The Apple iPad
Trends and Statistics 2 February 2011
Brought to you by web & iPad publishing specialists
Apple iPad - Trends & Statistics 2 “We are firing on all cylinders and we’ve got some exciting things in the pipeline” Steve Jobs, Apple CEO
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Since our first iPad trends report, published in October 2010, the device has continued to break boundaries. As Apple’s most successful product in its first year on sale, it would not be an exaggeration to say that the iPad has revolutionised the personal computer market and the technology industry as a whole. Its immersive, enjoyable and personal take on the mobile computing experience has proven extremely attractive to consumers and developers alike. The impact of this innovative approach to mobile media computing has been reflected in its unparalleled success in the market. In just under a year on sale, upwards of 14.8million iPad’s have been sold around the world, with 7.3 million being sold in the 2010 Christmas quarter alone.
In this Q2 report we highlight further evidence of trends identified in the previous quarter’s report and discuss even more trends and statistics that have emerged since.
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Quarter one trends update Since our report on the first quarter of iPad results, further studies and research has been carried out which support and, in some cases, exceed previous figures. Below are some brief updates where more up to date statistics were available.
• iPad is fast becoming the most popular mobile device Morgan Stanley analyst Katy Huberty projected 16 million iPads would be sold in the first 12 months alone. In fact, approximately 14.8 million were sold in the first nine months on sale. These figures, released by Apple, suggest iPad sales will in fact exceed her predictions. Previously, a Yahoo survey stated 35-44 year olds made up the greatest proportion of iPad owners, but according to a Neilsen Company report conducted in December 2010, 25-34 year olds now make up the core ownership of iPads. At the time of the last publication, it was only known that consumer awareness of the iPad was ‘very high’. Adage have since reported in January 2011 that 90 percent consumer awareness amongst people surveyed. The same studies also found 21% of 18-34 year olds intended to buy an iPad.
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• iPad is changing the rules of digital publishing Despite the unprecedented initial magazine app sales reported in the quarter one report, the extremely high launch sales of a number of high profile eMagazines somewhat distorted their rate of adoption on the iPad as a whole. More recent studies have shown that these figures have dropped after the initial issues. Mashable.com has reported that sales performance of eMagazines on the iPad roughly correlates with the title’s performance on the news stand, which show a higher initial sales for launch.
• iPad is becoming a major gaming platform According to figures published by the app store analytics company Distimo, Gaming apps maintain the highest proportion of apps for the iPad, however they do not account for quite such a high proportion of all apps. In our previous report we highlighted the figures of April 2010, which showed that around 30 percent of all apps for the iPad were games. In contrast to this, gaming apps now represent only 23 percent of all iPad apps.
• iPad is creating a netbook sales drop The decline of Netbook sales reported in the Q1 findings appears set to continue in 2011. Acer’s sales manager has stated that this year “tablet launches will begin a gradual replacement of Acer’s small laptop-style netback computers, in line with market demands”.
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• iPad apps are bringing in more revenue for developers and publishers While there is no direct update to the research from Distimo, which reported the average iPad app costs $4.67, they have released an encouraging report which states that: “paid downloads increased almost 30% more than free downloads in the top 300 in December 2010 compared to June 2010”.
• iPad internet usage is at a par with traditional PC’s Further supporting our findings in our Q1 report, in December 2010, Chitika, an online adverting network, reported that 0.83 percent of internet usage was generated through the iPad. It reported that it is currently on a par with all Linux product’s internet share.
• iPad is becoming adopted for commercial applications It was previously reported that 50 percent of the Fortune 100 were using iPads for commercial use. Far more impressive figures announced by Apple now state that over 80 percent of the Fortune 500 are currently deploying or piloting the iPad.
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1
Apple’s App Store continues to dominate the app store market
“Many are wondering if the app frenzy we have been witnessing is just a fashion, and, like many others, it shall pass. We do not think so.”
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Stephanie Baghdassarian, Gartner Research
In the past 12 months, application downloads from Apple’s App Store have skyrocketed. Figures published by Apple state that seven billion apps were downloaded from the store in 2010 alone, with the achievement crowned by the ten billionth download in January this year.
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“The App Store has surpassed our wildest dreams”
Philip Schiller, Senior vice president of worldwide product marketing, Apple Inc
Such rapid growth of Apple’s app market in 2010 can in no small part be attributed to the iPad’s popularity during the same period. According to research carried out by The Neilsen Company, 91 percent of iPad owners have downloaded at least one application for their device, with 63 percent of those downloading a paid application.
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Source: The Nielsen Company
The iPad’s popularity has no doubt been a factor in Apple’s continued dominance of the app market. Gartner research found that 9 out of 10 app downloads of an estimated 8.2 billion were from Apple’s app store. It is therefore no surprise that the same research company are forecasting App sales of $15 billion in 2011 - a figure that is nearly triple the $5.2 billion Apple made from the App store in 2010.
