This is a copy of the presentation I gave at the iOS DevCamp in Seattle on August 21, 2010. It goes into user data, market share, app market, competitive outlook, and future trends for Apple's iOS and the mobile internet.
Introduction: I'm Lauren and I am the director of research and strategy over at Curio Consulting. We are a market research and strategy firm that helps businesses capitalize on user behaviors, cultural shifts, and competitive intelligence. As a market researcher I'm less interested in the details about the technology than I am about what people are doing with the technology and how it is effecting individual user behavior and how it is effecting culture on a broader scale. What I'm going to be presenting will be a lot of charts and graphs, but no matter how numeric and clinical it gets, I'll always try to bring it back to a human scale.
We&#x2019;re probably all very familiar with the story of how the iPhone came into being and changed everything. It started with a disastrous partnership between Apple and Motorola which resulted in a mediocre product and the necessary credo that Apple could and should do better. In 2007 they launched that device and the old guard of mobile device brands have been struggling to deliver a worthy competitor ever since. With one device, North Americans went from being mobile internet laggards to being super users. It&#x2019;s amazing what a good UI can do.
Since 2007 we have seen three upgrades to the handset (the 3G, 3Gs, and now the 4) and even more iterations of the operating software. And even though it may not be a phone, the iPod touch is still a mobile device, and a very widely used one at that. Now we also have the iPad to consider. A different device, a different user behavior.
Smart phone adoption is on the rise in general, with a quarter of the US population now using phones capable of accessing the mobile web.
But it is the rate of adoption this is the most surprising. People are buying into and using iPhones and iPod Touch to access the internet at a much higher rate than we started using desktop internet access back in the 90&#x2019;s. It&#x2019;s also at a much higher rate than the Japanese adoption of Docomo mobile internet. We may have had a late start in using the mobile internet, but we&#x2019;re catching up fast.
Where is the new growth coming from? Once the low hanging fruit of the Apple enthusiasts have been tapped where do the new users come from? While we expect people with high household incomes to purchase iPhones, the fact that most of the new growth is coming from people making between $75 and $25K is relatively new. We can probably attribute some of this to the availability of refurbished iPhones and the greater access with AT&T, Apple, and WalMart
The data from the previous slide may be from 2008, but so is the data that we&#x2019;re looking at here. It&#x2019;s interesting to note that the biggest barrier to people purchasing an iPhone is price, but the greatest growth is coming from people in lower income brackets. So when we think about how people are using their phones to access the mobile internet, we should also be thinking about how people are accessing the internet overall. How many users consider their phone to be their primary internet access device?
So let&#x2019;s talk about iPhones are effecting the norms of internet consumption.
How many of you know that actual voice driven phone calls are on the decline? People just aren&#x2019;t going over their allotted minutes anymore. The phone may be less and less about talking, but it&#x2019;s still about communicating. Between voice, email, and SMS communicating still takes up about 70% of a person&#x2019;s time spent using the device. Also note that iPhone users tend to use their device more overall than the average cell phone user.
iPhone users are simply different. Maybe it&#x2019;s them. Maybe it&#x2019;s the device. Most likely, it&#x2019;s a combination of both. They use a disproportionate share of the mobile internet. They are more likely to use their phone to access news and other information (84% vs. 13% all mobile, 58% smartphone). More likely to use a mobile search engine (59% vs. 6% all mobile, 37% smartphone) iPhone users are also more likely to download and listen to music on their device than other smartphone users.
They do just about significantly more of everything! Games Video Banking Shopping iPhone users are just voracious mobile internet consuming machines!
So now let&#x2019;s talk about the app market.
Some stats from GigaOm from earlier this year. These numbers have probably changed since then, but they still show how big this market is and some of the generalities still hold true.
The combination of Apple&#x2019;s iPhone/iTouch hardware, software, distribution, data plans and access, developers, and applications is a tech ecosystem, symbiotic in nature. Each feed and strengthen the other in users and depth of use. It is the fastest growing tech device and ecosystem in history. This also goes back to a previous slide showing how this Apple mobile ecosystem is outpacing previous internet tech adoptions by leaps and bounds. The more you build, the more people want to use.
