Apple’s rumored tablet may write next chapter in publishing
Not since biblical times has the arrival of a tablet been greeted with such anticipation.
Apple Inc. won’t reveal the details of what is widely expected to be a new tablet computer until Wednesday, but it has already shaken up the publishing world, whose executives wonder whether the device will revolutionize the distribution of newspapers, magazines and books in the same way that the iPod transformed the music industry.
Fueling widespread speculation, Apple last week invited reporters to “come see our latest creation” but provided no other information. Pundits and analysts have guessed the gadget will feature a 10-inch touch-screen color display that’s designed for reading, watching video, browsing the Web and playing games.
How the device connects to the Internet, whether through wireless hot spots or already congested high-speed mobile networks, remains a question. Analysts believe the device would sell for as much as $1,000 and reach stores in March.
Apple has been slowly amassing digital reading material for the forthcoming device. A team from the New York Times has been working in Apple’s Cupertino, Calif., headquarters in recent weeks, developing a large-screen version of the newspaper’s iPhone application that incorporates video for the yet-to-be-unveiled device, according to one person with knowledge of the matter. A Times spokeswoman declined to comment.
Condé Nast Publications, publisher of 18 magazines, and HarperCollins Publishers have been approached about developing content for Apple’s tablet, according to the Wall Street Journal. HarperCollins declined to comment, but Condé Nast issued a news release last week, touting sales of a digital version of its men’s magazine, GQ, for the iPhone and iPod Touch, and acknowledging it was developing content for “the anticipated tablet from Apple.”
“We have seen the door opened to a different pool of readers through these new distribution channels,” Robert Sauerberg, Condé Nast president of consumer marketing, said in a statement.
Apple’s tablet is among a class of new devices set to hit stores this year. Hewlett-Packard Co. showed a prototype of its Slate touch-screen tablet this month at the Consumer Electronics Show in Las Vegas, where Dell Inc. also unveiled its Streak tablet device.
Tablets are envisioned as a novel way for users to check e-mail, catch up on their social networks, read books or browse the Web, without the added bulk of keyboards and wires. But they will inevitably vie for market share with electronic readers designed primarily for reading, such as Amazon’s Kindle and Sony Corp.'s Reader, that sold an estimated 3 million to 4 million units in 2009. This year, consumers are expected to snap up 6 million devices, generating $1.3 billion in retail sales, according to the Yankee Group, a Boston research firm.
Dozens of such devices were unveiled at this year’s Consumer Electronics Show, and more are destined to crowd store shelves in the coming months, creating a potential source of competition for tablets such as Apple’s.
Analyst A.M. Sacconaghi Jr. of Sanford C. Bernstein & Co. wrote this month that it’s hard to gauge demand for a product that has yet to be introduced. But based on the first-year sales of other successful products, such as the iPod, the Kindle and the Palm Pilot, he estimates sales of less than 5 million tablets. Another analyst, Shaw Wu of Kaufman Bros., offered similar projections.
First-generation tablet PCs generated lots of enthusiasm when they were introduced in 2001, promising to replace the finger-slamming trauma of typing on a keyboard with the ease of using a stylus. But Sacconaghi wrote that sales never matched the initial euphoria because “input mechanisms proved somewhat clumsy” and the premium prices put tablets out of reach for one of the target groups: students who were interested in using them to take notes in class.
E-readers have fared better. Amazon said that the Kindle is its bestselling product ever and that on Christmas Day, digital book downloads exceeded physical book sales. As of January, Sacconaghi said the Sony Reader, the Barnes & Noble Nook and the Amazon Kindle were sold out, “another strong indicator of burgeoning demand.”
For the book-publishing world, Apple’s device could entail radical changes to the way it does business. Cover design, pricing, marketing, payments made to authors -- the digital transformation of the printed word is bound to touch every aspect of the $25-billion industry the same way it has rippled through music and movies.
Although digital book sales still account for less than 5% of the industry’s revenue, it’s growing fast, while traditional print book sales have stagnated.
“It’s a big new world, and publishers are all scrambling,” said Jane Friedman, former president of HarperCollins and chief executive of digital publishing start-up Open Road Integrated Media. “The whole business model is being turned on its ear.”
With Amazon.com Inc. charging $9.99 for electronic Kindle copies of the same new releases selling for $25 in hardcover, publishers recognize that they won’t be able to maintain the pricing they’ve enjoyed for decades.
Apple’s device could also present a new opportunity for publishers to counteract Amazon’s mammoth influence over the book market and a new avenue for publishers to explore other ways to make money, such as selling individual chapters of a travel book or charging extra for videos that illustrate step-by-step guides in how-to books.
By going through Apple’s iTunes store, publishers can take advantage of the millions of consumers who already use iTunes to buy an assortment of digital media such as music and movies. Publishers also like the ability to set their own retail prices; they have only to give Apple a 30% cut of the sale.
With Amazon, publishers receive 50% of a book’s retail cover price, but the Seattle-based online merchant is free to charge whatever it wants -- a fact that has frustrated many publishers who fear the same price erosion that occurred in the music industry when albums began to be sold digitally.
Some analysts say the publishing industry’s hopes that Apple will usher in a renaissance are overly optimistic.
Although Apple has proved its deftness at creating trendy devices and a digital store in which publishers could sell their wares, Gartner Inc. analyst Allen Weiner said there will be plenty of trial and error before newspaper, magazine and book publishers figure out the “fine art” of creating digital editions that take advantage of the device’s graphics and video.
“Nobody’s buying a tablet to read e-books. The lowest-end Sony Reader, which costs $199, does a fantastic job on reading books,” Weiner said.
“Where’s the opportunity? It’s creating book experiences. It’s taking a cookbook and adding video and author updates. That’s an opportunity, because you can charge extra for that.”