Tag Archives: Amazon

Amazon Prime Is A Marketing Problem, Not A Value Problem

Much talk has been made over Amazon’s decision to raise its Amazon Prime program cost to $99 per year, up from $79 per year.  It’s the first time in the program’s nine-year history that the price was raised.  This comes shortly after Amazon raised the rates in countries throughout Europe.  Combine that with the fact that Amazon has only made a relatively marginal profit and is a publicly traded company, and it’s not that surprising that Amazon would raise the rate of Amazon Prime.

In fact, there were rumors that Amazon might raise the price to $119 per year, even up to $139 per year, so the fact that the price only went up $20 per year is actually small.

However, there are many people complaining about the price increase, enough so where they are reportedly considering dropping their Amazon Prime subscription before the next renewal.  At last check on this DealNews poll, there were 200 more votes to end their Prime subscriptions before renewal, about 58% willing to end it versus a 42% willing to keep it (essentially around 4 in 7 people willing to end it versus 3 in 7 people willing to keep it despite the rate increase).

Some are wondering if people are still getting enough value from their Amazon Prime subscription to justify the increased cost.  Well, let’s consider what you get:

– You get free 2-day shipping on nearly every items fulfill by Amazon, even if you don’t spend the minimum $35 as non-members must do.

– You get to borrow one free book each month (though you need an actual Kindle device; Kindle mobile apps or desktop applications do not quality for this benefit).

– You get access to Amazon Instant Video, including many free television episodes and series, movies, and more.

Those benefits alone give you more than what other subscription-rate video-only providers give you, such as Netflix or Hulu Plus, thanks to the countless number of items you can shop for online.

In addition, Amazon plans to release a new streaming radio service for Amazon Prime members in early April, thus entering the free online streaming industry alongside competitors such as Pandora, Spotify, Google Now, and iTunes Radio.  Thus, even more value will be provided to Amazon Prime subscribers.

Thus, I think it’s safe to say that the value of Amazon Prime is as high as ever, and soon to be even higher.  Why, then, are many people complaining and even considering ending their subscriptions to Amazon Prime?

In my opinion, it has to do with Amazon’s marketing.  How many times have you heard the magic number of “$99”?  Probably too many times – every time you think of Amazon or Amazon Prime, I’m sure that number has popped into your head, along with the soon-to-be old rate of $79.

This $99 is what people keep focusing on, and, thus, have overlooked what that number actually is.  That $99 is a yearly rate, not a monthly rate, and this is a point that Amazon has failed to remind people of.  In fact, to my knowledge, they haven’t even compared their service to Netflix’s.

Remember that Netflix offered their streaming online movie and television service for $6.95 per month, then it went up to its current $7.95 per month.  Not too many make mention of the $7.95 per month cost now. (Many subscribers and investors DID complain about the fact that Netflix raised the cost 60% to offer both DVDs and streaming to customers after they originally offered the two together for $9.99/month, plus the fact Netflix didn’t offer a discount for bundling the two together).

The $7.95/month cost, when multiplied by 12 months per year, comes out to an annual cost of $95.40/year, less than $4 cheaper than the new Amazon Prime rate.  As mentioned above, value isn’t the problem with Amazon Prime – it still offers way more than Netflix for that $99/year.  However, Amazon has failed to emphasize this in their marketing.

One of the main keys to marketing is pricing, and presenting that pricing so that it represents the most value.  This is usually shown by breaking a price down to its lowest unit cost.  You see this exhibited by many companies; one common example is life insurance companies breaking down life insurance to cost per day.  I’m sure you’ve seen Alex Trebek talking about Colonial Penn’s life insurance coverage costing “less than $.35/day; that’s less than the cost of a daily newspaper.”

When higher-cost items are broken down into smaller units, they are much more palatable to the budget-conscious consumer.  When you keep prices at higher units, especially ones pushing $100 like the new Amazon Prime rate, it’s going to be naturally oppressive to people because most people consider $100 to be sizable money.  However, if that cost was broken down by month or even day, it would be much more palatable to most and likely would quell much of the anger and dissension that has gone through the Amazon Prime subscriber base.  The yearly cost of $99 broken down by month comes out to be $8.25/month, $0.275/day (less than the cost of Colonial Penn’s life insurance daily rate, in fact).