When Apple first opened the App Store in July 2008 sales were brisk, with 300 million apps sold by December of that year. After the holiday gift season that number had jumped to 500 million22. Earlier in January 2010, Apple announced that sales had reached over 3 billion; that means iPhone users downloaded 2.5 billion apps in 2009 alone. Estimates from market research analysts show another 16 million apps that could come from other platform's recently opened app stores. Forecasts for 2010 see only continued growth for the iPhone ecosystem. Downloads will jump from 3 billion in 2009 to 4.5 billion in 2010 which will generate an estimated $6.8 billion in revenue. 2013 is predicted to be even bigger. It is estimated that app downloads will grow to 21.6 billion that year for an estimated $29.5 billion in revenue. Keep in mind that not all of this income will be generated directly from the buying/downloading of these applications. 25% of the app revenue will most likely be generated by free applications that are supported by advertising. That is over $7 billion.
What are they downloading
Remember what I was saying about how iPhone users do more of just about everything when it comes to the mobile internet? The same holds true for app downloads as well.
We can break down those numbers specifically by device. Most of the apps are pretty much the same. No surprises or real insights here: - Entertainment, social networking, utilitarian Except for Blackberry - ESPN? Where did that come from? Funny how that would be their favorite news source and further entrenches the stereotype of having little imagination.
who are they downloading from (discuss chart) There is some debate as to just how large Apple&#x2019;s application is. Everyone agrees that it is the largest marketplace for applications, but I think most analysts are tied up in the minutia of what qualifies a an app and what qualifies as an application store. This chart includes carrier app stores which only service feature phones, not smart phones. I think that Apple has the most users that are willing to pay for apps. These users are usually more sophisticated than the average smartphone user and other app stores are struggling with gaining more of these types of users. Apple and Android app store customers are also the most satisfied with their experience.
The ipod touch is synonymous with the youth market Out of the 58 million iPhone and iPod devices circulating in 2009, roughly 40%, or 24 million, were Touches which flooded the market over the Christmas holidays as parents and grandparents gave their little nearest and dearest the gift of mobile technology And these Touch users are insatiable downloaders
In 2009, app downloads on the iPod Touch screamed past the iPhone for the first time ever, surpassing iPhone downloads by 172%. On Christmas Day (a Friday), iPod Touch 3G downloads jumped by 900% compared to all of the other Fridays that month. Total iPod Touch downloads (all generations) jumped by over 1000% on Christmas Day compared to the other Fridays that occurred that month and even after Christmas Day, Touch downloads continued to overshadow iPhone downloads by 104%. The exception to this rule lies in viewing paid applications only, where 50% of iPhone users download more than one paid application per month while only 40% of iPod Touch users are likely to do the same.
I just love how this chart shows the download cycle for iPod Touches and how it coincides with the regular school year and major holidays
We can&#x2019;t talk about Apple&#x2019;s iOS without talking about Android.
We&#x2019;ve all heard the news that Android is out selling iPhone Its like talking about the apocalypse - Everything we know has completely changed!!! We&#x2019;re all going to die! Apple is finished. Here&#x2019;s the thing, Android may be outpacing Apple in current sales but that doesn&#x2019;t mean that Google and Android have over taken the iPhone in market share. Apple has a huge head start, and it&#x2019;s going to take a while for Android to catch up. My prediction is that once Android does catch up we&#x2019;re going to see a neck-a-neck race for some time to come with no clear dominant device.
Let&#x2019;s look at it from an actual web consumption base......
The user habits between the two devices are very similar. It looks like ringtone and wallpaper downloads are the only places where you see significant differences and that&#x2019;s probably because iPhone users are more empowered to create their own.
But what do people really want? People are generally device loyal, but there are variations in just how device loyal they are. Apple users have the highest loyalty rates, and it should be no surprise that that also have ridiculously good satisfaction levels as well. Overall, the iphone is still the most desirable smartphone on the market.
