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TOC Bologna 2012: The Hardware Conundrum: How Children are Shaping the Next Generation of Mobile Devices (Matthew Growney)
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TOC Bologna 2012: The Hardware Conundrum: How Children are Shaping the Next Generation of Mobile Devices (Matthew Growney)


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A perspective on Toys vs Tablets and how the world will react when children ultimately decide to become predominantly entertained and educated over the mobile Internet. …

A perspective on Toys vs Tablets and how the world will react when children ultimately decide to become predominantly entertained and educated over the mobile Internet.

Over the years, publishers have faced a growing number of hardware platforms for licensing their digital content. The separation between tablet makers and toy makers is about to collapse with certain products. A variety of factors will set these products apart including content collection/catalog, quality user experience, aspirational brand value, price point, and the ability to remotely access content and store content in the Cloud.

This presentation will address the rapid convergence of device types from generic Asia-sourced tablets becoming simpler and cheaper, to toys becoming smarter and more complex. Both trends have their merits. In the end, the “market” (aka the child) will make their choice, thus leaving an eventual void from which one or the other has to recover.

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  • Tactile feedback, holding/touching/tasting/hearing. Motor skills play a huge part in discovery. Portability. Ownership
  • Screen capture their attention?
  • Transcript

    • 1. The Hardware Conundrum:How Children Are Shaping the NextGeneration of Mobile Devices TOC Sala Rossa 11:00am March 18, 2012
    • 2. Who Am I?MatthewVenture Investor, Entrepreneur, @IAmGrowneyEducated on Encyclopedias, TRS-80, & Flash Cards. 2
    • 3. Who Am I?….but more importantly now:Father, Uncle, and Godfather. 3
    • 4. How Are My Kids Learning?Playful Discovery. 4
    • 5. How Are My Kids Learning?And Digitally. 5
    • 6. Ultimately…. Learning = Atoms + Bits (Device) + (Content) 6
    • 7. A Kid’s Desire vs. A Parent’s WalletHuge current demand coupled with strong desire for a better solution USER DEMAND BUYER RELUCTANCE Interest in Buying in the Next 6 Mo. (Kids 6-12) Device PRICE iPad 44% "Everyone wants their children to have a iPod Touch 30% tablet, but not everyone wants to spend iPhone 27% $500 for a iPad that a child can throw onto Computer 25% the floor.” –Gary Storch, CEO Toys “R” Us Tablet Computer (non-iPad) 25% Nintendo DS / Dsi / DS Lite 22% “…the industry faces hurdles. That Television Set 20% includes setting a priceparents can live Smartphone (non-iPhone) 19% with and dealing with concernsabout PlayStation 3 / PS3 Slim 17% kids getting hooked on technology too Blu-Ray Player 17% early.” –Bloomberg e-Reader 17% Microsoft Xbox 360 16% Other Mobile Phone 12% “Amazon Kindle Fire Criticized for Lack of Nintendo Wii 11% Parental Controls” –PCWorld PlayStation Move 10% PlayStation Portable 10% (Source: Nielsen, 2011) Content CONTROL 0% 10% 20% 30% 40% 50% 7
    • 8. Understanding Your Content OpportunitiesIt will become increasingly important forPublishers, Content Developers, andAuthors to understand:(1) How is your content being consumed?(2) How is it being distributed?(3) How can it sell a zillion copies?In the end, your BITS are very dependent on theATOMS that present them. 8
    • 9. Will it Be On Toy or Tablet or SomethingNew? 9
    • 10. I. How Is Content Being Consumed? 1. The Device’s Cost (Toy or Tablet) - Toys are inherently cheap. Can’t do much in digital. - Tier 2 or “Value Brand” tablets are also cheap. Price and performance. - Tier 1 brands have created an almost unattainable price point for much of the human population (especially children). 10
    • 11. Tablet Price and Demand $700 $647 700(M) $600 600 $533 $500 481 500 $400 $400 $340 400 349 $289 $300 $246 300 243 $200 162 200 $100 100 29 $0 0 2010 2011 2012 2013 2014 2015 Tablet Sales, Millions Average Selling Price - Tablet Computers 11
