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Wednesday, September 1, 2010

Sony Just Doesn't Get It.

In the world of electronics, Sony is always a player. From audio to video to gaming, Sony can be found in the thick of it. While many of their products are quality made, Sony always seems to get beat on pricing. Some companies can get away with charging a premium (e.g. Apple). But Sony has never had the reputation for "cool" or the innovation in its products to get away with hit (Rather, quite the opposite. Sony takes a well deserved beating for often deliberately crippling its products out of its obsession with piracy - but that is another rant for another day).

As a result of its failure to cut prices, it always takes a beating from the competition. This is one reason the VHS beat out the Sony Betamax in the 80's, why the Wii is pushing aside the Playstation, and why most of the world won't give up their DVD collections to move to Blu-Ray. Sony is simply afraid to cut prices in order to gain market share. Sometimes it works out okay, but often it leads to failure.

Given its past practices, I should not have been surprised at Sony's latest decision. But I could not help be shake my head when I read that Sony is raising its prices on its ebook Reader. At a time when other readers are in an all out price war, Sony is actually raising prices on products!

Sony's cheapest reader, with a pathetic 5" screen, was selling for $150, is now selling for about $180. Yes, they have added more memory and a touch screen. But even the Sony Touch, which already had a touch screen, is now selling for $50 more. Compared to other market leaders like the Kindle and Nook, which have been improving features and cutting prices, Sony is definitely headed in the wrong direction. Sony's 5" screen is now more expensive than the latest Kindle and about the same as a Nook which both have 6" screens and offer lots of other great features.

Sony seems to think its improvements merit a higher price. If it was a monopoly, it might get away with this. But this is one of the most competitive markets in the world today. It's cheapest model should be bare bones, with low low prices the highest consideration. If it wants to add more memory and features to other models, that gives users a choice. But as other readers are battling down to below $100, Sony thinks it can simply walk away from the price war.

Even the the new features are questionable. Adding a touch screen has been widely criticized for affecting the contrast and viewing quality of the screen. I can say from personal experience that it makes the screen look more like a cheap black and white LCD screen than ink on paper as eInk should look. Again, this follows a bad trend for Sony, which though that user would pay a higher premium for slightly smaller video tapes, for slightly higher graphics in its gaming systems, or significantly more for the better picture in Blu-Ray. By and large, the market has said that lower prices matter more.

If Sony cannot compete by going much lower on price, bigger and better readers like the Kindle will drive it from the market. Better to sell at a loss now and gain market share, then cook up some deals with publishers to sell media and make money at the back end.

But as usual, Sony is getting greedy and will pay the price. Unless it changes course, I would not be surprised to see Sony leave the market within the next two years. I see the Kindle remaining the market leader, with much of the rest of the market coming from very low priced bare bones systems made in China.

People who want quality will buy a Kindle. People who want lots of other features will get the iPad or one of the many other tablets coming out soon. People who want inexpensive and easy will go to the cheaper brands. Sony does not seem to have a place in the market. It will be feeling the pressure as it gets squeezed out of the market.

Wednesday, August 11, 2010

Look like Dell is coming close entering the tablet market with the release of its "Streak". Personally, I think this device misses the mark. With a 5" screen, the device is too big to fit in your pocket. After passing that size point, they should make the screen at least 8" or 9" so that the screen is big enough to use for other things.

That said, it has some nice features, including GPS and a 5 MP camera (although these are now the norm on most smart phones these days).

If you want a phone with a slightly larger screen, this Android based device has potential. But I still don't understand the reluctance to give consumers a device with a decent sized screen.

Monday, August 2, 2010

Getting There

Since my last post, lots has happened that gives me hope that change is on the way. iPad still enjoys a virtual monopoly on tablet sized devices. But that does not appear to be the case for much longer.

Many companies seemed to have been hitching their wagons to Microsoft's Windows 7 tablet, which CEO Steve Ballmer says is "coming soon". However, I don't think we will see them any time this year. MS seems to want to rely on a new Intel chip that is not due out until 2011. If MS really does plan to shove a tablet out the door this this year, they may rely on exiting Atom Chips for a while, then change course when the new chip arrives next year. This means all you early adopters can expect a buggy beta like version of the device with much poorer battery live and bulkier size than you will get next year.

Also, MS seems to be trying to base its tablet OS on the PC version of Windows. That is a big mistake. It will mean the device is slow, crash-prone, and a hardware hog. MS still just doesn't get it. The latest user interface (UI) called Macallan seems more focused on cool graphics rather than making a useful and efficient device. Its focus on turning pages looking like you are turning a paper page in a magazine reminds me of how some car manufacturers used to put fake wood panels on the sides of their cars so they would appear more like the wooden horse drawn wagons used by their parents. It also reminds me of Xbox's focus on graphics rather than fun game play, which caused the Nintendo Wii push MS aside in the console market.

It appears, however, that most of the major would-be tablet makers agree with this assessment and are dumping MS as the primary provider of their OS. HP made, in my opinion, a brilliant move by picking up Palm at a bargain basement price a few months ago. HP dumped plans to develop a Windows 7 tablet and is now allegedly building one based on Palm's WebOS. This will not only mean a better product that can be brought to market faster, but they won't even have to pay OS royalties to MS or anyone else. Now we just have to see if they can execute this plan properly. HP is still talking about an enterprise version with Windows, but I expect that will be dropped soon, or shortly after it is release as a failure similar to the horrible MS Kin.

