Last updated on November 26th, 2014
How long will Apple hang onto its leadership position in the tablet market?
With a slew of new tablets having been announced in recent months, one might be forgiven to interpret the plethora of upcoming devices as an indication of upcoming alternatives to Apple’s domination in this space. However such a perception overlooks the fact that Apple still represents 90% of all tablets sold:
Apple has sold nearly 15 million iPads since the product’s release last
April, and the device now accounts for close to 90% of all tablets
shipped worldwide, according to market research firm IDC. Apple also
says it has 160 million users who have credit cards on file. That means
if publishers want to sell books or magazines to tablet readers, they
have to go through Apple. (via LA Times)
And most upcoming Android tablets do not seem to significantly break Apple’s price point: The Motorola Xoom will be approx $800.00, other popular models are similarly priced
Turning the screws
In addition, the primary reason Apple’s device has become so popular so quickly are the quality and choice of software content available, namely apps, and their associated market place in iTunes. And here is where Apple is starting to turn the screws, as evidenced by their recent announcement of new digital content subscription models that fundamentally change the way publishers have positioned apps in the app store. In many cases magazine and e-Reader apps existed in the iTunes app store solely to sell content outside of the app store: examples of this are Amazon’s Kindle app, which offered books on the web only, downloading this content to the iPad’s Kindle app, bypassing Apple’s 30% apps store share. But Apple will now begin to kick out apps from the app store that offer outside purchase or subscription based products, unless these products are also made available as in-app or iTunes purchases.
For consumers this is great news, and represents an easy one-click way to purchase subscriptions. For many publishers however, this represents a 30% revenue sharing loss they did not have before.
How quickly is Google catching up?
Google on Wednesday announced their own digital subscription mechanism called “One Pass”. It is rumored to charge publishers only 18%, but details are sketchy at this point, and from a content perspective Apple has a huge lead in the app store market for the time being.
So for larger publishers, what does this all mean?
My interpretation is that there is no good immediate alternative to staying out of the iTunes app store, and that it will be quite some time before Android devices and Android app marketplaces present a significant leverage point for publishers to pressure Apple into changing their 30% subscription fees. The LA Times agrees:
Android tablets from Samsung, Dell and others have not gained the
traction with consumers that could present publishers with a clear
“If you look out over the coming several months, there’s probably
nowhere else [besides iPad] for those content producers to go,” said
Yair Reiner, an Apple analyst at Oppenheimer & Co.
And for smaller publishers like us?
And as a smaller independent publisher I’m seeing opportunities in creating products and apps that leverage the ease of the new subscription models. Because we are reaching mostly new global market segments with our upcoming apps, Apple’s new subscription announcement represents no loss of existing revenue, but an opportunity to conveniently offer subscription based products world wide.