Apple, Google Devices Bridge Old Media to New Consumers

The Apple Tablet could be the digital window newspapers, magazines and even broadcasters need to achieve interactive nirvana using apps, social media, e-commerce and mobility to transform their struggling businesses.

Until now, many portable connected devices - from iPods to smart phones - have been more audio and simple text-centric. Amazon's Kindle has sparked a new generation of groundbreaking e-readers for print publications and books, but not video. In just two years, Kindle downloads compromise nearly half of all book purchases on Amazon.com

Apple's long-awaited Tablet promises the closest thing yet to a portable panacea for both text and video; a device fashioned and functioning just as consumers want it.

The Tablet, due for release in March, will have better graphics and lower content delivery costs. That should provide more affordable newspaper and magazine e-subscriptions amortized through unlimited data plans with carriers -- unlike the Kindle. Although Apple has not yet released details about the Tablet, a larger display, touch-screen and color graphics will "better replicate the experience of reading print magazines and newspapers," according to TBI Research analyst Rory Mahler.

Even before the Tablet becomes official, debate is raging over its significance. Whatever its shortcomings, it is sure to push the envelope on accessing and paying for content like other devices in the Apple ecosystem.

Apple's forte is understanding and accommodating digital consumers. The iPod and iPhone were catalysts for new ways to connect digital consumers. Apps have done for smart phones what the iTunes store did for MP3 players by providing the means to showcase and sell content and services. More than three billion downloads from Apple's App store in about 18 months suggests they offer at least one solution to securing consumer payments.

Mobile devices clearly are lifelines - not luxuries. Domestic adult smart phone penetration has nearly doubled to 29 percent in the past year despite the recession (according to Forrester Research), and expected to cross the 50 percent threshold by 2011 (according to Nielsen). Google's new Nexus One phone could outsell the iPhone by 2012 (according to Gartner).

What already resembles a digital device free-for-all in 2010 is no ordinary hardware fracas. This is all about changing and catering to new digital consumer behavior so that interested parties can get their piece of the action.

Google upended this week's Consumer Electronics Show in Las Vegas with its own coming out party for its first branded Nexus One "super" smart phone. The hybrid device doesn't just promote Google's Android operating system, and dominant search and display advertising sales. The new Google phone will challenge the way consumers buy and service smart phones independent of telephone carriers.

Google gets what former Time Warner chairman and CEO Gerald Levin observed earlier this week on CNBC. "The new paradigm has less to do with consumer purchases and more to do with consumer experience," Levin said.

Combining low cost experience with the Internet and mobile apps is like having the Library of Alexandria at your fingertips, Levin observed. Building an interactive economy on relevant marketing and payments required an acute understanding of what individual consumers want and think. That's why Apple and Google have been so successful.

Broadcasters, filmmakers, newspaper publishers and other traditional media should keep that in mind as they scramble to carve their niche in the interactive marketplace at the annual CES gathering in Las Vegas.

Walt Disney will demonstrate its new Keychest service allowing consumers to pay once to transport their favorite branded TV series, movies and video games across all digital devices.

The Open Mobile Video Coalition of traditional TV broadcasters will promote its plan to deliver local news, sports, weather and entertainment to consumers on the go in an effort to transcend the static living room boob tube.

With $1 billion in local advertising generated on mobile digital video devices at least five years away (according to Borrell Associates), broadcasters and other traditional content providers are aiming to reinforce their fragmented connection to consumers and developing direct pay-for-play mechanisms.

Even as marketers increase their traditional and digital media budgets even in a recovering economy, and Apple and Google position themselves for an all-out mobile advertising war, it is becomeing clear that the digital marketplace requires multiple revenue sources to thrive.

While the media conglomerate owners of broadcast and cable networks can strong arm higher retransmission fees from cable and satellite operators, local TV stations have to fend for themselves. Advanced portable connected devices such as Google's Nexus One smart phone and Apple's Tablet will assist with that process so long as local TV broadcasters and other content providers embrace the use of apps and other connectors.

Much was made in the press this week about Levin's apology for destroying more than $200 billion in shareholder value during the disastrous AOL Time Warner union. He cautioned all media company executives to avoid the mistakes of the past by staying in touch with their inner consumer.

"Strategy is not a calculus. It doesn't come from a ledger sheet. It comes from inside people. It comes from their experience, their emotions, their comfort level," Levin said. CEOs are, first and foremost, consumers.