Apple iPad Trends & Statistics 3 November 2011

The Apple iPadTrends and Statistics 3 November 2011Brought to you by web and iPad publishing specialists

Apple iPad - Trends & Statistics ““ The Apple iPad did to the tablet PC market what the iPhone did to the smartphone market: re-invented it Gartner.comGoing into 2012, The Apple iPad and The Apple iPad 2 find themselves in anever-increasing pool of competitors. The market Apple created in 2010 has sincegrown to become one of the key components in the technology industry, withhundreds of tablet devices now available.As a result, a notable shift has taken place in the analysis of the device’s successas a product. Where it was once examined as a standalone product, it is now moreregularly judged against its competitors.While this mode of analysis has changed, statistics and trends relating to Apple’siPad and iPad 2 still remain almost unanimously positive - Apple are on course tosell 46.7 million tablet devices this year, 4 times larger than their Android Rivals.In this third trends and statistics document, we will look at Apple’s current andprojected position in the market and display that although Apple is set to faceincreasingly stiff competition; all signs suggest that the device will continue itstablet dominance for the foreseeable future. “ “ The tablet market continues to be summed up like this: the iPad and everything else. And everything else doesn’t amount to much Cnet 1

1 The iPad is currently untouchable as the leading tablet device In our last report , we suggested that the iPad’s most significant impact would be the creation of an industry almost overnight. At that stage of 2011, competitors were scrambling to develop and release their own devices that they hoped would rival the iPad’s supremacy. This developer battle has perhaps become the defining issue of the technology industry during the latter months of 2011. For Apple, the good news is that their market domination has persisted throughout.According to the IDC, Apple’s tablet market share actually rose to 68.3% of the worldwidemarket, up from 65.7% in the first quarter. During the same period, the number of devicessold by those operating an Android system fell to 26.8% from 34.0%. Considering thenumber of devices using an Android operating system, Apple remains way out in frontas the world’s most popular tablet device. Current share of tablet marketplace by operating system 5% 27% Apple 68% Android Blackberry Source: IDC Market Intelligence 2

The customer base established by the iPad appears unlikely to erode as well. Accordingto a U.S tablet survey by Robert W. Baird, 98% of current iPad owners that areconsidering a second purchase are looking at another iPad.There are several factors for both the market share and customer loyalty of the iPAf,however put simply, the iPad and iPad 2 offer users the best hardware, the best softwarethe most Apps, and now with iOS 5, the iCloud. New devices which do not have these4 components integrated in one ecosystem will continue to suffer when compared toApple’s devices. Tablet Planned Purchasing Who is the manufacturer and what tablet device are you planning on buying? August 2011 100% 85% 80% 60% 40% 20% 4% 2% 1% 0% Apple Samsung Galaxy RIM Motorola iPad Tab Playbook Xoom Source: ChangeWave Research 3

2 Tablet devices are here to stayAlthough making a significant impact on the technology industry, the tablet marketin 2011 is still in its relative infancy. The ‘newness’ of these devices has prompted somedetractors to label the tablet boom a passing fad, however forecasts from industryanalysts predict year-on-year growth of the tablet device, with the iPad and itsfollow-up devices maintaining their position as industry leaders. Tablet Sales Predictions 2010 - 2015 400 Device Sales (Millions) 300 Gartner 200 IHS 100 0 2010 2011 2012 2013 2014 2015As the graph illustrates, both Gartner and IHS have predicted a similar trajectory forthe tablet industry, with huge yearly increases leading to approximately 300 millionworldwide tablet sales recorded by 2015.During this time, several notable milestones have been predicted for the industry.Research by Social Cast predicts that in 2012, more tablets will sell per year thannotebook laptops, and that by 2014 one in five US consumers will own a tablet PC(currently 8 per cent of Americans own a device). 4

