Thinkings about Digital reading & Microsoft

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Thinking about Microsoft and digital reading business. Reasons why Microsoft should have a closer look at this fast growing market. (disclaimer: ppt created in early 2011)

Technologie Business

Digital book… and Microsoft State of Art Music & Video Digital readingsmarket How to becomenext leader Recommandations

First, a « revolution » for cutomer You canbringwithyou all music / videosyouown Buy music / videoyouwantwhenyouwant Payonlywhatyoureallywant Exceptthat… digital experienceis Same as physicalexperience(but don’tsayit!)

Video market in 2009 Strong decrease in last years, & digital copies is replacing physical copies. Innovative entertainment industry ,[object Object]

Differentiation via technologies (HD, 3D…) to limit digital business

Price war! Overall decrease but strong digital growth ,[object Object]

Box office is going up and forecast are good.

Retail is decreasing strongly from 40B$ to 34B$ within 7 years (-15%!)

Rentalaftergoing up isnowdecreasing, sufferingfrom VOD / online video as well

VOD and Online video are gettingmomentum (from 1 to 11 B$ in 6 years!)Music market in 2009 17B$ business (-7% VS 2008). Despite strong decrease in past years, digital copies are slowly replacing physical copies. From 0$ in 2003 to 4,3B$ in 2009 (25% total sales), 9% growth. Not consistent trends ,[object Object]

In Europe: -4% total. Digital copies + 29,7 % (13% total).

13 countries are growing their markets. Digital copies compensate physical copies market. Digital market From 2004-2009, + 940% VS -30% traditionnal industry. More than 400 music plateforms on Internet with 11M titles. Itunes (23 countries) have 100M members and more than 10B downloads. Wall Mart, Best Buy, Amazon are here too.

Learningsfromdigital Music & Video business 4 years to get15%marketshare US and Europe are the keymarkets

Digital Market Chain Value Software Content Device

Content Device Software To be the next digital reading leader, (re) build the digital value chain. But doesitworthit?

Digital Readings = Next digital entertainmenteldorado? Books Comics Press CA (trend) Digital % 60B$ 30B$ 3B$ Opportunity in 2014 9B$ 1B$ 15B$ Tablets will cannibalize netbooks, outselling netbooks starting in 2012.In 2015, 23% of all PCs sold to consumers in the US will be tablets. Approx 100 millions a year. Slate IB/ebooks IB approx 300M users. (IDC 2010) # slates 8,5B$/ year Leader Revenue Opportunity in 2014 with 30% marketshare

Digital Readings = digital Music / Video? Wouldreaders love to: Bringwiththem all books/ presstheyown? Buy books/pressyouwantwhenyouwant? Payonlywhatyoureallywant? …YES

Are you sure? Cultural Old story (6th century) Smell & touch fetichism Pillar of education The content is the container The Music, The Movie but Readings

Yes we are! Education will help digital reading adoption Fetichismwill shift from « smell & touch » to « design » ,[object Object]

Innovativeway to sell& buy books,[object Object]

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Software is changing the way traditional business operate. People now have smartphones in their pockets - a supercomputer that is 25,000 times more powerful and the minicomputers of the 1960s. This is changing people´s behaviour and how people shop and use services. The organizational structure created in the 20th century cannot survive when new digital solution are being offered. Software is changing the way traditional business operate. People now have smartphones in their pockets - a supercomputer that is 25,000 times more powerful and the minicomputers of the 1960s. This is changing people´s behaviour and how people shop and use services. The organisational structure created in the 20th century cannot survive when new digital solution are being offered. The hierarchical structure of these established companies assumes high coordination cost due to human activity. But when the coordination cost drops The organisational structure that companies in the 20th century established was based on the fact that employees needed to do all the work. The coordination cost was high due to the effort and cost of employees, housing etc. Now we have software that can do this for use and the coordination cost drops to close-to-zero. Another thing is that things become free. Consider Flickr. Anybody can sign up and use the service for free. Only a fraction of the users get pro account and pay. How can Flickr make money on that? It turns out that services like this can. Many businesses make money by giving things away. How can that possibly work? The music business has suffered severely with digital distribution of content. Should musicians put all there songs on YouTube? What is the future business model for music?

