The Network Garden - Mark Sigal's Blog: Is Andy Rubin doubling-down on a losing hand with Android in Tablets?

In noting that the 'educated consumer' now realizes that "they're either picking the Apple ecosystem or the Microsoft ecosystem or the Google ecosystem," Android chief, Andy Rubin, promises that Google will 'double down' on Android tablets in 2012.

But this begs the question. Why is Google losing the Tablet wars in the first place, and what should they do about it?

After all, they're doing just fine in the Smartphones segment, with 850,000 Android devices activated each day, and over 450,000 apps in the Android Market.

Yet, things are apparently so bleak that even the 'glass-is-half-full' optimist, Samsung, willingly acknowledges, "Honestly, we're not doing very well in the Tablet market."

Hows does one reconcile breakout success AND failure on essentially the same platform (albeit with different form-factors)?

Is it that better devices are needed? More compelling apps? A better marketing campaign? Or is it something else?

I'd argue that Google's struggles in Tablets is a classic case of the chickens coming home to roost. Thus, it's worth spending a couple minutes on what exactly those 'chickens' are:

A Less than the Sum of the Parts Platform: The downside of Google's hard push of an open, loosely coupled web that is 'free' (i.e., ad-supported) is that it diminishes the importance of native, well-integrated apps for which consumers are willing to pay money. It's a truism to the point of self-fulfilling prophecy that while iOS device owners love-Love-LOVE their apps, Android device owners are more likely to plainly state that they "don't really use apps that much." As such, savvy developers look past the Android numbers, and see fragmentation, monetization and consumer mindset challenges, and focus their best efforts on iOS.
Confusing the Tail with the Dog: While there's a tendency to see the Android vs. iOS story as a case where one vendor creates a hardware-independent standard to achieve ubiquity on the backs of hardware OEMs (ala Windows vs. Mac), the core truth in Smartphones is that this is a market driven by: A) the power of carrier push (i.e., you can only buy what the carrier sells); B) the power of subsidy (i.e., carriers have trained consumers to ignore the real price of the phone and focus on the price after carrier-subsidy); and C) upselling Feature Phone customers to Smartphones. In other words, the success of Android is less about anything magical that Google has created from a software perspective, and more about enabling an established channel (carriers and handset makers) with proven market demand. As we shall see, when applied to the Tablet segment, it's akin to the kid who was born on third base, and thought he'd hit a triple.
The End-Run Around Intellectual Property: Let's face it. What many of us love about Google is that is has realized much of its vision to organize the world's information and make it universally accessible and useful. The downside is that in doing so, it has run roughshod over the intellectual property rights of content owners, social networks and especially media companies. This has created a dynamic where the very companies that Google needs as motivated partners if it intends to achieve parity with Apple's iTunes media universe of Music, Movies, TV shows and Books, look askance at the company when it comes time to content licensing. Thus, it's little surprise that despite the iPod media player being the core seed from which both the iPhone and iPad sprang, there is still no serious name brand, Android-based competior to iPod touch.

Hence, when you boil this down, what you are left with is the following:

One, is that unlike the Smartphone space where there is clear mission-criticality and a carrier controlling access to and pricing control (via subsidy), with Tablets there is NO table-stakes per se, because Tablets are not mission-critical devices.

iPad is winning in Tablets simply because Apple created and cultivated the demand for a device that offers a superior media experience, and a superior environment for games and other apps.

No less important, Apple built iTunes and App Store specifically with the goal of providing consumers with a curated, trusted environment for loading up on music, apps, movies, books and the like, complete with a friction-free monetization and distibution path for same.

That's now the bar for entrance to the Tablet party, and any device that does less, had either better be focused on doing one thing well (e.g., Nook) or offering 'comparable' functionality at a much-lower price point, which is what Amazon is doing by tying Kindle Fire to both Amazon.com and Amazon Prime.

In other words, whereas Smartphones are driven by their mission-critical nature, and carrier "push," Tablets are driven by consumer "pull," and there is very little pull for a device that lacks an iTunes equivalent, killer apps, and a friction-free marketplace model.

Simply put, the successful tablet device makers (iPad, Kindle Fire, Nook) all have nailed the media side of the equation - music, movies, books and TV shows.

Until Google gets this piece right, I think they'll struggle, in and above all of the challenges that they face on the segmentation side.

Moreover, one is right to be dubious that the media players will play ball with Google, given how fully the company has tried to end-run their IP over the years.

In this light, it's unsurprising that Google Music has struggled to gain traction in the market.

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