giovedì 26 gennaio 2012

Product strategies for the tablet market

While computer manufacturers (Samsung, Lenovo, HP, ...) are struggling to emerge in the tablet market and have so far failed to provide a real and credible alternative to the leader of this market segment (ie. Apple’s iPad), Amazon and Barnes & Noble are experiencing great success at least with American consumers. The new Amazon Kindle Fire (7 inch tablet) seems to have sold 1 million units per week in the month of December. Barnes & Noble (the largest retailer of books in the U.S.) with the renewed Tablet Nook is having similar success.

What these two companies have done differently?

First, they understood that in order to fight the incumbent iPad they must offer a simple product with reasonable price (around $ 200-250). The other iPad competitors have focused on providing tablets with amazing hardware and specs at prices very much inline with those of Apple. However they have not been able to build around their product a comprehensive offer of services and content easily available to users. Tablet products of Samsung, Motorola, Asus, Acer seem to be aimed at replacing PCs rather than offering a “tablet” experience to the customers. Both Amazon and B&N have entered the tablet market adopting an approach similar to Apple and have focused on providing the customer with a “user experience” for the functions they are most interested in: reading books and digital magazines, surfing the net, watching videos, checking email and using applications organized in the proprietary app store designed for the specific tablet. Both the Fire and the Nook tablets are based on the Android platform but with a completely redesigned interface that is controlled by Amazon and B&N hence shifting the focus from the operating system to the contents that are offered. Both have their own app store applications compatible with Android but carefully chosen and selected from Amazon and B&N (unlike Google's Market where there is no filter), and this approach eliminates many apps that are marginal or even harmful.

So are these computer manufacturers doomed to fail in the tablet market? For sure their PC-centric approach is not meeting the needs of mass consumers. The new android tablets that will be launched in 2012 seem to continue along this path. Just think about the ASUS Prime Transformer, a tablet with superb hardware specs but that does not create the ecosystem that has generated the success of iPad, Kindle Fire and Nook tablet.

Amazon and B&N are selling their tablets at very low price (probably with little or no profit) because they are way behind Apple and they must create a significant user base to compete. Obviously this situation cannot continue for long. In perspective I think that content owner such as Amazon and B&N will consider the possibility of alliances with the major tablet manufacturers in order to get rid of the hardware production part. In the future we could see an Amazon-Samsung tablet where the amazing hardware specs of Samsung devices are integrated into the Amazon ecosystem.

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