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The internet is radically disrupting most of the traditional content distribution and selling models, starting with music and games, followed by TV, film, books and print publishing. Once everyone is always-on, mobile and hyper-connected, and everything is available everywhere, how will content be created, distributed, marketed, consumed, and paid for? Who will do what, for whom, and how will the traditional players such as broadcasters, record labels, publishers and distributors adapt? If new players, starting with telecoms, device makers, advertisers and brands, indeed move into the content business, what will be their challenges and opportunities? Picture 22 Given the challenging financial climate, how do we reconcile the need to reward enterprise and secure sustainable revenue streams, with the expectations and demands of the “freeconomics” generation? What kind of legal, regulatory and cultural framework do we need to ensure that this new eco-system of creators, consumers and intermediaries generates more benefits for all involved? More http://www.mediafuturist.com/2009/04/the-future-of-content-creativity-my-presentation-at-the-rsa-in-london-april-8.html

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Thinkings about Digital reading & Microsoft

1. Digital reading… and Microsoft?

3. Digital book… and Microsoft State of Art Music & Video Digital readingsmarket How to becomenext leader Recommandations

4. First, a « revolution » for cutomer You canbringwithyou all music / videosyouown Buy music / videoyouwantwhenyouwant Payonlywhatyoureallywant Exceptthat… digital experienceis Same as physicalexperience(but don’tsayit!)

6. Differentiation via technologies (HD, 3D…) to limit digital business

8. Box office is going up and forecast are good.

9. Retail is decreasing strongly from 40B$ to 34B$ within 7 years (-15%!)

10. Rentalaftergoing up isnowdecreasing, sufferingfrom VOD / online video as well

11.

12. In Europe: -4% total. Digital copies + 29,7 % (13% total).

13. 13 countries are growing their markets. Digital copies compensate physical copies market. Digital market From 2004-2009, + 940% VS -30% traditionnal industry. More than 400 music plateforms on Internet with 11M titles. Itunes (23 countries) have 100M members and more than 10B downloads. Wall Mart, Best Buy, Amazon are here too.

14. Learningsfromdigital Music & Video business 4 years to get15%marketshare US and Europe are the keymarkets

15. Digital Market Chain Value Software Content Device

16. Content Device Software To be the next digital reading leader, (re) build the digital value chain. But doesitworthit?

17. Digital Readings = Next digital entertainmenteldorado? Books Comics Press CA (trend) Digital % 60B$ 30B$ 3B$ Opportunity in 2014 9B$ 1B$ 15B$ Tablets will cannibalize netbooks, outselling netbooks starting in 2012.In 2015, 23% of all PCs sold to consumers in the US will be tablets. Approx 100 millions a year. Slate IB/ebooks IB approx 300M users. (IDC 2010) # slates 8,5B$/ year Leader Revenue Opportunity in 2014 with 30% marketshare

18. Digital Readings = digital Music / Video? Wouldreaders love to: Bringwiththem all books/ presstheyown? Buy books/pressyouwantwhenyouwant? Payonlywhatyoureallywant? …YES

19. Are you sure? Cultural Old story (6th century) Smell & touch fetichism Pillar of education The content is the container The Music, The Movie but Readings

20.

21.

22. Blue Ocean

23. Whereweshould go? Price 500$ 150$<X<400$ 150$ Experience New Reading + Video + Web Reading Reading + Video + Web Hardware 100+ 3 to 5 1 to 2 Business Models License + Ads + Content Content Hardware

24. Our Assets PLATEFORM PARTNERS CUSTOMERS DEVELOPERS 600K Partners 8.6 Million Professional Developers 1.1 BillionPC Users Worldwide 60%+ of PC are running Silverlight $506 BillionIn Ecosystem Revenue

25. What about the device?

26. What about the business? Key question: revenue sharing (OEM, Content, Dev, Microsoft, Retailer)

27. Appendix

28.

29. The top book retailers in the United States Barnes and Noble Borders Books-A-Million Wal-Mart Costco B. Dalton Waldenbooks Amazon.com Books and Co. Bookland

Thinkings about Digital reading & Microsoft

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