26% of U.S. Internet Users Might Buy a Tablet This Year

Recent studies by Ipsos MediaCT examining penetration and ownership of tablet PCs shows dramatic increases in buying of tablets.

In fact, tablet ownership is now 16 percent among 18 year olds and has increased across all demographic groups.

Ipsos expects more than a quarter of U.S. online consumers could purchase a tablet before the end of 2012.

Samsung Galaxy S3 Will Test the "Big Screen" Theory

The Galaxy S3, which tracks the user's eye movements to keep the screen from dimming or turning off while in use, and features a giant 4.8-inch screen, is launching in 28 European and Middle East countries. The U.S. launch will probably come in July 2012.

The Galaxy S3 is deemed by some observers to be the single device best positioned to compete with the Apple iPhone, including the upcoming version of the Apple iPhone.

The smartphone, running on Google's (GOOG.O) Android operating system, boasts a 4.8-inch (12.2 cm) screen, one of the largest on smartphones ever, and much bigger than the 3.5-inch display on the iPhone 4S.


In the first quarter of 2012, Samsung sold 44.5 million smart phones, giving it 30.6 percent market share. Apple sold 35.1 million iPhones, taking 24.1 percent market share.

Will Developing World Mobile Innovations Come Back to Developed Regions?

Innovation traditionally has taken established paths. New technology has been made available to people in developed nations, while the rest of the world getting access as markets scale and prices come down.

Likewise, technology has been developed in universities, commercialized for enterprises, then migrates into the mid-market, then small and medium business. Eventually, consumers might adopt, as well.

But those diffusion pathways are changing. These days, it is very likely that innovations are created in the universities, then popularized first in the consumer markets, before being adopted later by businesses of all sizes.

In similar fashion, technology innovations can be created in the developing regions and then find their way back to developed regions.

So Nokia looking to use Kenya to debut a free classifieds service (think a mobile-phone version of Craigslist), complete with a first-ever feature that lets people shop using voice commands to browse for goods.

In fact, the traditional model of developing new products is quietly reversing course. Call it "trickle-up innovation," where ideas take shape in developing markets first, then work their way back to the West.

"If it's radically innovative and reduces costs, it's going to get looked at and will accelerate," says Michael Chui, McKinsey Technology analyst. Consider almost anything related to mobile phones.

For the average developing market mobile user, a mobile feature phone costs a few months’ salary. Using the devices can represent over 10 percent of their monthly income, UNICEF believes.

Batteries can be hard to recharge locally, so long battery life is necessary. Handset cost and low recurring costs, including apps that require very little bandwidth, also are necessary. All of those innovations would be helpful in developed markets as well, though.

The Long Road to Streaming TV

As haltingly slow as the process is, we continue to glacially create all the infrastructure required to enable streaming delivery of television at a revenue-significant level. Better broadband is the first requirement, as is the consumer habit of watching TV on lots of devices connected to the Internet.

Better ways of aggregating content, providing navigation and ease of use also are needed. In many ways, Xbox now provides some of that functionality. Boxee and Roku are other examples.

But content availability remains the biggest blockage. AT the moment, online content still does not feature most of what consumers expect when they buy video entertainment services. To be sure, a growing number of consumers decide to live without traditional video services. But those consumers remain a small percentage of all consumers.

Still, even once the infrastructure to support robust video streaming is in place, there will be key obstacles, namely content availability.

Historically, even content availability has not proven it can create a large market.

According to a new report released by The Diffusion Group (TDG), video-on-demand services provided by PayTV operators should be, but are not, generating significantly higher viewing and advertising revenue. Total VOD use is small, representing only one percent of all U.S. TV viewing.

By some measures, VOD is doing better. Magna Global has estimated that U.S. homes with VOD, a "category that includes both traditional multichannel VOD offerings and over the top services," will hit 70.1 million homes, about 57 percent of all TV homes at the end of 2016.

TDG attributes that failure as a reflection of VOD's inadequate advertising support and awkward program guides that limit availability and viewing of ad-supported VOD content. That also suggests the "for fee" VOD has not gotten widespread interest.

