Reading the CES Tea-Leaves

The kick-off of the Consumer Electronics Show this year may be more meaningful for tech than usual because it’s a barometer of some critical market dynamics.  Tablets are set to take the hot seat at the show, even though (as usual) Apple isn’t attending.

The big question in my view is less whether we’ll see a zillion tablets than whether we’ll see tablets focusing on both a smaller (7 or 8-inch) form factor and WiFi-only connectivity.  The tablet as a satellite of a 3G/4G mobile service plan isn’t going to transform the market because the cost will be too high for most users.  Sure they might end up with value, but why take a risk?  On the other hand, an “uncoupled” WiFi tablet that’s affordable becomes the instant device of choice in hotspots, particularly hospitality sites.

Most users (83% according to my model) plan to use tablets primarily at home, at work, or in a setting that’s likely to have WiFi.  An even larger percentage would prefer WiFi access to a wireless subscription tie-in.  Tablets and WiFi would have a major impact on the ebook space, creating a device that could become a universal reader, devaluing the incumbency of both Amazon and Barnes & Noble, and making Google and even Apple happy by validating a more general model of device.  Google, who’s trying to get its own book program going, might be particularly gleeful, and of course as the Android backer they have some influence on market direction.

At least a couple of the tablets at CES will surely be WiFi; Vizio already says it will launch an 8-inch Android tablet with WiFi only.  If we see a lot of this sort of thing, it means that the appliance vendors are looking to drive the market.  If not, then it means that they’re not prepared to step on the older partnership with the wireless carriers, which in turn means they’re not fully confident about the tablet future.

CES this week will start the drive toward the next stage of the media/network relationship.  The more pressure created by new tablets and new integrated TV delivery systems, the greater the pressure on ecosystemic tuning and market consolidation.  It won’t revolutionize viewing, but it could revolutionize the industry that delivers it.

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