This would especially be true if Amazon was comparing that monthly cost to a comparable service like Netflix or Hulu Plus, both of which do not do anything in regards to carrying a large inventory of items and shipping them to the consumer.  This would reemphasize the value subscribers are getting with Amazon Prime, and for most, would justify the higher rate increase.

Due to the fact that Amazon has failed to do this, everyone is fixated on the $99/year cost.  Certainly, the one-time payment of $99 can be a sizable amount for many, but when you consider that it’s a yearly cost and the fact that most households easily pay that much and more per month for their cable and Internet subscription packages, their groceries, their clothing, their utilities, their car insurance, their home insurance, and other essentials and non-essentials (cable and Internet, while important, isn’t exactly an essential package like food and shelter), you can see that the Amazon Prime rate increase isn’t that substantial for the value a subscriber gets.

Yet, Amazon is letting the public run wild with the $99/year price increase as being the “end of the world” and a good reason to end their subscriptions to Amazon Prime, even if they’ve been loyal subscribers for years.  This is another example of where the power of social media and online communication via the Internet must be monitored and responded to right away, as Amazon really hasn’t combatted this pervading viewpoint that the price increase is unreasonable.

As mentioned above, it was inevitable that the price increase would happen; after all, Amazon makes a marginal (in relative terms) profit compared to most companies, especially those that are publicly traded on a stock exchange.  Of course, investors will get antsy over rising costs and slim profits, so Amazon had to take some step to increase their revenues.  Besides the fact they raised the minimum purchase price for free shipping to $35 from $25, they’re raising the price of Amazon Prime to $99 from $79.

Again, though, it’s a relatively minor increase compared to what was originally proposed, not to mention it’s a one-time yearly fee, not a twelve-time monthly fee.  Most people pay far more per month for food, clothing, car insurance, health insurance, cable and Internet TV subscription bundles, etc.  Yet, most of those people aren’t complaining to the extent that they are about the Amazon Prime price increase, and that’s because of how those services are marketed as compared to Amazon’s marketing of Prime.

For Amazon to quell this anger and dissension amongst the Amazon Prime subscriber base, they need to do two things:

1. Break the yearly price down by month, even by day (as I did above), and emphasize that in their marketing.

2. Reemphasize all of the value subscribers will continue to receive, including the new music service that is scheduled to come online next month.

The first item has been non-existent, while the second item has been haphazardly done at best.  I really think that by emphasizing these two points, Amazon can help to quell the concerns and anger coming from much of the Amazon Prime subscriber base and keep many of them from fleeing.  If too many of them leave, this could start a bad cycle, as Amazon’s profits will suffer, scaring investors further and making Amazon consider more price increases in the near future, which will only make subscribers even angrier and giving them more impetus to unsubscribe from Amazon Prime.  It will be interesting to see the numbers of how many Amazon Prime subscribers stay and how many go as the new rate increase kicks in.

What do you think of Amazon’s rate increase of Prime? Reasonable? Unreasonable? Are you a subscriber to Amazon Prime? If so, do you plan on keeping your subscription or dropping it? Why? Feel free to answer any or all of the questions in the comments box below.

Fujitsu’s New Tactile Sensation Tablet Screen Could Be A Game Changer For Online Retail

Late in February, Fujitsu unveiled a prototype of a tablet that has the ability to allow the user to feel the texture of what he/she sees on the screen.  Therefore, if you are seeing a rough object, you could feel the coarseness of that object; if you’re seeing a smooth object, you could feel the silky smoothness of that object.

Think of the implications this could provide for online retail. Many people aren’t fond of purchasing clothing online because they can’t touch it, can’t try it on, etc.  While they may not be able to try it on (virtual reality and/or sophisticated online diagrams may solve that issue), with this technology, they certainly can get a feel of what the fabric feels like, increasing online clothing conversion rates.

This could encourage more people to shop for clothing online and help to pick up that segment of the online retail industry, as other categories sell much more via online channels, including technology, books, and even food (none of which rely on touch to help convince prospects to make a purchase).   With the tablet commerce (a.k.a. “tcommerce”) industry already picking up in terms of higher-priced purchases, this technology would fit in perfectly to encourage even more apparel purchases via tablets.

