E-readers are not tablets—yet

This semester, three of my SJSU honors students studied the tablet and e-reader market. Swapnil Lall, Michael Edmonson and Joshua Hawley came up to speed on an emerging and turbulent market segment. Since their presentation last month, there have also been some important announcements in this market.

They did 20 interviews, 57 intercept surveys and 133 online surveys of owners and non-owners of these products.

Not surprisingly, they found that the iPad dominates mindshare as the iPhone did four years ago. Most respondents want an iPad, even if few are willing to pay the $500 price. As various analysts have noted, there is no tablet market — just an iPad market.

However, there is an e-reader market, and the separation of specialized e-readers from general-purpose tablets seems only temporary. Today there are significant differences in price and screen technology, but major overlaps in usage — as well as one product (the nookColor) that straddles both categories.

It is clear that the tablet market is growing, as awareness and usage grow. For owners, the products clearly compete with laptops, smartphones and physical books.

The most popular usage categories that our students found were (in order):

• news
• books
• social networks

Two-thirds of the respondents say that e-reading is a primary reason for using the device. The web is important, but for most e-mail is less important than people thought it would be. Having a web-connected tablet provides the value of serendipitous discovery, as when one respondent uses it with IMDB to research actors in the current TV movie.

For now, the market has two distinct segments: the $100-150 black & white (E-ink) e-reader without Internet capabilities, and the $200-800 color web tablet with WiFi and possibly 3G. Even if the two categories will eventually merge, the entry level devices are spurring adoption, attempting to lock-in e-book formats and hastening the demise of physical books.

NYT columnist David Pogue evaluated the new Nook (aka “Simple Touch Reader”) and Kobo (“eReader Touch”) in his Thursday column. He laments the current limitations, like the lame “lend” features (one time only) and restricted availability (no Harry Potter).

Still, these 6" touchscreen E-ink tablets improve on the market-leading Kindle in terms of convenience and size, with the Nook nosing out its rival:

The All-New model, for this nanosecond in marketing time, offers the best combination of size, shape, battery life and features on the market; it’s a superb reading machine. But remember that buying an e-reader means locking yourself into that company’s bookstore. Idiotic, incompatible copy-protection schemes mean that you can’t read a Kindle book on a Nook, or a Nook book on a Kobo, or a Sony book on an iPad.

With a 2-week battery and a size that fits in my back pants pocket (when standing), the new Nook seems close to my ideal.

Amazon will presumably introduce an improved B&W device in the next few months, and is expected to offer a color tablet in time for Christmas. While all the press has been focused on Android tablets, it appears that (outside the iPad) all the action has been on the low-end e-readers that are permeating the public consciousness and changing behaviors. If I were doing a startup now, I’d be interested in developing enterprise software (or cloud services) for high school and college students who will quickly abandon physical books for e-readers.

Meanwhile, there will be a bloodbath in the 7" and 10" tablet segments as company after company loses their shirt. I don’t know who will eventually be left standing, but it’s clear there’s a lot of money to be lost trying to peddle $500+ products to consumers who don’t really need them and would rather buy an iPad anyway.

One thing I haven’t seen mentioned is the gender effect for tablet size. At least in the US, most women carry a purse that could easily hold a 6" e-reader or 7" tablet, while for men, it’s either a pocket smartphone or a 9-13" tablet or laptop. Is the 6-7" device a “tween” device, or will it find a permanent home?

While I like the size (and price) of the new (6") Nook, compared to my 7" nookColor the screen seems a little small for reading PDFs of letter-sized documents — and I’m not going to carry two devices for PDFs and e-books. Still, a $150, 8 oz. e-reader that reads books and PDFs would find a place in my briefcase alongside my laptop, both to provide better battery life and also provide a second screen while writing reports or emails.

Time to say goodbye to Steve Jobs?

A day after his appearance to sell iCloud to developers, Steve Jobs emerged from seclusion Tuesday night to sell his vision of a new 12,000 employee corporate campus to Cupertino politicians.

Apple has been HQ in Cupertino for more than 30 years, most recently at the Infinite Loop facility originally intended to house R&D employees but one that housed most of the company during the cutbacks of the darkest days of the 1990s.

Steve Jobs doesn’t make many public appearances nowadays because (one presumes) he’s really really sick. He doesn’t do trade shows or general press interviews although he was able to make it three months ago when the POTUS flew into town.

When his time is scarce, Steve Jobs doesn’t do anything by chance or whim. That he showed up to wow the part-time council members (monthly salary: $730/month) in a small town of 50,000 suggests that this is really important to him.

And even for a company as insanely profitable as Apple, the spaceship motif campus (a round Pentagon) to replace the old HP facilities on the 150-acre site is over the top.

