launch. However, because Amazon has released a free Kindle app for the iPad, iPad users can access the entire Kindle catalog.  This is in addition to accessing content directly from Apple’s iBooks. The reverse, however, isn’t true: iBooks are only exclusive to the iPad.

So, technically, iPad users have access to more content than other e-readers. However, it’s important to note that by making the Kindle catalog available not just on the iPad, but also on as many devices as possible (iPhones, Blackberries, PCs, Macs, etc.), Amazon has a better chance of holding on to the lion’s share of e-book sales. And perhaps this is Amazon’s real strategy — wherein the fight isn’t necessarily about e-reader sales, but about sales of e-books themselves.

iPad vs. Tablets: The Fight over “Value Chain” Partnerships

Meanwhile, companies like Microsoft, HP, Dell, Best Buy, RIM, Google Android, Samsung and even start-ups like JooJoo are hard at work on their own multi-purpose tablets, designed to compete directly with the iPad. In a July meeting with financial analysts, for instance, Microsoft CEO Steve Ballmer says the company has a lot of software knowledge and intellectual property from the decade it has spent in the tablet business, and that their yet-to-be-released tablet will boast features like a Windows 7 operating system and printing capacity.

The question is, can these devices really hold their own or even overshadow Apple’s offering? On one hand, while the aforementioned Changewave survey shows that 74 percent of iPad owners are satisfied with their purchase, the iPad is not without its flaws — lack of Flash support, Internet connectivity issues, poor screen visibility, no camera or space for removable media, and a high price point. These drawbacks could pave the way for other manufacturers to compete.

On the other hand, coming up with a "better" and more affordable tablet isn’t the only hurdle for iPad rivals: Apple also has a powerful “ecosystem” that allows different Apple devices to work together and to access the company’s wide range of apps, software and services. This appeals not only to Apple’s consumers, but also to its partners in the digital media value chain. For instance, during its Worldwide Developers Conference this June, Apple reported that it has paid over $1 billion to app developers so far, and CEO Jobs even noted that the developer of the Elements app for the iPad has e-mailed him to let him know that he has earned more money in the first day of iPad sales than he did in five years from Google ads on his periodictable.com site.

This win-win reciprocity with its partners could help solidify Apple’s lead. As Tim Bajarin, President of research firm Creative Strategies, writes in PCMag.com: “Even Apple’s detractors have to admit that the company’s forward thinking with things like iTunes and the App Store have given it quite an edge over potential competitors. And if Apple keeps tweaking and adding more products to its ecosystem, it will be hard for future tablet vendors to catch up.”

  
  
  
  
  
  

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Top-ranked IESE Business School's Institute for Media and Entertainment (IME) is the leader in media and entertainment executive education. Our intensive programs for executives and thought leaders include Advanced Digital Media Strategies, and the world's first global Advanced Management Program in Media and Entertainment (Media AMP). These programs attract executives from top media companies around the world, including Time Warner, Google, Disney, Fox Entertainment Group, NBC Universal, MTV Networks, and many others. IESE-IME helps media professionals gain industry-specific business knowledge and real-world insight to help them think like CEOs and advance their media and entertainment careers. For more information, visit www.ime.edu

All-Star C-Suite Lineup Booked for Groundbreaking Paley Center-IESE Media and Entertainment Management Program

By: Institute for Media and Entertainment in Uncategorized

Top media and entertainment executives are signing on to participate in the Leadership Forums of the world’s first global Advanced Management Program in Media and Entertainment (Media AMP) – an intensive, “transformative” management program aimed at preparing seasoned media and entertainment executives for major executive roles. The Media AMP, scheduled to launch in January 2011, is jointly offered by industry thought leader, The Paley Center for Media, and top-ranked IESE Business School. One of the Media AMP’s key components, the Leadership Forums, gives program participants the unique opportunity to network and interact in a private, intimate and personal setting with top industry leaders and entrepreneurs who are changing the face of the business. These off-the-record conversations enrich the program’s academic content by giving participants an inside look at the management challenges, victories and strategies that industry players face on a daily basis.