Also, expect to see Blackberry entering the arena with its upcoming release of Blackpad supposedly this fall. Again, this is essentially the OS we see on Blackberry phones on a device with a much larger screen. I use a Blackberry every day and love what it can do. My biggest complaint with it right now is that I would often like a bigger screen. I think I am the perfect target market for this device. Unlike the iPad, which is marketed more to students. Blackpad will try to accommodate the business market (the people with all the money). Businessmen who mostly want to use this gadget as a toy will feel more comfortable seeking an employer request to order something from Blackberry than iPad or a consumer oriented book reader. If it can handle connecting to enterprise servers and can make phone calls using a bluetooth headset, I think most IT departments will be happy to support these devices as legitimate business tools.

Dell and Asus have also dropped plans for a Windows OS and are going with Android. Again, like Apple has done, HP is doing with Palm and Blackberry is doing with Blackpad, they are essentially taking a smartphone OS and putting it on a bigger screen. This is exactly the way to go. But again, execution is everything. We have to wait for the releases. Expect to see lots of pressure for fall releases in time for Christmas. Also, with all the companies entering the arena, expect to see a price war next year. By Christmas 2011, these devices will probably be selling in the $250 - $300 range for base models.

On the eReader side of things, we see Amazon finally cutting its prices, with the new release of a $139 model reader ($189 with free 3G wireless). For me, the 6" screen is still a little small for most purposes. I expect this price to drop under $100 by next year. Amazon will sell these things as a loss leader, hoping to make money on all the ebooks you buy. Since they make it difficult to load much of anything else on the device, the devices should be sold at a loss, just like printer companies sell printers at a loss, knowing they make their money on the cartridges.

Amazon had to move much lower than the iPad prices, but also has to worry about competition from the Nook, from Barnes & Noble. The Nook starts at $149 for a similar black & white 6" screen. It also has this tiny color touch screen below the main screen. But I find this a distraction. They would be better off just putting buttons there. The fact that Amazon dropped prices $10 below the Nook says they are not going to let direct competition undercut them. Prepare for more price wars in the coming months.

Other readers such as the Kobo and Sony Reader are pressured to price in this same area. But since they are not as well positioned to make up losses after the initial sale, keeping up with an increasing price war may be more difficult for them. As I said before, dedicated eReaders using eInk are easier on the eyes if reading a long time, but most people will still prefer a multi-function tablet unless the eReader can live in a much lower price point.

Monday, June 14, 2010

Why cell phones should think big

Apple, which has dominated music player and cell phone markets for years now, has received great fanfare for the introduction of the iPad.

This technology is nothing new. Tablets and e-readers have been around for years. Amazon and Sony have been fighting in the e-reader market for years now, with relatively little interest from consumers. More advanced multi-function tablets have been around for years too. Anyone still have their Palm Pilot from the 1980's? Even Apple was doing this 20 years ago (anyone remember the Newton?).

Why then is the iPad being seen as the greatest new invention since the PC? In part, this is due to Apple's well earned reputation for coming out with cool cutting edge technology popular with young people. Part of the reason is also customer confidence in being able to purchase and download interesting media with relative ease. But the other big reason is that Apple is filling a consumer demand that just isn't being met by any other major product.

Until the development of wireless 3G networks, portable streaming video was not a viable technology. The other problem has been that most large media networks are so afraid of piracy that they have been reluctant to much of any content available. While there have been some other attempts at portable video, they have been too small to gain much notice, and have not had access to much digital media of interest.

All that is changing now, and Apple is clearly the first major player out of the gate. It is a wake up call to the rest of the industry to get out there and make something happen.

E-ink readers such as the Amazon Kindle or Sony Reader are seen as the future, but these sorts of devices really fill a different consumer need entirely. They are ok for reading a book straight through, but if you want to jump around pages in a reference book, or store hundreds of documents for reference, these devices fall woefully short. Further, the slowness in updating page changes and inability to move beyond monochrome, makes them look pathetic next to the iPad. Yes, e-ink has great potential because of its ability to use much less electricity than an LCD screen, but if it cannot keep up in performance, it is like comparing an electric golf cart to an SUV. Until performance can meet that of LCD, e-ink is going to be relegated to people who want a very limited use device. They are only going to do that if the cost is much cheaper. Until we see devices selling for well under $100, these will not be of much interest since consumers can read books, and much much more buying a similarly priced iPad.

The technology to take on Apple, however, does already exist for a number of companies. They are called Smartphones. Apple simply took its iPhone OS and put it in a device with a bigger screen. Other companies, Blackberries, Palms, Androids, already exist on phones and are capable of streaming video, organizing documents, playing games, and just about anything else available on the iPad.

Their only major failure? You cannot get one with a screen bigger than about 3". Phone manufacturers have tried to keep their devices pocket sized. There is a large market for these small phones, but many others would be more than happy to carry around a larger device if it had a screen size that let the read documents, watch shows, or play games without having to use a magnifying glass. There is no reason these cell phone makers could not keep pocket sized devices for customers who want that, but put basically the same OS on a 9" screen for customers who want larger screen size. Given that the OS already exists, such a device could be on the market in a matter of months. They could even still work as phones using a head set to the tablet.

Come on cell phone manufacturers - the cell phone market is hugely competitive right now. The tablet market is wide open. You already missed being first into the market. Better to be second than tenth.