    • 12. I. How Is Content Being Consumed? Cont. 2. The Device’s Construction - Toys typically are constructed w/ extreme cost sensitivity and sell content as an accessory. - Tier 2 tablets won’t withstand children’s usage, cheaper components equals lack of functionality. - Even Tier 1 tablets won’t survive a Drop Test or are “juice-proof”. 12
    • 13. Example of a Tier 2 Tablet 13
    • 14. I. How Is Content Being Consumed? Cont. 3. The Device’s Connectivity - Toys are not typically connected to the Internet. - Tier 2 tablets are typically WiFi. - Tier 1 tablets offer both WiFi & Cellular 4. The Device’s Lifecycle - Toys typically churn in 20 days (left in the toy box with sporadic reuse). - Tier 2 tablets are being used on average 3-6 months before being churned out due to performance issues (memory, battery). - Tier 1 tablets are being handed down as new models are selected. 14
    • 15. II. How Is The Content Being Distributed? 1. Content Availability/Discoverability - Toy Companies typically preload their content and are extremely price sensitive and prone to working with only large Publishers (eg. Disney, Hasbro). - Tier 2 tablets rely heavily on what they can afford to preload or the AppStore. - Tier 1 tablets select more preloaded content based on the device’s functionalities. 15
    • 16. II. How Is The Content Being Distributed?Cont. 2. Content Curation - Toy companies curate based on their target demographic (Toddler, Early Reader, K- 6), but again work primarily with larger publishers. - Tier 2 tablets work almost exclusively with a minimally curated AppStore. Category definition, age grading, Rating, are typically not provided. - Tier 1 tablets are not much better organized in presenting content selections then Tier 2. 16
    • 17. Children’s Content Use/Purchase Is Soaring Game-based Learning Mobile Learning $413M $1.82B $232MDEMAND $959M 2010 2015 2010 2015 (Source: Ambient Insight, 2012) (Source: Ambient Insight, 2011) % of Apps by Target Age  Over 80%of the top selling apps in 58%MARKET RESPONSE 57% the Education category of the 40% iTunes Store target children 35% 29% 12%  In 2011, 72% of the top selling apps targeted preschool or elementary Toddler/Preschool Elementary Adult aged children (Source: The Joan Ganz Cooney Center, 2012) (Source: The Joan Ganz Cooney Center, 2012) 17
    • 18. 3. How Can I Sell A Zillion Copies?1. Marketplace- “Free” is important for Discovery, but not a good business model.- Content prices need to be diverse and allow for a “Pay”- model to function.- iTunes averaged $100 in paid purchases from iPad owners for children in 2011.- Create a Discovery experience for your brand 18
    • 19. 3. How Can I Sell A Zillion Copies? Cont. 2. Artistic / Literary Excellence - Content still needs to preserve its authenticity, integrity, and originality. - Not everything needs to be a “shiny” object like an App. A PDF is sometimes just as good if tells an amazing story. - Understand the “Game-ification” trend. - Experiment with Touch, Audio, Highlighting, but don’t use it all for everything. 19
    • 20. 3. How Can I Sell A Zillion Copies? Cont. 3. Education - Support pilot programs with ALA, Non-for- Profits, and other Verticals to help validate the children’s digital education model. - Education content is much needed in various commercial book stores. - Much classroom testing of devices is still needed. 4. Other Distribution Considerations - New devices with private content collections - White labeled or private labeled eReader application for individual publishers 20
    • 21. Is There Room For A Tier 1 Children’s Tablet? High-end Tablet Designed and Priced for Children Suitability for children for Children ($130) ($499) ($389) ($200) ($80) ($200) for ($499) ($380) ($330) ($250) ($80) Adults ($499) Affordability for Children 21
    • 22. The Journey For Such Has Begun… Learn more at (Shameless plug) 22
    • 23. Thank you.  Matthew Growney, CEO  Email:  Phone: +1 (978) 287 – 0007 x11 23