Entelligence: One device to rule them all -- or not

August 22, 2010

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Entelligence is a column by technology strategist and author Michael Gartenberg, a man whose desire for a delicious cup of coffee and a quality New York bagel is dwarfed only by his passion for tech. In these articles, he'll explore where our industry is and where it's going -- on both micro and macro levels -- with the unique wit and insight only he can provide.

The introduction of the third generation Kindle has reignites the debate over the role of dedicated vs. converged devices. Five years ago, device segmentation was easy: phones made calls, music players played music and cameras took pictures. Even two years ago, integrated devices remained differentiated from standalone devices that provided greater features and capabilities. But some now feel the market for dedicated e-book readers like the Kindle and Nook will soon disappear, subsumed by devices like tablets and smartphones capable of delivering e-books along with other content, applications and services.

It certainly feels to some degree that converged functionality is replacing the standalone and dedicated device. Look at the state-of-the-art iPod touch today and the state-of-the-art iPod of just three years ago. Compare the camera on your phone to the point and shoot digital of just four years ago. The argument seems strong for converged rather than dedicated and standalone devices.

I think the reality is a little more complicated.

Despite recent advances of converged device capabilities, consumers will likely remain interested in optimized devices for two major reasons:

Optimized Experiences
. Dedicated devices deliver an optimized experience. Even as that camera on your phone gets better, the features on that point and shoot evolve as well. In the case of media players it's one thing to listen to music on your phone at the gym, but it's another to have your entire music, video and photo collection to use on a plane from New York to Tokyo. In the case of e-book readers, they're lighter than tablet devices, offer the best battery life, and their black and white, outdoor viewable screens are a feature -- not the negative they would be on a tablet that would also be used for content creation, games, and video playback.

By making the Kindle software experience available on iOS, Android, and other mobile platforms, the Kindle can be a broad experience for consumers.

Lower Costs. The cost of dedicated devices keep dropping even as their features become optimized. I doubt that a $399 Kindle (the price at introduction) could keep pace with an iPad today. But a $139 Kindle that's likely to hit $99 sooner than later will be able to hold its own. Likewise, low-cost media players, cameras and game machines will still be able to attract vertical users who may not be interested or care about additional features and will instead focus on buying the optimized experiences they're interested in at lower prices.

In the case of Amazon, I think it's wise to purse the dual strategy the company seems to be embracing. First, create and extend a good platform for e-books and their ecosystem: store, reading experience, price and content selection. By making the Kindle software experience available on iOS, Android, and other mobile platforms, the Kindle can be a broad experience for consumers. At the same time, providing a dedicated, optimized reader at low cost makes the platform available to those unwilling or unable to embrace the higher price of converged devicestablets carry. The key will be keeping the device optimized and ignoring the impulse to add secondary features that are likely to go ignored and unused in order to keep driving price points down.

This is the age of multiple device with overlapping functions. While some devices such as smartphones will continue to grow in importance and ubiquity, one device will not rule them all anytime soon.

Michael Gartenberg is a partner at Altimeter Group. His weblog can be found at gartenblog.net. Contact him at gartenberg AT gmail DOT com. Views expressed here are his own.

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