Most people (particularly women) like to feel the fabric and get an idea of how it would feel on their skin.  One part of that puzzle may be solved with this new tactile sensation technology; I definitely can see this technology revolutionizing the online retail and ecommerce industry in the coming years and make it as natural for people to purchase clothing online as they do technology, books, and food.

What do you think? Do you think this will be a game-changer, or is this just a technology that won’t leave any lasting impact on online retail? Let me know in the comments box below.

Why Apple Has Gotten Rotten In The Tech Industry (Part 5- Apple’s Future)

This is Part 5, the Final Part of the Series “Why Apple Has Gotten Rotten In The Tech Industry.”

To read the other four parts in this series:

Part 1 (Google)

Part 2 (Samsung)

Part 3 (Amazon)

Part 4 (Other Competitors and Challenges)

Having gone through the challenges that Apple is facing from equally capable companies such as Google, Samsung, Amazon, and Pebble on several fronts, including the smartphone, tablet, and smartwatch categories, what does the future hold for Apple?

As was mentioned earlier in this series, expecting Apple to widen the gap to where they were far ahead of their competitors is unrealistic; those days are gone.  For Apple fans and investors, one must accept this fact: the rest of the industry has caught up, and in some ways, the rest of the industry is outdoing Apple in the tech industry, especially in terms of innovation.

Does this mean that Apple is finished in terms of being a profitable company in the tech sector?  No; Apple just needs to raise its game when it comes to innovation, both in the tech industry and beyond.  The good news is that there are rumors of them doing just that.

There are more rumors by the day that Apple is looking to connect its impending iWatch to the health industry.  As this 9to5Mac article points out, specifically, it’s the mobile healthcare industry that Apple is targeting.  That would certainly explain why Apple has taken a long time to release its iWatch, and it is an industry that the other main tech companies have not targeted.  That, alone, should appease Apple fans and investors, as this could be the impetus Apple needs to get some of its value back closer to its all-time high of $700+ (currently under $550 as of the time of this blog post).

Reportedly, the new iOS 8 operating system will include an application called “Healthbook” that will enable the iWatch to monitor one’s fitness (weight lost, calories burned, steps taken, etc.) and one’s health (heart rate, blood pressure, hydration levels, etc.).

While that is exciting, there are still some hurdles to take care of.  As this CiteWorld article points out, Apple is entering a different playing field that is more tightly regulated in virtually every country than either the music or entertainment industry.  Thus, Apple will not be able to easily and quickly differentiate themselves from other competitors in the field as they did for a long time in the tech field.

In addition, Apple likely would have to gain the proper clearance from such regulatory organizations as the FDA and the Department of Health and Human Services in order to be able to market the iWatch as a medical device.  Note that this is just at the U.S. Federal level; many states and some cities have their own regulatory rules when it comes to health devices.  This doesn’t even take into account the European Union and other regulatory bodies in the countries of Europe and Asia.

Thus, the iWatch’s ability to penetrate the health industry is far from a done deal, and any roadblock could seriously hinder or even derail the full plans for the iWatch to disrupt the health industry and give Apple some much needed momentum for the company.

Apple introduced iRadio in June 2013 after years of rumors that Apple was going to get into the online radio market.  Many were predicting that Pandora, whom many considered to be the online radio leader, would suffer irreparable damage as a result, possibly leading to its collapse.

However, despite iRadio being in existence for over six months now, Pandora, as well as Spotify, are still kicking out the tunes.  In fact, Google also got into the act with its All Access Streaming Music service.  While iRadio added a nice feature to iOS7, it really didn’t distinguish itself from the other services, and in fact lacked features that Google All Access and Spotify provide – the ability to stream virtually any song any time the user wishes.  Surprisingly, iRadio is cheaper than Pandora (the most similar service to iRadio) – $24.99/year versus $36/year.  Of course, there are free versions in both, supported by ads.

This is another example of where Apple took a long time to develop a product, finally deliver it, but not distinguish itself from its competitors.  When it comes to Internet radio, it’s likely that most still think of Pandora or Spotify before Apple or Google (I know I do – and I use my iPad every day, but have only had iRadio on two times total in the last few months), showing the importance of being a first or early mover in the market.

At one time, most stock analysts and fans thought that Apple was the model company when it comes to tech, but that is no longer the case.