So my guess — and it’s only a guess — is that Steve wants to create a permanent, tangible legacy for his life that will outlive people’s recollections of his role transforming the PC, mobile phone and tablet industries. The new facility will be a lasting testimony to the success of Apple during the early 21st century, just as the PanAm and Rockefeller and Carnegie and other buildings testified to the success of their respective patrons.

Maybe Steve will eventually return as Apple CEO. Maybe he’s just hedging his bets in case his health doesn’t improve as he and his family pray will occur.

But with or without the bronze statue of Steve out in front — ala Walt Disney at Disneyland — Steve already has more of a legacy than ten CEOs randomly selected from the Fortune 500. He doesn’t need a building or statue as proof.

If you build it, they may go

In the past 24 hours I’ve had a chance to spend considerable time at two major US airports — Pittsburgh and Denver — thanks to my once-favorite airline, United Megalith Airlines. (“We try to ream you™”). In fact, UMA gave me multiple chances to enjoy Denver by canceling my flight home.

But both were examples of airports built in a period of boundless optimism by civic boosters hoping that massive government spending would boost the local economy.

Pittsburgh is pretty clear cut: when the new airport opened in 1992, US Airways was using the city as a major hub. However, the airline filed for bankruptcy after 9/11 and ended the hub in 2004. The airport is vastly over-built and under-utilized, just as the Kansas City airport expansion in the 1980s was tied to TWA’s brief experiment with hubbing there.

Denver is less clear-cut. United still has a hub here, and the airport gets considerable traffic from the 2.5 million people in the metropolitan area. However, the big planes are now medium sized plans and the medium sized planes now commuter jets, as United seeks to increase load factors and reduce service as part of its ongoing march toward high-volume, low-quality service.

However, after the merger with Continental, United is reducing its hubs to 10 worldwide, a pilot told me yesterday. Airlines have been eliminating their Western hubs — Delta has pulled back from Salt Lake City and Southwest from Las Vegas — and United no longer has the flights from Denver that it once did.

When (if) I get home, one terminal at San Jose airport was built for American’s hub there, now gone. With airline traffic less than expected, city fathers are wrestling with a range of options to pay what it borrowed for the $1.3 billion expansion.

The best analog I can think of is the sports stadium — worthless if the major league team leaves town. This seems a little different — you have the case of a single individual shopping his team (almost always a he) to the highest bidder. The airlines seem to be more dropping hubs than moving them and thus seem less likely to abandon a facility on a whim.

The fundamental problem is that capital investments like this have a 20-30 year amortization period against a planning horizon that may only be 2-3 years. Betting on local boardings/deplanings is a bet on the local economy — as long as there are local businesses and residents, there will be airline traffic. However, the hub bets are vulnerable to acquisitions, bankruptcies, or merely business incompetence.

I think this falls under the category of the fallacious “will,” as in statements like “this investment will bring $2.4 billion in economic growth over the next 20 years.” Obviously this is not true — the correct form is “is predicted to” or “is expected to” — but economically (or mathematically) challenged reporters seem to play along with this snow job by reporting these political claims unchallenged.

Of course, this ties back to the inherent short term/long term disconnect between our ruling caste and the common citizen. Politicians make promises to get re-elected next year, while taxpayers have to pay the bill s for decades to come.

Airline mergers: half the competition, double the mediocrity

This week I flew Continental Airlines for the first time since it was acquired by United — and in fact the first time in three years. Where once Continental competed for customers with superior service, today — just as I feared — it offers the same customer hostile-policies that its corporate parent has so carefully pioneered over the past decade. The jetbridge slogans promising a better customer experience are just so much empty rhetoric.

If the processes have changed with the merger, so far the people have not. The Continental employees seem pleasant enough — certainly not like the surly TWA cabin crew in the years leading up to their acquisition.

Perhaps the Continental culture of pride and perhaps empowerment has yet to be destroyed by the penny-pinching bureaucracy that is the world’s largest airline. Or perhaps the Texas hospitality temporarily lingers, just as Delta once had a Southern charm before that was ground down by commoditization and its acquisition of an unhappy struggling airline.

There’s really nothing new here: big companies would rather force us to buy what they offer rather than compete for customers. Bigger is rarely better, except for the CEO egos and their paychecks. Mergers have not created better airlines, just ones with more market power and less accountability

Which of course brings us back to SBC, America’s largest telecom company, and its efforts to control 40% of the US cellphone market through purchase of T-Mobile USA. It's been over 10 weeks since the proposed acquisition was announced, but no real news from the FCC.

As with airlines, the promises of AT&T similarly ring hollow. At least United can offer some new destinations to its customers after gobbling up Continental.