“ “ We found that tablets appear to be taking incremental dollars away from PC’s William Power, Analyst at Robert W. BairdSignificantly, analysts have been quick to emphasise that the iPad will retain itsposition as the leading device throughout this period. Gartner forecast that of the 326million tablets sold in 2015, Apple will sell 148m iPads. While this is a smaller share ofthe overall tablet market, it would remain far and away the most popular tablet device,and remarkably, the most popular operating system, with Android sales projectedat 116.4 million. Tablet Planned Purchasing Who is the manufacturer and what tablet device are you planning on buying? August 2011100% 85% 80% 60% 40% 20% 4% 2% 1% 0% Apple Samsung Galaxy RIM Motorola iPad Tab Playbook Xoom Source: ChangeWave Research 5

3 Magazines are set for a huge sales boost on the iPad “ “ iPads and tablets appear to be very conducive to deeper, more information-packed experiences LocalyticsStatistics published over the last quarter have given publishers the biggest signal yetthat consumers are adopting iPad magazine reading on a considerable scale.In a survey of over 200 people, UK marketing and analytics company imano foundthat 69% of those surveyed regularly use their device as a magazine or newspaperreader. These consumer habits are expanded further by Gartner, who in May foundthat 52% of those who read magazines on the iPad actually found the experienceeasier than reading a print copy, while 42% said it was just as easy. How easy do you find the iPad magazine reading experience 6% Easier than the print version 42% 52% As easy as the print version Less easy than the print version Source: Gartner 6

It is important that publishers recognise the huge potential for the growth of thismarket, and the credible predictions being made about its growth. PriceWater-houseCoopers have recently estimated that by 2015 the North American digitalmagazine market will be worth. This indicates massive growth of what wasconsidered a $4million dollar market in 2010.Perhaps best emphasising the huge potential for Magazine apps currently is theNew Yorker Magazine. According to statistics 20,000 people have purchased annualsubscriptions at a yearly rate of $59.99 in 2011, and “several thousand” have purchasedindividual issues at $4.99 each. According to Conde Nast estimates, the New Yorkeralready has an audience of 100,000 readers on the iPad. Representing a significant milestone for magazine publishers, Apple launched its Newsstand service for the iPad on October 12th. The new service affords newspapers and magazines a higher profile, dedicated space within iTunes and is set to act as the primary sales channel for digital magazine editions. Since its recent release, the channel has been responsible in some cases for a huge 268% Digital magazine sales increase. 7

4 The iPad is the dominant enterprise & consumer tablet “ “ Although consumers have been using mobile technology for a while, in the last year, there has been an awakening on the corporate side George Ravich, CMO at FundtechMore and more companies are seeing the benefits of deploying tablet devices in theworkplace. Although perhaps less publicised than its success as a commercial product,the iPad has already proven an essential business tool for many companies, and remainsthe corporate tablet device of choice. Corporate Tablet Demand - A Comparison May 2011 vs August 2011 For those companies buying Tablets in the next quarter, who is the manufacturer of the Tablets your company is planning on buying?100% 80% 80% 80% 60% 40% 20% 10% 8% 6% 7% 6% 5% 4% 3% 0% Apple Samsung Dell Motorola RIM/Blackberry Source: ChangeWave Research 8

As this recent Changewave survey displays, Apple’s position as the dominantcorporate tablet has not deviated over the past quarter. Significantly, this 80 per centshare is of an increasingly bigger pie. According to data by from technology researchgroup Gartner, by 2013, 80% of businesses will support a workforce using tablets.The professional landscape most altered by the iPad is undoubtedly the mobiletechnology industry. While this may seem obvious, it is an interesting sector to lookat as it is the forerunner for tablet usage trends that may emerge more universally inthe future. For example, according to a Social Cast survey, 27.4% of mobile workersbelieved the tablet could replace the laptop as the mobile device of choice in thefuture. While this may not be set to happen immediately, it is an interestingprojection from those who work with these devices the most. ““ Every single organisation that is dedicated to digital should be spending the majority of their time, effort and resource optimising for smartphones and various tablets Bonin Bough head of digital at Pepsico 9