Ben Reitzes, analyst at Barclays, just downgraded Apple to “equal weight” from “overweight.”  That’s significant because, he has had Apple as “overweight” for 10 YEARS. Yes, 10 YEARS! As he states in this Benzinga article, he believes that iPhones will become more costly to make due to such new features as Sapphire glass, curved glass, and new batteries.  This will lessen Apple’s margins on its flagship smartphone product, thus leading to less profitability.  Reitzes doesn’t believe that AppleTVs or smartwatches will help to raise Apple’s valuation either.

This type of judgment on Apple is something that has not been seen in quite some time.  Even when Apple’s stock was dropping like a rock in 2013, most analysts brushed it off and thought that Apple would immediately come back in terms of value.  I know some analysts were even predicting that Apple would rise to $800, even $1000+ during 2014.

While that may still be possible, current evidence would suggest otherwise, as Apple is currently trading above $520, down about $1 (2.2%) on the day as of the time this post is written (about 12:15 PM ET on Monday, February 24, 2014).  While it has gained from the $385.10, the low it hit on April 19, 2013, it’s also a good margin away from the recent high of $575.14 on December 5, 2013, never mind the fact that Apple hasn’t been above $600 for over a year now.

Thus, more people are starting to realize that Apple is facing a much tougher tech environment, and Apple has been slow to adapt.  Every time Apple has more negative news about it or a positive development about a competitor surfaces, it does more damage to Apple than in the past.

Add in the fact that Apple has admitted that it has a “bug” that fails to encrypt sensitive data on iOS and Macs, and this just further intensifies the black cloud hanging over Apple.  This type of bug sounds more typical of Microsoft and Windows, yet the former tech leader is experiencing such a “bug” and is still working to resolve it on Macs (they have issued an iOS patch for iPhones and iPads).  Worse than that, as this Reuters article reveals, this bug has been present for months, but has only been identified very recently.  Thus, many Mac users may have inadvertently exposed their sensitive data on public WiFi without even knowing it until now.

This is another reason why Apple is being looked down upon, especially amongst the younger generation; Apple is not the most transparent company in terms of its operation, a quality that younger generations look more for than older generations do.  That is one problem Apple is facing.

Another problem Apple is facing is one that I mentioned earlier in this series: More and more people are looking at paying less for their technology.  This is likely to hold true in China, which is why most don’t think Apple will ever lead in market share there (they were up 1% in Q4 2013, a total of 7% market share, good for fifth place, 12% behind market leader Samsung – source).

Whereas at one time people thought that Apple was THE only choice in getting quality tech, even at higher prices, the competition has shown that that is no longer the case.  Add in the fact that the competition’s tech is cheaper, and it’s not surprising that other companies have more market share in places such as China, Android dominates the world (and leads in the U.S.), and times don’t look that bright for Apple right now.

So, what can Apple do about this downtrend?

Two things:

1. They need to be more adaptive to the competition – they can’t take as long in coming out with new products.  I pointed out both the delays in producing the iRadio and in the smartwatch.  Just as the iRadio didn’t do a whole lot for Apple or that much against its competition, I don’t expect the smartwatch to do much either, even if it is targeted more toward the health sector.  As mentioned earlier in this post, Apple has many governmental hurdles and restrictions to deal with before the smartwatch can even become a medical device reality, and that’s across many government levels.

2. Apple also must be more innovative in its product line.  While the health industry is one that its competitors aren’t in (yet), the delays aren’t helping Apple’s cause to be more innovative in the health industry.  As for its other products, the iRadio wasn’t that innovative, as noted above, and new models of the iPhone and iPad aren’t innovative enough anymore to outdo or even match its competitors.

Further proof that Apple has to pick up its “tech” game to make a comeback: I just seen in the latest Best Buy weekly flyer that Samsung has released its new, larger tablet, the Samsung Galaxy Note PRO 12.2.  Apple has plans to release a 13″ iPad, but that won’t be until later this year or 2015, again leading to them being behind the ball when it comes to innovation.  Apple does plan to target more of the enterprise industry than the main consumer industry, but the innovation behind such an idea has again been taken away from Apple thanks to Samsung coming out with such a product first.

