Sony is no copycat. Its Tablet S, revealed at IFA today, shows true innovation in hardware design. It’s slightly smaller than the iPad, but it feels completely different to hold, with its folded-magazine “wraparound” design. It has high-tech features that set it apart from the iPad and other Android Honeycomb tablets, including DLNA support, an IR blaster, and what Sony calls “quick view/quick touch,” which makes the screen and Web browser extremely responsive and fast-loading.
A bigger step for Sony is what comes on the device. The Tablet S comes preloaded with access to Sony Entertainment Network, including a six-month free subscription to its Music Unlimited service, plus two free PlayStation 1 games—finally, leveraging assets from across different business units, a huge step for Sony. Sony has also negotiated deals for an exclusive window to several new Android tablet apps, including Crackle and Foursquare, which will be preloaded on the device. These are all important product innovations, which combined with Sony’s brand should put Sony’s product ahead of many Android competitors in consumers’ minds.
But the price—on par with the market-leading iPad at $499 for the 16GB version and $599 for the 32GB version—raises a red flag. We’ve been down this road before: Motorola and HP both priced their devices on par with the iPad, and both were unable to sell their devices in volume until they lowered the price significantly. Yesterday, I spoke with Phil Lubell, Vice President of Tablet and Digital Reading at Sony, about the product strategy behind the device. Phil reiterated Sony’s position that their product justifies a premium price. Consumers will be the judge of that, but my concern for Sony is not price competition with Apple but price competition with Amazon, whose tablet we expect to be significantly cheaper.
This, too, has the ring of familiarity to it. Product strategists at Sony, of all companies, should be the most wizened to the harsh realities of competing with Amazon economics from its experience with its eBook reader business. Sony was the first to launch a widely available E Ink eReader in 2006, only to rapidly lose market share to Amazon, whose Kindle included wireless connectivity and severely undercut Sony on price.
This is the new reality of adjacent competition. Competing as a hardware manufacturer against companies whose core business is not hardware is a high-risk game. In this respect, we see the product strategy behind the Sony Tablet S as evolution, not revolution. Bringing together “best of Sony” hardware and content assets is a step forward for Sony, most certainly. But revolution would be to flip the model and lead with content and services, which is not a step Sony is willing to take with its product strategy — yet. After round two of competition with Amazon economics, product strategists may look back and second guess that decision.