Google — Not Consumers — Is Winner in Tablet ‘Giveaways’

Newspapers are offering free tablets with paid digital subscriptions

   
Google — Not Consumers — Is Winner in Tablet ‘Giveaways’

Would you pay full price for a digital newspaper subscription if the company threw in a new tablet to read that digital content on?

Well, News Corp (NASDAQ:NWS, NWSA) and the U.K.’s Financial Times are hoping the answer is yes. If you buy The Times for 18 months at $28 per month, you can get a 32GB Google (NASDAQ:GOOG) Nexus 7 tablet for $50, while a 12-month subscription to The Financial Times at $49 per month gets you a free 8GB Nexus 7.

The economics of the deals don’t seem particularly favorable to consumers if they stop to do the math, though. The Financial Times’ website is currently offering a “premium subscription package” that seems to cover all the bases — unlimited article access, unlimited mobile and tablet access, archives and more — for $8.59 per week (around $33 per month).

The cheapest Nexus 7 currently available (the 8GB version has been discontinued) goes for $199. If we subtract $33 per month (standard subscription rate) from $49 (for the free tablet rate) over the course of the 12-month term, you end up with $204. In other words, the publisher is basically offering an older tablet at a bit of a price premium on a monthly installment plan.

Doesn’t seem like such a great deal once you get past the “free” part.

Let’s also pause and consider for a moment the actual tablet. It’s a Google Nexus 7 (made by Asus). The tablet is considered among the best of breed for Android devices and one of the best small tablets out there.

But there’s the rub. It’s small. The display measures just 7 inches diagonally, with a resolution of 1,280 x 800 pixels. That’s perfectly fine for reading an e-book, casual Web surfing, gaming or watching video … but for reading content-dense newspaper?

Sure, you can turn the tablet so it’s horizontal to minimize the tiny text effect, but that’s not the natural orientation most people tend to use with a tablet, and it still limits your view, just in a different direction. Have you ever tried reading a digital newspaper on a tablet of this size? I have and, despite the fact that the smaller tablet is more comfortable to hold, I always give up and go back to my Apple (NASDAQ:AAPL) iPad with its full-size display. When it comes to digital newspapers, size trumps portability.

So why “give away” the small tablet if it’s going to provide a less-than-optimal user experience?

First and foremost is cost. Smaller is cheaper, and the economics of this giveaway are already questionable, so ponying up for an  iPad or even a cheaper (but still nice) Nexus 10 is out of the question. Either the publisher would have to eat the cost, the tablet maker would have to cut a sweet deal for cheap hardware or the subscription price would have to be jacked up so much that even the most gullible consumer would have doubts about what “free” actually meant.

Next would probably be the fact that the programs took place during December — the lead-up to Christmas — and tablets are on many wishlists. Anyone who didn’t intend to actually use the tablet themselves as a news reader, could give it to someone on their holiday shopping list. A premium gift at little or no cost!

Did readers bite on the offer? I haven’t been able to find any word on how the promotions went. However, an Asus spokesperson had this to say about ongoing tie-ins:

Yes, hopefully there will be more deals with other publishers and titles in the future. Asus UK is actively looking at innovative ways to get Asus products into consumers’ hands.”

Newspapers are faced with declining readership and loss of advertising revenue … in print. Many have come to the conclusion that publishing online is the way of the future, and there’s a lot of data supporting the idea that people will read Web-based newspaper content. However, monetizing digital content through paywalls has faced opposition and risks alienating potential readers, so publishers are trying to find ways to make it palatable for consumers to pay for what was once free.

Giving away a tablet may become the 21st century equivalent of a free watch with a magazine subscription. The difference, of course, would be the hope that the buyer might — just might — actually read the digital newspaper on the tablet and get hooked on the experience.

To me, though, it seems as though the winner in all this isn’t the newspaper publisher that might sell some digital subscriptions (which may well be canceled after the term is up), the consumer (who’s basically just getting a tablet on a monthly installment plan) or Asus (which probably isn’t making anything on the deal). If there’s a winner, it’s Google.

Google is all about getting as many Android devices into as many hands as possible so more users are using its search engine and apps, driving that all-important ad revenue. The company couldn’t care less if people used the tablets to read newspapers, but I suspect it would be more than happy to participate in these sort of promotions for as long as publishers have the stomach for them.

As of this writing, Brad Moon did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/12/google-not-consumers-is-winner-in-tablet-giveaways/.

©2014 InvestorPlace Media, LLC

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