In essence, Apple must improve the innovation in its product lines and its ability to get them to the market quickly (preferably first).  It is no longer good enough for them to just release a product and have everyone look upon Apple positively; it must now react to competition that wasn’t really present even a few years ago, and certainly not five years ago.  This is the only way, in my opinion, that Apple will start to gain value in the eyes of its fans and investors again.  Apple isn’t going away in the tech industry, but it’s no longer the tech leader, and it won’t be again either without it being more innovative and being more efficient in getting its technology out to the market before its competitors do.

I hope you enjoyed this series.  Feel free to post your comments below.  I will keep an eye on Apple and the tech industry in the coming months, delivering a few posts here and there.  If you have questions or would like to see an expansion of this series, looking at another specific aspect of Apple and/or the tech industry, feel free to leave a comment below.  Thanks!

Why Apple Has Gotten Rotten In The Tech Industry – Part 4 (Other Competitors & Challenges)

This is Part 4 of the 5-Part Series, “Why Apple Has Gotten Rotten In The Tech Industry” – Other Competitors and Challenges.

To read Part 1 (Google)

To read Part 2 (Samsung)

To read Part 3 (Amazon)

As has been discussed in the three posts above, Apple is facing stiffer competition on many different technological fronts from companies such as Google, Samsung, and Amazon.  This is especially true when it comes to the smartphone and tablet market, where Apple made waves years ago with the original iPhone and iPad.

The problem is that Apple hasn’t been very innovative since that point.  Yes, they’ve updated the iPhone and iPad numerous times, some revisions with nice enhancements (such as the iPad 2), but the revisions of late have been of the “ho-hum” variety, which hasn’t impressed customers or investors.  In fact, I know more Apple fans often wait a version or two to upgrade, knowing some who are still on iPhone 4s who haven’t upgraded to the iPhone 5 or iPhone 5s (or 5c).  In the past, it was quite common for Apple fans who would go grab every new version, but with the prices and the constant “rebooting” of the iPhone every year, but few notable upgrades, most Apple fans think they can wait a version or two before upgrading.  This is another notable shift in how people are viewing Apple.

Many people, including noted CNBC commentator Jim Cramer, think that Apple must be more innovative – this is because the technology field has become much more competitive and that the main rivals for Apple have caught up and even surpassed them in technology, as I’ve noted in earlier posts of this series.

Some are excited by the fact that Apple is purported to be introducing a new smartwatch this year, a type of watch that can be programmed in order to answer calls on your smartphone, hold those calls, surf the Internet, and more.  While it’s certainly different for Apple to be doing that, what some might even call “innovative,” personally, I think it will take much more than that for Apple to really regain some momentum in the tech industry.

“Why?” you ask.

Well, for starters, Apple was rumored to be releasing a smartwatch last year, but that obviously didn’t happen.  In the past, that might have been acceptable, but as I said above, the competition has become much better at matching and outdoing Apple in technology.  Samsung already released the “Galaxy Gear,” a type of smartwatch that works with their Samsung smartphones (though it’s purported to work with other Android phones as well).  Now, the “Galaxy Gear” didn’t come out to the most favorable reviews, which is why Samsung plans to release a second version of the “Galaxy Gear” in 2014.  Early indications seem to suggest that Samsung may release that second version before Apple even releases its initial smartwatch.  This certainly doesn’t help Apple’s image of being an innovator of technology when one of its main rivals will likely come out with a second version before Apple even comes out with a first.

However, the bigger problem for Apple in the growing smartwatch industry is not so much Samsung, but by a relatively new company that came out with a smartwatch that has received rave reviews: Pebble.  Pebble Technology developed this smartwatch thanks to the help of the crowdfunding platform Kickstarter, and began shipping the Pebble Smartwatch in January 2013, over a year ago.  This competitor is not going away anytime soon; besides the fact that most would consider it the leader in the smartwatch industry, apps are being developed for it.  In fact, it can communicate with both Apple and Android phones via many different third-party apps.

Thus, Apple (and Samsung, for that matter) has its work cut out for it.  Therefore, I don’t think releasing a smartwatch, no matter how favorable the reviews are, is really going to give the company the impetus of being the tech leader again.  Certainly, it may raise its standing a bit, could even boost the valuation of the company for a short period of time, but as for that “grand slam” that’s going to put it back out in front of the competition, that’s highly unlikely.  At best, it may put itself up there with Pebble and show that it, too, can come up with a solid smartwatch on its first try (something Samsung largely was unable to do), but as for being out in front in the smartwatch industry, that honor has to go to the rising upstart, Pebble.