5 The iPad is a purchasing machinePurchases made on the iPad continue to act as a good indicator of the devices popularity,and how well they have been adopted by their user base. In the last quarter statistics haveemerged to suggest that both internet browser and app purchasing has massivelyincreased, and has the potential to grow much further. “ “ We see [the iPad] as a key growth vehicle Claire Watts, CEO of QVCSignificantly for retailers, research has shown that owners of the iPad spend more moneyvia the device than through any other platform. The Wall Street Journal has reportedthat, on average, PC and Laptop users buy a product 3% of the time, whereas a consumerbrowsing on the iPad or iPad 2 has a conversion rate of between 4-5%. “ “ Tablet owners tend to be wealthier, which gives retailers a self-selected audience of their best customers Dana Mattioli, Wall Street Journal 10

These estimates are reflected in the results of Imano’s survey into iPad usage, whichfound that 48 per cent of iPad users spent the most money through the device, whileonly 19 per cent said they spent most through their computer. How easy do you find the iPad magazine reading experience Laptop Mobile 16% Phone 11% Computer iPad 19% Mobile Phone Laptop Cable/Internet TV Computer 4% Cable / Internet TV iPad Don’t Spend Money on a Device 48% I Don’t Spend Money on a Device 3% Source: GartnerThe same survey found that customers are growing ever more willing to purchase apps.A third of those surveyed have paid for 20-49 apps for their device, and just over 1 in 10have bought 50-99 Apps. How many Apps have you paid for using your iPad 100+ 6% 50 to 99 11% 0 to 9 26% 20 to 49 33% 10 to 19 24% Source: Imano 11

6 Catalogue apps are flourishing on the iPadAn App format that is thriving on the iPad and the iPad 2 is the Catalogue shopping App.As we’ve already highlighted, e-commerce is proving to be hugely popular on the device.Although internet browsing might be the traditional way to shop online, many retailersare finding that a catalogue app is a perfect fit for the device.A survey from eConsultancy has found that 54.4% of UK shoppers have used a cataloguebefore making an online or in-store purchase this year. With an interactive catalogueApp, which is tailored to mobile shopping, the route to online purchase can be reducedsignificantly.This has been proven by online shopping research TheFind, who have found that theconversion rate on its catalogue app is about 10% higher than on its website, andaverage order size is between 10% and 20% higher. 12

“ “ Tablet users are spending three times as much time on the catalogue app than on the website Wall Street JournalA look at YUDU’s own catalogue apps shows that users are engaging with the contentand the retailer themselves. Across our catalogue apps 39.4% of users supply opt-in datathat then becomes the property of the company. This data affords retailers up-to-dateinformation about their audience demographic and can allow for better targetedadvertising campaigns. 13

7 ConclusionAlthough the tablet landscape has changed dramatically throughout 2011, the iPad and theiPad 2 remain the benchmark by which all other tablet devices are judged, and if the quarter “has proven anything, no device is yet to meet the lofty standards set by Apple’s devices.“ Apple delivers a superior and unified user experience across its hardware, software and services. Unless competitors can respond with a similar approach, challenges to Apple’s position will be minimal “ Carolina Milanesi, Gartner ResearchBoth the current and projected sales figures have proven that the iPad is still king in thetablet market, and will remain the key player in an industry that is set for unprecedentedoverall year-on-year growth up until at least 2015.But the newest threat to the iPod’s tablet dominance is perhaps the largest. Amazon’sKindle Fire looks set to offer a unified service that rivals the iPad’s own. Amazon’sestablished presence as a content-delivery channel, already in possession of millions ofconsumer’s details, encouraged the pre-ordering of around 95,000 devices on the firstday of pre-release.While this may be slightly troubling news for Apple, the larger pool of tablet devices canonly be considered as a positive for digital magazine publishers.As we reported in a recent blog post, the Kindle Fire will be geared towards mediaconsumption, and in particular, interactive colour reading experiences. It is truly excitingand encouraging for Amazon to put their name to hardware that allows for this kind ofreading.Perhaps what it emphasises more than anything however is the enduring potentialof the industry, and how important digital reading experiences will be in this overallgrowth. If Amazon’s faith is well placed, 2012 looks set to be a huge year for tabletmagazine publishers and the devices they are viewed upon. 14

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