The Media AMP Leadership Forums in 2011 will also include an exclusive tour of the NBC Newsroom to be led by NBC News President, Steve Capus.

The line-up of speakers so far (more are expected to sign on in the coming months) includes:

Frank Bennack, Jr. Frank A. Bennack, Jr.
Chief Executive Officer of Hearst Corporation 
Hearst Corporation is one of the world’s largest media conglomerates and owner of well-known brands that include Good Housekeeping; Cosmopolitan; Country Living; O, The Oprah Magazine; Esquire; Marie Claire; Seventeen and SmartMoney. Learn more about Frank Bennack.

Lauren Zalaznick Lauren Zalaznick
President of NBC Universal Women and Lifestyle Networks
Lauren Zalaznick, President of NBC Universal Women & Lifestyle Entertainment Networks, oversees Bravo Media, Oxygen Media, and iVillage.  Learn more about Lauren Zalaznick.

Steve Capus Steve Capus
President of NBC News 
Steve Capus is the No. 1 News Division executive at NBC Universal and is responsible for all aspects of America's highest-rated and most-watched network News division, as well as MSNBC and NBC News Channel. Learn more about Steve Capus.

Avner Ronen Avner Ronen
Founder and CEO of Boxee
Named one of Rolling Stone's "Agents of Change" for 2009, Ronen is Founder and CEO of Boxee, the first "social" media center, whose free, open source, downloadable software is changing the way consumers experience media. Learn more about Avner Ronen.

About the Media AMP – An Industry Game-changing Management Program to Prepare the Next Generation Leaders in Media and Entertainment

The IESE-Paley Center Media AMP is the first program of its kind for media and entertainment executives, and is set to be a game-changer, redefining how executives advance their careers in this industry. It is a postgraduate level program targeted at high-potential senior managers, business unit directors and VPs of media and entertainment companies from around the world.

The Media AMP is being positioned as a “must have” industry credential among aspiring media and entertainment leaders, and can become a crucial component for companies in their leadership succession planning. The program combines in-depth, enriching classroom and networking experiences with the flexibility of a professional development program that does not require years to complete. Media AMP participants will attend four modules over a 6-month period, each 5 days long. Three of the modules will be held in New York City, and one in Los Angeles. Top professors from IESE Business School will teach the program, and high-profile senior industry experts will be featured speakers.

Learn more about the program at: www.ime.edu/programs/media-amp

About IESE Business School and The Paley Center for Media

IESE Business School is based in Europe, with a newly opened Center in Manhattan, and is among the top-ranked business schools in the world. The Paley Center for Media is a global thought leader on the cultural, creative, and social significance of television, radio, and emerging platforms for the professional community and media-interested public.

“The Paley Center serves as a convener of industry executives and as a leader of discussions about the evolving media landscape — as such we are an ideal partner for IESE in this new venture," said Pat Mitchell, president and CEO of The Paley Center for Media.  "The combination of the Paley Center’s close relationships within the media industry and IESE’s internationally respected business curriculum will make the Media AMP the ‘gold standard’ of executive education in this industry,” said Mitchell.

“We are thrilled to partner with The Paley Center for Media. They occupy a rare position of leadership in the media and entertainment industry and are well-attuned to the business education needs within the industry. Given their expertise and leadership position in the industry, it’s a fabulous alliance,” says IESE’s Dean, Jordi Canals.

IESE Business School is listed as # 1 in the full-time MBA rankings of The Economist (2009) and # 3 in global executive education in the Financial Times (2009). IESE also ranked #1 in Europe and #2 in the world in the Financial Times Executive Education Survey (2010) for its Open Programs. Based in Barcelona, Spain, IESE has a broad international reach, including a campus in Madrid, and a new state-of-the-art executive education and research center in New York City. With offices in Munich (Germany) and Sao Paulo (Brazil), IESE offers executive education programs in Germany, Brazil and China, and has helped develop business schools in 15 countries in Latin America, Europe, Africa and Asia.