“We estimate that Apple’s App Store… will remain the single bestselling across our forecast period”
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Carolina Milanesi, Vice President, Gartner Research
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2
Revenue generated from in-app purchase is increasing
“Apple will be the number one platform for a long time from a developer perspective, they have gotten so many things right….And paid content just doesn’t work on Android.”
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Peter Vesterbacka, Developer, Angry Birds
While upfront payments for purchasing an app were the primary source of revenue for iPad apps in 2010, research by the analytics company Distimo has identified an increasing trend towards revenue generation via in-app purchases. They found that in December 2010: In-app purchases on free apps accounted for 15 percent of total app revenue on the iPad. This figure was up from 7 percent in June 2010. In-app purchases on paid apps accounted for 14 percent of total app revenue. This figure was up from 5 percent in June 2010.
Distimo observed that developers were making a shift to free applications with in-app purchasing as it allowed them to create revenue whilst harnessing the high download rate of free applications. This shift of both consumers and developers alike represents disappointing news for the Android Market, where in-app purchasing remains unsupported. It may go some way to explaining why Google’s Group Manager for the Android platform Eric Chu, recently told a conference he was “not happy” with app generated revenue on the platform.
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Revenue Share By Monetization Type (US) 100%
88%
71%
100%
75%
75%
50%
50%
64%
51%
15%
5% 14%
25%
5%
34%
25%
15%
7%
7% 0%
June 2010
Dec 2010
0%
June 2010
Dec 2010
Revenue Share Paid Applications Revenue Share Paid Applications Within App Purchases Revenue Share Free Applications Within App Purchases Source: Distimo
With Apple’s in-app purchase system, many newspaper and magazine apps let iPad users buy individual editions or subscriptions from within the app. Articles published by the Wall Street Journal and Forbes in February 2011, reported that Apple are now enforcing the rule which states all in-app purchases need to be made via the Apple payment system- a move which could be detrimental to many publishers and developers who avoided doing this in the iPad’s first quarter.
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Advertising on the iPad is more effective than print
“Advertising in digital magazines can more effectively engage readers and create stronger purchase intention than similar static ads in print.”
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Dave Dickson, Product Marketing Manager, Adobe
Research carried out examining the effect of iPad advertising in 2010 has largely found that ads viewed on the iPad are more effective than both print advertising and advertising on other digital platforms. In a study carried out by Alex Wang, Ph.D. of the University of Connecticut, consumers were asked to gauge their reactions to different types of advertising. The study found that the interactive ads on the iPad were consistently better received than static print advertising. The test subjects were required to assign a rating (with 9 being the strongest), to a variety of different criteria. The results of this study can be seen below.
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The findings of this study are supported by research carried out by The Neilsen Company, which found that iPad users were far more receptive to advertising than users of other devices and that users were more likely to make a purchase as a result of an advert on the iPad compared to any other device. iPad users are far more receptive to advertising Receptivity to Advertising 49%
I am more likely to look at ads if they have an interesting video
40% 39% 46% 26% 27%
I enjoy ads that have interactive features
40%
I am more likely to click on ads that are simple text ads
25% 25% 39%
Ads on my connected device are new and interesting
20% 19%
Apple iPad Apple iPhone
37%
I like to see what ads can do on a connected device
23% 19%
All Connected Device Owners
iPad owners are more likely to make a purchase after viewing an ad Response to Advertising 36%
I made a purchase on the internet via PC
27% 24%
I made a purchase at a store I made a purchase over the telephone I made a purchase directly through my connected device
10% 12% 7% 8% 5% 18% 18%
I searched for more information
22% 20%
I clicked on an ad to view the full advertisement or product offering Used or requested a coupon through an ad Discussed a product or service that I saw advertised , with a friend or family
10% 13% 7% 9%
Apple iPad All Devices Source: The Neilsen Company
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“Many retailers report that already half of what they consider to be mobile traffic is coming through tablet devices.”
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The iPad is increasingly being used for eCommerce
Forrester Research
A recent study by price comparison website Kelkoo has found that eCommerce sales now represent more than 10 percent of total retail sales in the UK. It is no wonder therefore that retail businesses are making ever increasing efforts to maximise their online sales. In order to do this though, it is essential for retailers adapt to the evolving technological landscape, and cater for increasingly popular devices such as the iPad. Using specifically tailored apps, a number of companies have found that the iPad can be an exceptional tool for generating revenue from eCommerce. Its vivid, tactile approach to online shopping is one that retailers are now beginning to exploit.
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“The iPad is the first mobile device where eCommerce really flourishes”
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Munjal Shah, Head of commerce sales, Google
In the past year eBay have reported that shoppers using an iPad spend on average 50 percent more than PC users, with unique visitors to the site who make a purchase spending on average $85 per week.
