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

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.

1
 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.

2
• 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”.

3
• 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.

4
 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.”
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.

“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.

5
 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 best-
selling across our forecast period”
“
Carolina Milanesi, Vice President,

“
Gartner Research

6
 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.”
“
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.

7
 Revenue Share By Monetization Type (US)
100% 100%
88% 71% 64% 51%

75% 75%

50% 50%
15%

5%
34%
14%
25% 25%

15% 7%
5%
7%
0% 0%
June 2010 Dec 2010 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.

8
 3 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.”
“
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.

9
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
40%
an interesting video
39%

46%
I enjoy ads that have interactive features 26%
27%

40%
I am more likely to click on ads that are
25%
simple text ads
25%

39%
Ads on my connected device are new
20%
and interesting
19%
Apple iPad
I like to see what ads can do on a
37% Apple iPhone
23%
connected device All Connected
19%
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
10%

I made a purchase over the telephone 12%

7%
I made a purchase directly through my 8%
connected device 5%

I searched for more information 18%

18%
I clicked on an ad to view the full 22%
advertisement or product offering 20%
10%
Used or requested a coupon through an ad
13%
Apple iPad
Discussed a product or service that I saw 7%
advertised , with a friend or family
All Devices
9%
Source: The Neilsen Company

10
 4 The iPad is increasingly being
used for eCommerce

“Many retailers report that already half of what they consider to be

mobile traffic is coming through tablet devices.” “
“
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.

“The iPad is the first mobile device where eCommerce really flourishes”“
“
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.

11
 “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

12
 5 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.

“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 Amazon Kindle
Which eBook Reader do you currently own? Apple iPad

80%
68%
62%
60%
47%

40%

20% 32%

16%
0%
Feb Aug Nov
‘10 ‘10 ‘10
Source: ChangeWave Research

13
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 Kindle Nook Sony Reader A Smart Phone Other/Don’t
(Apple) (Amazon) (Barnes & (Sony) with eBook Know/NA
Noble) Capability

Source: ChangeWave Research

14
 6
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
May 2010 Owners
Apple iPad Owners vs. All Other e-Reader Owners
All Other e-Reader
60% Owners
50%
50%

40% 38%

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.

15
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.

“Something massive has happened…it’s called the iPad.”

“
Stephanie Baghdassarian,

“
Gartner Research

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