The Media AMP is being presented by IESE Business School’s Institute for Media and Entertainment (IME). IME specializes in world-class business education for media and entertainment professionals. Its mission is to train media professionals to think like CEOs and to help them advance their careers.

The Paley Center for Media has offices in New York City and Los Angeles. Through the global programs of its Media Council and International Council, the Paley Center serves as a neutral setting where media professionals can engage in discussion and debate about the evolving media landscape. The Paley Center was founded in 1976 by William S. Paley, a pioneering innovator in the industry.

For program and admission inquiries, please contact Rich Sabreen, Media AMP Program Director, Managing Director, Institute for Media and Entertainment at IESE Business School, 646-346-8830, rsabreen@iese.edu.

For press inquiries, please contact Marie Oates, Director of Communications (US), IESE Business School, 646-742-2843, 617-290-7795 (cell), moates@iese.edu.

Upon Request, the following individuals will be available for comment:

Pat Mitchell
President and CEO of The Paley Center for Media

Christy Carpenter
Executive Vice President and COO of The Paley Center for Media

J. Max Robins
Vice President & Executive Director, Industry Programs of The Paley Center for Media

Eric Weber
Associate Dean and Director of IESE USA, IESE Business School

Mike Rosenberg
Media AMP Academic Director, IESE Business School

Rich Sabreen
IME Managing Director & Media AMP Program Director, IESE Business School

 

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IESE IME Logo for Signature

Top-ranked IESE Business School's Institute for Media and Entertainment (IME) is the leader in media and entertainment executive education. Our intensive programs for executives and thought leaders include Advanced Digital Media Strategies, and the world's first global Advanced Management Program in Media and Entertainment (Media AMP). These programs attract executives from top media companies around the world, including Time Warner, Google, Disney, Fox Entertainment Group, NBC Universal, MTV Networks, and many others. IESE-IME helps media professionals gain industry-specific business knowledge and real-world insight to help them think like CEOs and advance their media and entertainment careers. For more information, visit www.ime.edu

3D: Can it Change the Game in the Gaming Industry?

By: Institute for Media and Entertainment in Uncategorized

3DChangeGame BlogThe quest to deliver three-dimensional entertainment has been around since as early as 1838, when the the stereoscope, a device to view 3D images, was first invented. While the technology has since evolved, progress came in starts and stops, and 3D periodically faded from public interest. Thanks to recent innovations, and the commercial success of 3D films like “Avatar,” 3D is now making a comeback. In fact, if recent product launches and media coverage are any indication, 3D seems to be the buzzword du jour for the video gaming industry.

At the June Electronic Entertainment Expo (E3) in Los Angeles, for instance, Sony promised consumers an end-to-end 3D experience, with its Bravia TV 3D model, 3D glasses, and the launch of more than 20 3D titles for Playstation 3 by early 2011. Microsoft announced new 3D titles to go with the Xbox 360 and its “controller-free,” 3D motion-sensing Kinect device, while Nintendo unveiled the first 3D game console which doesn’t require glasses — the handheld Nintendo 3DS. Meanwhile, at the May Computex conference in Taipei, GPU and chipset developer NVIDIA debuted “3D PCs,” which allow consumers to play 3D games and view 3D photos, videos and movies.

However, considering that 3D gaming has been attempted before with negligible results –Nintendo’s Virtual Boy 3D game console, for instance, was discontinued a year after its 1995 launch – can 3D really stick this time around and help boost the gaming industry?  This is a market which appears to be in decline.

According to the 2009 year-end and 2010 mid-year reports by research firm NPD Group, video game sales have been sluggish overall. NPD says total console, portable and software revenues amounted to $10.5 billion in 2009, an 11 percent decline from 2008. And as of mid-2010, total sales were only $1.1 billion, a 6 percent decline compared to last June. Note, however, that while software sales continued to dip, falling 15 percent as of June to $531.3 million compared to last year, hardware sales have started to pick up, climbing five percent to $401.7 million for the same period. NPD analysts are hopeful that the slate of new content and devices will drive sales, and a recovery, further.