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“Our iPad app is actually easier to use than our Web site.”
Han Yuan, Director of engineering, platform business solutions and mobile at eBay inc.
As well as eBay, a number of retailers are hugely benefiting from the shopping experience offered on the device. Wine.com achieved over 8000 unique downloads of their iPad app in the first two months it was available. While Wet Seal, a retailer of teenage girls apparel, has stated that whilst promoting back-to-school clothing, they had close to 1 million outfit views via the iPad app alone. Forrester has examined the mobile traffic driven to its own retail site. It found that 45.5 percent of traffic driven from mobile devices was from the iPad.
Typical Mobile Traffic Report from Forrester Retail Site
iPad iPhone iPod touch Droid Blackberry Tour Blackberry Onyx Samsung Moment Other Mobile Source: Forrester
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iPad is becoming one of the most popular eBook reading devices
While 2010 will undoubtedly be remembered for the unprecedented success of the iPad, it will also be considered the year eBooks (digital books) achieved success on a major scale. Global sales of the eBook rose by approximately 400 percent and achieved nearly $1 billion sales in the process.
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“Publishers need to take digital seriously, they must make it the new default for publishing, preparing for a day in which physical book publishing is an adjunct activity that supports the digital publishing business”
James McQuivey, Forrester Research
In a year in which Amazon announced eBooks outsold paperbacks on its website in the final quarter of sales, ChangeWave Research indicates that the iPad successfully claimed much of the eReader market from its more established competitors. Current eBook Reader Ownership Nov 2010 Which eBook Reader do you currently own? 80%
68%
Amazon Kindle Apple iPad
62%
60%
47%
40% 32%
20% 16%
0% Feb ‘10
Aug ‘10
Nov ‘10 Source: ChangeWave Research
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The growth of the iPad as an eBook reader appears set to continue into the decade. An online survey conducted by The Bookseller in October and November 2010 forecast that eBooks would eventually be read primarily on tablet devices. Nearly one third (31.8%) of respondents forecast that the iPad or devices like it would be the most commonly used eReader platforms by 2015. A survey by ChangeWave Research of 2,800 consumers suggests that these predictions are well founded, and if anything, conservative in their forecasts, given the projected adoption rate of the iPad as an eReader.
Future e-Reader Buyers - Next 90 Days Nov 2010 Which of the following eBook Readers will you most likely buy? 50% 68% 40%
33%
30% 18%
20% 10%
4%
1%
2%
0% iPad (Apple)
Kindle (Amazon)
Nook (Barnes & Noble)
Sony Reader (Sony)
A Smart Phone Other/Don’t with eBook Know/NA Capability
Source: ChangeWave Research
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Consumers more likely to read magazines & newspapers on iPad than other devices
Since its introduction in April 2010, the iPad has established itself as the device of choice for reading eMagazines and Newspapers in particular. ChangeWave research found that iPad users are over three times more likely to read magazine and newspaper content than owners of all other eReader devices. % of e-Reader Owners Who Say They Read Newspapers/Magazines on Their Devices
Apple iPad e-Reader Owners
May 2010 Apple iPad Owners vs. All Other e-Reader Owners
All Other e-Reader Owners
60% 50%
50% 38%
40% 30% 20%
14%
11%
10% 0% Newspapers
Magazines Source: ChangeWave Research
The iPads dominance as a device used to read magazine and newspaper content is even more impressive when compared to its main eReader market contender, the Kindle. In a further study, ChangeWave Research found: 51 percent of iPad owners read newspapers on the device, while only 11 percent do on the Kindle. 36 percent of iPad owners read eMagazines on the device, while only 8 percent of Kindle owners do.
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Conclusion When examining the performance of the iPad in 2010, it is hard to conclude that it has been anything other than an unmitigated success. It has surpassed all sales expectations, driven record profits for Apple, and appears set to grow at an unprecedented rate in 2011. It is also helping to generate revenue for publishers, advertisers and retailers, in addition to being the consumer’s choice of devices. However, arguably the greatest impact of the iPad, is the shift it has engendered in the technology industry as a whole. One must only look so far as the 100 or more tablet devices debuted at the 2011 CES gadget show to appreciate the transformative effect the iPad has had on Apple’s competitors, hoping to take a slice of the Apple pie. For the iPad, the main issue of 2011 will therefore be in maintaining its market lead, whilst making further in-roads in certain areas of the market. Publishing and eCommerce look set to be industries in which the iPad will flourish in 2011, with consumers and developers alike favouring the iPad above all other devices. A number of commentators have shrewdly forecast 2011 as “the year of the tablet”, however with rumours abounding about a possibly imminent iPad 2 release, and speculation regarding the innovative features it may provide, all trends are suggesting that 2011 may well in fact, be the year of the iPad 2.
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“Something massive has happened…it’s called the iPad.”
Stephanie Baghdassarian, Gartner Research
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