Here is a recent roommate wanted ad from a few months ago on Craigslist. What can I say about this, except it gives me a pretty good insight into the minds of the people who refuse to buy an iphone and that it makes me laugh:
&#x201C;Oh, hello. I&#x2019;m moving to NYC at the end of August, and am looking to sign a one year lease somewhere in Manhattan. The more happening the area, the better. Other than budget ($1400 or less), I have two criteria: 1) NO iPHONE USERS. I refuse to live with anyone that has sold their immortal soul to Steve Jobs. I don&#x2019;t care about your app that tells you when you need to water your plants. I don&#x2019;t care that your phone can function as a Speak N Spell. I don&#x2019;t care that your phone has a million &#x201C;exciting&#x201D; features that exist elsewhere. NO iPHONES. Oh, and probably no iPads either. Upon meeting, you must show me your phone (no scammers! I will be calling it in person to confirm that it is indeed your phone). 2) STARCRAFT 2 experience is a big plus. If you play, please post a link to your battle.net profile. The more experience, the better. No bronze leaguers. Looking forward to hearing from you!
And this is just for a roommate. Can you imagine what his internet dating profile looks like? Anyways, even though it doesn&#x2019;t explicitly say that he&#x2019;s an android user, I&#x2019;m going to go out on a limb and say that he&#x2019;s probably an Android user. He could be packing a blackberry, but I doubt it. I just love how doggedly contrarian he is.
New device. Not a whole lot known about it, but analysts seem very optimistic about its potential. A reported 2 million iPads were sold worldwide within the first two months.
Almost every new device replace Apple stands to lose a great deal of iPod Touch sales, but I don&#x2019;t see that being a huge headache for them. Companies that make netbooks however, have a lot to worry about. The iPad is a very sexy alternative for low to midrange notebook computers. Apple is expected to sell 15 million iPads in 2011
Google tablet is expected to arrive at the end of November.
While this looks very promising, keep in mind that total US advertising spending is currently projected at $170 billion for this year. But this is how internet advertising started - small investments that grew in double digit percentages year over year. We&#x2019;re bound to see this same behavior in mobile advertising.
I love how iPhone ad spending is in a category by itself.
iAd isn&#x2019;t your only option and neither is making an app from scratch. My understanding is the creative advertising timelines and traditional cycles (from conception to execution) are severely hindered because Apple is requiring approval of every ad on its platform and this approval process (as some of you know from your own app development wait times) can take up to ten weeks. Sometimes simplicity can be more memorable than a super interactive break the bank ad campaign. Explore you options with other mobile ad servers and see which ones fit your particular needs.
Branded utility Everyone wants to build a better mousetrap.
Maslow&#x2019;s Hierarchy of Needs Lasting trends touch a nerve. They counterbalance other movements that have gone too extreme. They satisfy deep rooted desires. Mobile technology and user sophistication is at the point where we can start thinking not just about mobile technology, but about how that technology can change and serve our self actualization. Mobile lifestyle technology is about communication, commerce, interpersonal connections, connectivity and security. It is about having access to your online and offline life at all times.
Mobile commerce is a lifestyle trend that is currently coming into its own right now.
We can use historical trends from desktop internet usage to predict future trends in mobile web usage. Here we can see that advertising and ecommerce account for a majority of the revenue made from the internet.
Online to offline
Mobile enabled commerce. Visa is launching a test program for mobile enabled commerce in NYC this September. Giving certain people RFID tags for their phone which can be used at specified vendors equipped with RFID enabled readers.
Peer2peer mobile commerce apps
As mobile phones become more and more ingrained into our daily lives and we become increasingly dependent on them and placing our most personal and sensitive information on them, security will become of greater concern. Can you imagine losing your mobile phone now? How about a few years from now when all your banking and investment management is done on your phone. Losing your phone is a part of modern life. It is as common, if not more so as losing your wallet. How do we prevent this from becoming a tragic personal crisis? Developers that can find solutions to this problem will do very well for themselves in the near future.