VOD in recent years has contributed about $2 billion a year worth of revenue for U.S. video entertainment providers. U.S. cable TV companies alone booked about $98 billion in 2011 revenue. That doesn't include the sizable revenue earned by satellite and telco providers as well.

The point is that VOD, as a service, has been a modest success, though it has had three decades to make its case.

Content availability is the single biggest key needed to unlock the streaming TV business. But if video on demand is any indication, even that might not be enough to create a robust streaming video business.

Platform Wars Explain Apparent Facebook Phone Interest

The platform wars are driving application providers into what might be unusual territory. In order to compete with Facebook, Google attempts to build a social network. In order to compete with Google, Facebook attempts to build a phone. Lots of device or app firms have launched their own browsers.

And the "platform wars" are occurring on a number of fronts.

The fight over the TV is really a fight over the next massive consumer platform that is coming up for grabs. Of platforms there are few: Google owns search, Amazon owns digital retail, Facebook owns social, and Apple owns consumer devices. Microsoft owns, well, nothing at the moment, despite its handsome revenue stream from Windows and Office, argues James McQuivey of Forrester Research.

But Microsoft’s Xbox 360 is already the most-watched net-connected TV device in the United States and soon, the world. With more than 70 million consoles in households worldwide, as many as half of them connected to the Internet, depending on the country, Microsoft can rapidly drive new video services into tens of millions of households, McQuivey argues.

Significantly missing from those lists of platforms are cable or telco access service providers. At least for the moment, telcos and cable operators are not "platforms."


Rumors about Facebook creating its own smart phone are not new. Now there are rumors that Facebook is considering buying mobile browser Opera, a move that would strengthen Facebook's platform status without requiring an immediate move into the actual device business.

Separately, there are rumors Facebook is hiring engineers as part of a project to create its own smart phone.

You might ask why Facebook would want to enter competition with Google, Apple, Microsoft, Mozilla and Yahoo. The answer is that, right or wrong, such a move would be viewed as a way of allowing Facebook to grow its status as a platform, much as Google, Apple and Amazon have done.

Keep in mind that Facebook also has talked about becoming an ad network, able to sell inventory outside Facebook. A browser would help, in that regard.

Google itself makes far more money from advertising on the iPhone than it does on its own Android devices, some would note. That suggests the rationale for an ad-supported company to control its own devices and use its own operating systems.

Apple Shares To $1,000?

Research firm Piper Jaffray believes Apple shares will hit a value of $1,000 in the next couple of years, based on a refresh of existing product lines and launch of Apple TV devices.

In 2012, Piper Jaffray analysts are looking forward to several “meaningful updates” to core products, including the iPhone and Mac, as well as the introduction of a TV, for shipment in 2013. Those products will, at least in the near term, prove Apple can still innovate at its accustomed high level.

Google Already Seems to Have Learned Something about Access in Kansas City

Some say Google is backing off its commitment to provide wholesale access to third parties as part of its 1-Gbps Kansas City network. Early on, Google seemed to believe it would offer third parties access, but it might be that Google already has learned how difficult it actually is to make business with an advanced fiber-to-home network.

Google might have concluded that any realistic hopes of operating the network as an money-making enterprise, as well as its hope to encourage lots of application innovation, might only be possible if Google acts as a retail provider and reaps all the revenue.

Also, if the point is to create a test bed for new applications, Google might now be concluding that it will learn more if it takes a more direct and active role in sponsoring such applications. One of the problems with operating as a wholesale provider is that you don't actually learn very much about what retail customers want, and are doing, because you don't actually have those customers.

Some think the wholesale approach would have been more interesting, as GigaOm tends to argue. But some might say the realities of the fiber to the home business now are clearer. As other triple-play service providers can well attest, offering such services in a competitive market, and Kansas City already has strong, entrenched cable and telco providers, is difficult.

If Google only wanted to create a "test bed," and didn't mind losing quite a lot of money, a wholesale approach might be feasible.

Utopia, an open access network operated by 16 municipalities in Utah, is among those entities trying to prove that a wholesale model can work, commercially.

Google might not believe it can learn as much, much less turn a profit, without offering and managing a retail service, allowing it to work with partners to test new services directly.