Why Some Say “Yes”

One reason for a positive outlook is the increased availability of 3D technology in itself. Manufacturers are now coming out with a wide range of 3D-enabled devices, including TV sets, Blu-ray disc players, monitors, computers, camcorders and even mobile phones. Content providers and distributors are launching 3D television networks, dedicated 3D channels, and 3D copies of videos and movies. Software developers are working on more 3D game titles for consoles and PCs, while companies like Microsoft, Intel and IBM are working on 3D streaming for the Internet. Indeed, as more and more players across the media value chain invest in 3D technology, this creates synergy and momentum that could help leverage sales and propel innovation even further.

Another reason is that, according to a survey of 2D and 3D gamers by 3D certification and advocacy group Meant to be Seen (MTBS), consumers seem ready to embrace 3D gaming options. The group’s 2009 U-Decide Initiative found that 65 percent of 2D respondents thought 3D was “intriguing,” while 27 percent said they “must have it.” Only less than 4 percent thought it was “tacky,” and about 5 percent thought it sounded “uncomfortable.” Furthermore, while 3D glasses have often been cited as a consumer turn-off, only 12 percent of 2D respondents and 3 percent of 3D respondents said they objected to 3D glasses for video games.

Why Some Say “No”

Some critics believe 3D gaming still has plenty of hurdles to overcome before it breaks out of its niche.  The topmost of the hurdles is price. On average, 3D-enabled TVs and PCs start at around $1,500 for basic models, and the prices can quickly go up for those with more sophisticated gaming capabilities. Specialized 3D glasses start at around $100. Consumers who may have recently purchased flat panel HDTVs may be unwilling to shell out new money for a new 3D TV set and its required accessories. They may choose to wait for a more affordable version or for more 3D content to be available in the market. As Microsoft's VP for Interactive Entertainment Business in Europe Chris Lewis commented in an August interview with Bloomberg Businessweek: “We are two to three years away [before 3D gaming takes off], till the price point comes down, till the experience is sufficiently social, that you don’t sit there with big glasses on and don’t talk to your family.”

Indeed, some market research firms predict that while sales for 3D TVs will no doubt increase as manufacturers roll out new models, they will likely do so at a conservative pace — at least for the near future. Research firm iSuppli, for instance, says only four percent (about 1.8 million out of 46.5 million) of total TVs shipped to retailers in the first quarter of 2010 were 3D. In fact, iSuppli predicts Internet-enabled TVs (IETVs) — TV sets designed to connect directly to the Web and display content — will be the focus of consumer upgrades in the short-term, and they estimate 3D TV sales will reach merely 4.2 million units in 2010 compared to 27.7 million IETVs.

That said, Nintendo’s 3D offering could be a good point of entry for casual gamers and those on a budget — not only does it forgo the need for 3D TVs and 3D glasses, but it will also likely be in the price range of Nintendo’s DSi devices (in the mid-$100s). Of course, it remains to be seen whether or not the Nintendo 3DS will be widely adopted by consumers. And if adopted by consumers, will other manufacturers introduce their own products, potentially making this new technology a game-changer for the video game industry?

  
  
  
  
  
  

IESE IME Logo for Signature

Top-ranked IESE Business School's Institute for Media and Entertainment (IME) is the leader in media and entertainment executive education. Our intensive programs for executives and thought leaders include Advanced Digital Media Strategies, and the world's first global Advanced Management Program in Media and Entertainment (Media AMP). These programs attract executives from top media companies around the world, including Time Warner, Google, Disney, Fox Entertainment Group, NBC Universal, MTV Networks, and many others. IESE-IME helps media professionals gain industry-specific business knowledge and real-world insight to help them think like CEOs and advance their media and entertainment careers. For more information, visit www.ime.edu

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