Other avenues for Apple seem to have a bit more promise for the company in terms of it being considered an innovator again.  Two, in particular, come to mind: Its “iBeacon” technology, and rumors of entering the health-monitoring industry.  The latter is pretty interesting, and we’ll explore this in Part 5.  I bring up the former here because, while it is interesting in its own right, there’s one hurdle that could torpedo much of the momentum from such a technology.

The “iBeacon” technology is one of the technologies that retailers hope to use to learn more about their customer while in-store, and then use that information to provide relevant ads and offers on their mobile devices (usually smartphones) while they’re in certain areas of the store.  So, for instance, if you’re in a Target store near the clothing area, you may get a special offer for a new pair of jeans.  If you’re in a local grocery store and you’re nearing the frozen food section, you might get a special offer for Van de Kamp fish sticks, etc.  Essentially, it relies on push notifications when a person is in a specific area of a store. It runs on Bluetooth Low Energy (BLE), also known as Bluetooth Smart.  Certainly, this technology shows a lot of promise for retailers to provide real-time marketing offers to their customers while they are in-store.  And, to my knowledge, Apple is the first one to offer such a technology.

The problem that I think will torpedo much of the momentum from this technology was highlighted in this Mobile Marketer article from February 11.  There is an upcoming Federal Trade Commission workshop on geolocation to address such technologies as the iBeacon, Bluetooth, Wi-Fi, and others that can track customers while in-store in an effort to learn more about what areas of the store they visit and stay in most often and provide relevant offers based on what’s near-by to them.

The problem comes in where some privacy advocacy groups are claiming that too much information is being revealed because of this technology.  One privacy advocacy group even claims that some marketers are even tracking in-store users in order to make stocking decisions based on income and/or race.  If true, obviously, this will cause the FTC to “raise an eyebrow” and greatly hinder the information that retailers can gather from this technology, thus negating much of the benefits retailers can get from it, and torpedoing much of the benefits for Apple.

Edward Snowden’s revelations about the NSA certainly did not help Apple when it came to the iBeacon.  Nor did the recent revelation that Nordstrom was tracking its customers’ every movement (without their knowledge) when they used the company’s Wi-Fi in-store networks.  Nordstrom immediately stopped that practice when it was revealed, thus putting an onus on the collection of too much data.

Thus, it would seem likely that the information the iBeacon system can collect will be limited in scope.  While it may still help retailers to some extent, the chances of that information being regulated is likely, and this will limit how much positive benefit Apple will receive from such a technology.  Whereas the iBeacon could have been a saving grace for Apple in terms of it regaining much of its former “tech leader” status, the fact that the technology will likely be limited and regulated due to privacy concerns and even racial/ethnic issues, the iBeacon technology will likely only benefit Apple slightly in terms of innovation and ingenuity.

So, again, Apple’s best efforts will likely not provide the “grand slam” it really needs to get back out in front of its competitors in the tech industry.  Can Apple even get back out in front of them?  And, if they can, what would do it?  These questions we will explore in the fifth and final part of this series, “Why Apple Has Gotten Rotten In The Tech Industry.”  That post will appear early next week – keep an eye out for it.

“Apple’s Gotten Rotten In Tech” Series Will Continue This Week

I hope all of you are well!

My apologies for not continuing the “Apple’s Gotten Rotten In Tech” series last week – I had some business to attend to that couldn’t wait.  However, I have learned more interesting things about Apple just over the last week where the wait will hopefully be worth it.

To refresh your memory, here is Part 1 (Google) and Part 2 (Samsung).

In fact, I am planning on making this at least a five-part series (for now – I may revisit this topic periodically over time).

As mentioned before,

Part 3 will be how Amazon has made life harder for Apple.

Part 4 will be how Apple’s efforts have fallen short in regards to the increasing tech competition.

Part 5 will be a continuation of Part 4, since there is a lot of information to cover, including some new information I have learned just over the last week.

Tentatively, I will attempt to post Part 3 either Wednesday or Thursday of this week, Part 4 either Thursday or Friday of this week, and Part 5 Monday or Tuesday of next week.

