Yankee Group: How connectivity, content is changing the game

In December 2010, researchers noted that although 4G connections were only slowly rolling out, they are going to be a game changer. The ability to connect to the Internet from anywhere and on nearly any device is a thrill for consumers. The problem? 4G isn’t ready yet. In 2011 less than 1% of mobile lines will be 4G ready. The good news? Once 4G lines are ready consumers are expected to quickly jump to upgrade smartphones, tablets and other connected devices so that they can be ‘always on’.

“Connectivity–especially mobile connectivity–drives disruption in the telecom arena,” said Jason Armitage, senior analyst at Yankee Group and a co-author of the report. “Once 4G takes hold, its impact will be swift and profound, and 2011 is the year to prepare.”

That always on connectivity is already being seen, even with limited availability of 4G networks, especially in the world of reading. As e-reading devices have become available consumers have quickly gobbled up content from magazines and newspapers to blog subscriptions and, of course, more books.

In 2009 app sales – apps for reading, social networking, texting and calling – reached $834 million. Books were part of the trend, but only a small part. Now we are learning that although consumers still download apps, they are just as quickly deleting them. Apps for content are one area where consumers are downloading and continuing to use apps.

A new forecast from Yankee Group predicts that e-book sales will reach $2.7 billion by 2013 – that is an annual growth rate of more than 70%. Researchers believe more than 380 million e-books will be purchased by 2013, four times the amount purchased in 2010. One negative: e-book prices are expected to drop to about $7 on average, a $2 decrease over 2009 prices.

That one negative shouldn’t scare publishers off, however, because the proliferation of reading apps and e-reading devices may give retailers and publishers new revenue models – paid content, ad-supported content and even the ability to ‘rent’ titles to consumers are possibilities as the digital content craze moves forward.