Would the purchase of T-Mobile allow AT&T to serve another square mile that it doesn’t already cover? I doubt it, but it will end T-Mobile competing with AT&T to win customers.

Fixing K-12: technology is no silver bullet

Three items from the San Jose Mercury News this week offer competing theories of K-12 education reform:

A local news story Sunday (May 30):

U.S. should look abroad for education reform, study says
By Sharon Noguchi
…
By the thousands, U.S. public schools have undergone overhauls, launched pilot projects and experimented with "best practices." Yet despite countless reforms, overall student achievement has stagnated for about 10 years, according to national and international measurements.
…
Instead, the report from the Washington, D.C.-based think tank recommends emulating foreign success stories, primarily by expanding national standards for curriculum, administering smarter and less frequent testing, improving teacher quality, salaries and authority.
…
The report suggests expanding on the "common core" standards in math and English that most states adopted last year. In the five exemplary countries, national curricula also cover science, social sciences, arts, music and often religion, morals or philosophy.

A column Sunday by one of the Merc’s business columnists:

Building schools for the 21st century will take courage
By Mike Cassidy
Mercury News Columnist

I spent a good part of last weekend closed in a hotel conference room listening to smart people talk about kids, schools and technology.

And a strange thing happened: I started feeling better about the future of public education in California.
…
Moving our country's public schools back into the upper echelon of rankings worldwide is going to take courage. This is no time to be afraid of the dark side of digital media and the Internet. Quit fretting over digital distractions and the specter of online stalkers. Stop obsessing about completely controlling your kids' media diets. … And push your kids' schools to do the same.

Some middle and high schools are already out there. There are schools, yes public schools, where each kid has a laptop. Schools that have social networks on which students collaborate. Schools in which the kids write the rules for proper use of technology. Schools where students and teachers use smartphones to analyze scientific data. Schools that rely on computer games that send students on quests requiring the mastery of scientific and mathematical principles.

A letter to the editor Wednesday (June 1) by a “Professor of Innovation & Entrepreneurship” (and K-12 education activist):

Letters to the editor
True reform needed: Teach writing skills

In two stories May 29 about K-12 education reform, one need was conspicuously absent: teaching students how to write. I get college seniors who received social promotions from local high schools (and middle schools and elementary schools) but never mastered basic writing skills.

It's not sexy: it doesn't involve tablets or texting or social networks, nor does it show up in the multiple-choice benchmarks comparing the United States to other developed countries.

Instead, it requires a meticulous, labor-intensive process to teach kids how to express an idea, to organize it into coherent sentences, paragraphs and essays, and to do so without grammatical errors. By doing so, the students also learn logical thinking and how to support an argument -- crucial skills for any career.

Joel West
Professor San Jose State

In response to the letter, I  got an email from a professor in another SJSU college who had similar problems:

I am shocked and dismayed that so many of our students at SJSU not only have atrocious writing skills, but that they receive such high grades in courses that require them to write. I have given students Ds and Fs on term papers only to discover the same student received an A or B in [the required writing class] or another lower division class. 

It doesn’t take a college degree to figure out which theory I find most convincing — after the past nine years of teaching an essay-based course for college seniors at a Silicon Valley public university. As the strategy faculty have argued for years, a major reason our students arrive at SJSU unable to write is because they are unable to think. We try to make things better, but aren’t always successful.

Update Wednesday 9:30pm: I also got an email from Helene Joseph-Weil, retired music professor from Fresno State. Here are excerpts from her own experience:

No matter how talented or brilliant a student may be, if he/she can't construct a sentence with proper syntax and punctuation, professional or academic brilliance can never be fully realized. 

In the past few years, I've truly despaired that the majority of my students at Fresno State cannot construct a sentence that has the subject and verb in agreement; their spelling is not up to standard usage, they confuse parts of speech [there vs. their, it's vs its, you're vs. your, etc.]; topics for papers are not presented according to clearly defined guidelines; and there is a marked inability to express their ideas in well-constructed, coherent sentences.… They demonstrate good ideas, even creative research, but seem to have a complete lack of ability to express either.

Every once in a while I will have the joy of a student in my studio who has good writing skills, but almost all of these are home-schooled or come from families whose parents are teachers or doctors. Strong writing skills  shouldn't be the exception, but the norm for entry level university students, and the current valuing of technological and scientific skills over the humanities must be combined with the ability to express the very ideas gleaned from such studies.

and the Merc is running this letter Thursday in response:

Letters to the editor
Practicing what he preaches

Bravo to professor Joel West of San Jose State (Letters, June 1) for his letter about the importance of teaching basic writing skills in grades K-12. The message is right on, and his clear, precise letter is a perfect example of the skills he advocates.

Dave Stein
Mountain View