Washington Post: Why Amazon, Apple tablet releases won’t be a big deal until they’re $100 or less
The high definition screens, faster processors, and enhanced Wi-Fi capabilities of Amazon’s new Kindle Fire tablets are making big news. The price of these devices is getting even more attention: $199 for the 7-inch and $499 for the top-of-the-line 8.9 inch 4G LTE-enabled models. Amazon will undoubtedly sell millions of these.
But I’m not excited.
Here’s why: These tablets won’t catalyze the revolution that is waiting to happen. The magic will happen when the price-per-unit drops below $100 on its way towards $50. That’s when hundreds of millions—possibly billions—of units will be sold and impact people in all parts of the world.
That’s exactly what happened when cell phone prices dropped to this level. India and China both have close to a billion mobile subscribers today. Cisco estimates that by the end of 2012, the number of mobile-connected devices will exceed the number of people on Earth and that by 2016 there will be over 10 billion mobile-connected devices— or 1.4 mobile devices per capita. These phones have dramatically impacted commerce, health, and social interactions all over the world. Villagers in the most remote parts the world are now connected. These have also aided uprisings in the Middle East and China.
Internet-enabled tablets will take connectivity to the next level. The world’s billions will have access to the same torrent of unlimited knowledge that we do. They will be able to get the same news, have access to the same online learning tools, engage in the same discussion groups, and participate more equally in the global economy.
The magic won’t just happen abroad. There are revolutions waiting to happen in the United States. Today, tablet devices are typically used to play games, search for information, send emails, read books and news, and to engage in social networking. You occasionally see iPads being used as electronic kiosks in retail stores. When the price point for tablets drops to about $50, you will see them everywhere. Just as happened with apps on iPhone’s and Android devices, there will be new uses of technology that we can’t even imagine. You will see these devices in grocery stores, where they will help you find what you need and decide what to buy. They will be used increasingly in restaurants to help decide what to order and in schools to revolutionize education.
The technology already exists to create sub-$100 tablets, but without the high-definition retina displays, superfast processors, and other bells and whistles that Amazon, Google, and Apple are constantly hyping. I would argue that, for most applications, such as the ones I mentioned above, you don’t need these advanced features. The iPhone released in January 2007 blew us away with its screen, speed, and connectivity. Later versions of the iPhone were relatively minor improvements on the original. The iPhone 5, which is rumored to be released next week, will no doubt be nicer but it is something that we are doing fine without. A tablet device with the level of functionality that earlier versions of the iPhone had, and that were also just fine, could be built relatively inexpensively.
Indeed, India is trying to launch such a product in the form of the Aakash tablet. When it was announced in Oct. 2011, it was billed as the $35 tablet. Development was outsourced to a Canadian company, DataWind. The Indian government’s specifications for this device were so weak that the released product was considered unusable and the project was embroiled in politics. DataWind CEO, Suneet Singh Tulli told me, via e-mail Thursday, that despite the delays, a newer version called Aakash 2 will be launched before October. He says it will have significant performance enhancements including a four-point, multi-touch projective capacitive display and a Cortex A8 – 1 Ghz processor. He also says it will run the latest version of Android, provide Wi-Fi and cell phone connectivity, and retail to the public in India for $63. The government is purchasing a version of this for $40 that it plans to subsidize for schools. Tulli says his goal is to market a high-end version of this tablet in the U.S. for a price of $79 early next year.
If it isn’t DataWind, then it surely will be a Chinese manufacturer that floods the market with cheap, disposable tablets. It is badly needed and has to happen. I doubt that Amazon or Apple will willingly go down to this price level because they are focused on high-end, high-profit customers. But regardless of who gets there first, there is a large, worldwide, market at the bottom of this pyramid.