The poorly kept secret that is the Google Nexus 7 tablet was just announced amid much developer applause and excitement. The device is everything it was rumored to be and the specs — something that only developers care about, of course — were impressive, including the 12 core GPU that will make the Nexus 7 a gaming haven. True, it's just another in a long line of tablets, albeit a $199 one that competes directly with Amazon's Kindle Fire and undercuts the secondary market for the iPad.
But as a competitor to the iPad, Nexus 7 isn't worth the digital ink I'm consuming right now.
But Google isn't just selling a device. Instead, the company wants to create a content platform strategy that ties together all of its ragtag content and app experiences into a single customer relationship. Because the power of the platform is the only power that will matter (see my recent post for more information on platform power). It's unfortunate that consumers barely know what Google Play is because it was originally called Android Market, but the shift to the Google Play name a few months back and the debut of a device that is, according to its designers, "made for Google Play," show that Google understands what will matter in the future. Not connections, not devices. But experiences. The newly announced Nexus 7, as a device, is from its inception subservient to the experiences — some of them truly awesome — that Google's Play platform can provide through it.
Netflix announced its Q3 2010 earnings a few weeks back and the numbers were every bit as positive as people have expected. The company added nearly 2 million subscribers in the quarter, almost four times as many subs as they added the same quarter last year. Yeah, four times as many. While Comcast and Time Warner announced net subscriber losses. At the same time, the cost for Netflix to acquire a customer has fallen 26% in the past year. Funny how when you digitize the customer relationship and the product at the same time, all your costs go down.
The number I always wait for from Netflix is the percent of subscribers that used Netflix Watch Instantly in the quarter. It rose to 66% this quarter, up from 64% last quarter. And remember, this was while adding 2 million new subscribers, which means that new subscribers are adopting Watch Instantly at a rapid rate instead of waiting to get used to Netflix; in fact, they're probably joining Netflix just to watch instantly. This is, of course, why Netflix will likely offer a digital-only plan that subscribers can pay for if they don't even want to pretend to put DVDs in their queue.
Why is this important today? Because it was just now that I finally dug through the summary financial results to find this gem of a quote, something that was briefly reported when Netflix announced it results, but was not fully understood in most of the reports I read. I want to resurface it because this is a big deal:
I'm in the business of identifying when there's a change in the wind coming that will push us in a new direction. On balance, I've been successful. So much so, that when something I staked my career on becomes commonplace, people are so used to it that they look back and think I was only pointing out the obvious. Like when the most senior faculty member in the advertising department at Syracuse University rejected the "Interactive Advertising" course I proposed to teach in 1996 because online advertising was "just a fad." I took a stand and got to teach the class, over his objections. Fast forward to today and online advertising is so obvious that predicting it is a thankless task.
I say this because I am about to take a stand I want you to remember. Ready? Starting November 4th, Kinect for Xbox 360 will usher us into a new era Forrester has entitled the Era of Experience. This is an era in which we will revolutionize the digital home and everything that goes along with it: TV, internet, interactivity, apps, communication. It will affect just about everything you do in your home. Yes, that, too.
I've just completed a very in-depth report for Forrester that explains in detail why Kinect represents the shape of things to come. I show that Kinect is to multitouch user interfaces what the mouse was to DOS. It is a transformative change in the user experience, the interposition of a new and dramatically natural way to interact -- not just with TV, not just with computers -- but with every machine that we will conceive of in the future. This permits us entry to the Era of Experience, the next phase of human economic development.
Today, Cisco unveiled its home telepresence solution called Umi (prounounced you-me, get it?). For those of us who aren't familiar with Cisco's use of the term telepresence, it's a term it coined to describe the very impressive (and very expensive) enterprise immersive videoconferencing experience it provides to businesses around the world. In the home, it basically means TV-based videoconferencing.
The home offering is similar to the enterprise version in two key ways -- it is also impressive and expensive. Starting November 14, affluent consumers who really want to connect with family across great distances (and who are either unaware of or uninterested in Skype) can put down $599 and sign up for a $24.99 monthly Umi service fee and become HD videoconferencers. I tried the system in a real home and I'll admit the quality is eye-opening. As is the price. Read more of the details here in this post from CNET, but some of the less obvious points include: video voicemail, video voicegreetings, and the ability to record video messages when not connected to someone else. The camera rests above your TV screen and makes for one of the most believable videoconference setups I've seen (the person you speak to actually appears to be looking at you, imagine that). The whole experience rides on top of the existing video input so that while you watch TV you can see a message indicating a call is coming in. Choose not to take it and it will go to video voicemail. There are nice touches like a privacy-minded sliding shutter over the camera (complete with "shooshing" noise when the shutter closes) that helps you know via the senses of sight and sound that your camera is not on. So go ahead and give the missus a kiss while on the couch, no one is looking.
I'm a big fan of the digital home, even if the phrase itself has slipped from popular use lately. I cannot wait for it to happen to me -- I'll have connected displays (does the word TV even apply anymore?) throughout the house, including the ones in my pocket, in my lap, or otherwise within reach at all times. Those displays will all speak IP, the language of the Internet, and they'll all speak to each other as well, allowing me to control one display -- say, my TV -- with another one -- my Droid X, for example. There's so much product innovation yet to come in the digital home that I love my job.
I'm not the only one who sees it, of course. If you follow the excited announcements from TV makers and electronics retailers like Best Buy, the next TV we all buy will be a connected TV (defined as a TV set with its own Internet connection whether wired or wireless and some kind of software platform), a critical first step toward that future digital home nirvana.
Connected TVs are going to be a big deal; to understand why, read my latest report which includes US survey results about connected TVs along with a forecast for connected TV penetration through the middle of the decade. It just went live to Forrester clients last week. In the report, we show that thanks to the enthusiasm on the supply side, connected TVs are going to sell like proverbial hotcakes. By 2015, we forecast that more than 43 million US homes will have at least one. That's a remarkable number, especially considering that we entered 2010 with fewer than 2 million connected TV homes in the US.
It has only been a few weeks since Google announced it would create a brave, new world with its Google TV platform. In all the reactions and the commentary, I have been amazed at how little people understand what's really going on here. Let me summarize: Google TV is a bigger deal than you think. In fact, it is so big that I scrapped the blog post I drafted about it because only a full-length report (with supporting survey data) could adequately explain what Google TV has done and will do to the TV market. That report went live this week. Allow me to explain why the report was necessary.
Some have expressed surprise that Google would even care about TV in the first place. After all, Google takes nearly $7 billion dollars into its coffers each quarter from that little old search engine it sports, a run-rate of $27 billion a year. In fact, this has long been a problem Google faces -- its core business is so terribly profitable that it's hard to justify investing in its acquisitions and side projects which have zero hope of ever contributing meaningfully to the business (not unlike the problem at Microsoft where Windows 7 is Microsoft). So why would Google bother with the old TV in our living rooms?
Because TV matters in a way that nothing else does. Each year, the TV drives roughly $70 billion in advertising and an equal amount in cable and satellite fees, and another $25 billion in consumer electronics sales. Plus, viewers spend 4.5 hours a day with it -- which is, mind you, the equivalent of a full-time job in some socialist-leaning countries (I'll refrain from naming names).
Google's goal is to get into that marketplace, eventually appropriating a healthy chunk of the billions in advertising that flow to and through the TV today with such painful inefficiency.