Therefore, I hope you’ll keep an eye out for this continuing series; again, I apologize for the delay and hope the wait is worth it.

Why I think Apple’s new 12.9″ iPad may be more than just for the educational market

If you have not heard, Apple is rumored to be working on a new 12.9″ iPad for the educational market. This new iPad is to be released in October 2014 according to PCMag.com.  Samsung is also planning on 12- and 13-inch devices for that market as well.

That (Samsung planning on introducing similar devices) is one reason why Apple is doing it.  The other main reason, I think, is because Apple is trying to create a new trend, just as they did with the iPhone and iPad, something that their recent products (the recent iPhone and iPad versions) and planned products (the Apple TV and the rumored iWatch) really aren’t doing or probably are going to be able to do. (I’ll explain why I think none of those aforementioned products will help Apple have a big 2014, if it has a big 2014, in a future post).

I think Apple is looking to do three things with this new iPad:

1. Try to establish a strong presence in the educational market, as the rumor says.

2. Try to take a bigger bite out of the laptop/notebook market, which would really do damage to Microsoft.

3. Try to counter the Microsoft Surface tablets, especially the Pro 2.

I say #2 because most of the laptops and notebooks that are still being produced run on Windows.  Yes, Apple has MacBooks, MacBook Pros, etc., but Apple sees the future just as much as the other companies (including Microsoft) see it: There will come a point in the near future where the traditional notebook/laptop is just a chapter in a school textbook (or tablet book in all likelihood, since traditional textbooks will probably be a thing of the past in the coming decade or two).  So, all makers of notebooks/laptops, including Apple, will no longer have that as a viable product line and income stream.  However, Microsoft is still the predominant operating system for notebooks, so this would really take a big bite out of them than it would for Apple.

Apple (as is Samsung) is trying to accelerate the demise of the laptop/notebook by creating a larger portable tablet that can be carried around and used.  Yes, it might be for the educational market at first, but I wouldn’t be surprised if Apple (and Samsung) both put larger tablets on the overall market if the “test” in the educational market works out well.  More on the challenges facing this below.

As for saying #3, I think Apple and Samsung are both trying to come up with larger tablets that can do more “work.”  Many of the complaints toward such devices as the iPad, Google Nexus 7, and Kindle Fire HD and HDX is that they are not very intuitive to do such tasks as creating documents and publishing them.  Even writing simple emails is pretty challenging.  Microsoft has, arguably, been the best at that because of the Microsoft Office Suite, something that the Microsoft Surface tablets can offer, whereas the other tablets cannot.

There’s office apps available at the App Store, Google Play, and the Appstore For Android on Amazon, but none of them really match the intuitiveness and functionality of Microsoft Office.  My thinking is that Apple and Samsung are attempting to provide larger tablets that have greater processing power (which the Microsoft Surface tablets have) and greater storage capacity (Microsoft Office does take up quite a bit of room on those Surface tablets) to counter those Surface tablets both in terms of functionality and capability.

Provided this is true, and these tablets will be for the overall market in the future, the challenges that Apple and Samsung will face with the production of these tablets:

1. Can they make the tablets light enough so that you don’t feel like they are weighing you down and are a bear to carry?

2. Can they make the tablets powerful enough to handle applications (equivalent or comparable to such applications as Microsoft Office) easily that a laptop would be able to do with ease and that you would use in school or work settings?

3. Can they come up with a viable alternative office suite to Microsoft Office, or at least, come up with an agreement with Microsoft to provide Microsoft Office on their tablets? (Samsung could, being that they already have a working relationship with Microsoft for their notebooks, but the same can’t be said for Apple, Google, or Amazon).

4. Can they enable the tablets to remain cool enough so that the tablets are not only comfortable to carry while performing these applications, but also ensure that the tablets remain in good working order and not overheat? (Some Microsoft Surface Pro users who have provided reviews have complained of the tablets getting quite warm and even overheating from time to time).

These are the questions that Apple and Samsung will have to deal with as they create these new, larger, and presumably, more powerful tablets.  While the educational market may be the initial staging ground for these tablets, I suspect that these larger tablets will hit the overall market in the not-too-distant future, probably either in 2015 or 2016, as both want to establish the future of the tablet as the only real “computer” you need and not any type of laptop or laptop-tablet hybrid that are still prevalent in retail and online retail outlets today.