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. Speaker

1. The Hardware Conundrum:
How Children Are Shaping the Next
Generation of Mobile Devices
TOC Sala Rossa
11:00am
March 18, 2012

2. Who Am I?
Matthew
Venture Investor, Entrepreneur, @IAmGrowney
Educated on Encyclopedias, TRS-80, & Flash Cards.
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3. Who Am I?
….but more importantly now:
Father, Uncle, and Godfather.
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4. How Are My Kids Learning?
Playful Discovery.
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5. How Are My Kids Learning?
And Digitally.
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6. Ultimately….
Learning = Atoms + Bits
(Device) + (Content)
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7. A Kid’s Desire vs. A Parent’s Wallet
Huge 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%
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8. Understanding Your Content Opportunities
It will become increasingly important for
Publishers, Content Developers, and
Authors 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 the
ATOMS that present them.
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9. Will it Be On Toy or Tablet or Something
New?
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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).
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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
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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”.
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13. Example of a Tier 2 Tablet
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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.
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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.
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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.
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17. Children’s Content Use/Purchase Is Soaring
Game-based Learning Mobile Learning
$413M $1.82B
$232M
DEMAND
$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)
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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
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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.
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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
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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
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22. The Journey For Such Has Begun…
Learn more at
www.IsabellaProducts.com.
(Shameless plug)
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23. Thank you.
 Matthew Growney, CEO
 Email: matthew.growney@isabellaproducts.com
 Phone: +1 (978) 287 – 0007 x11
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