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The Apple iPadTrends and Statistics 3 November 2011

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Going into 2012, The Apple iPad and The Apple iPad 2 find themselves in an ever-increasing pool of competitors. The market Apple created in 2010 has since grown to become one of the key components in the technology industry, with hundreds 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.

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“ The Apple iPad did to the tablet PC market what theiPhone did to the smartphone market: re-invented it

Gartner.com

The tablet market continues to be summedup like this: the iPad and everything else.

And everything else doesn’t amount to much Cnet

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Apple iPad - Trends & Statistics

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1In 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.

The iPad is currently untouchableas the leading tablet device

According to the IDC, Apple’s tablet market share actually rose to 68.3% of the worldwide market, up from 65.7% in the first quarter. During the same period, the number of devices sold 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

AppleAndroid

Blackberry68%

27%

5%

Source: IDC Market Intelligence

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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 software the 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?

85%

4% 2% 1%

100%

80%

0%

20%

40%

60%

Apple iPad

Samsung Galaxy Tab

RIM Playbook

Motorola Xoom

Source: ChangeWave Research

August 2011

Although making a significant impact on the technology industry, the tablet market in 2011 is still in its relative infancy. The ‘newness’ of these devices has prompted some detractors to label the tablet boom a passing fad, however forecasts from industry analysts predict year-on-year growth of the tablet device, with the iPad and itsfollow-up devices maintaining their position as industry leaders.

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2 Tablet devices are here to stay

Tablet Sales Predictions 2010 - 2015

Gartner

IHS

0

100

200

300

400

2010 2011 2012 2013 2014 2015

Dev

ice

Sale

s (M

illio

ns)

As the graph illustrates, both Gartner and IHS have predicted a similar trajectory for the tablet industry, with huge yearly increases leading to approximately 300 million worldwide 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).

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Significantly, analysts have been quick to emphasise that the iPad will retain itsposition as the leading device throughout this period. Gartner forecast that of the 326 million tablets sold in 2015, Apple will sell 148m iPads. While this is a smaller share of the 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?

85%

4% 2% 1%

100%

80%

0%

20%

40%

60%

Apple iPad

Samsung Galaxy Tab

RIM Playbook

Motorola Xoom

Source: ChangeWave Research

August 2011

We found that tablets appear to be takingincremental dollars away from PC’s

William Power, Analyst at Robert W. Baird

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Statistics published over the last quarter have given publishers the biggest signal yet that consumers are adopting iPad magazine reading on a considerable scale. In a survey of over 200 people, UK marketing and analytics company imano found that 69% of those surveyed regularly use their device as a magazine or newspaper reader. These consumer habits are expanded further by Gartner, who in May found that 52% of those who read magazines on the iPad actually found the experience easier than reading a print copy, while 42% said it was just as easy.

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3 Magazines are set for ahuge sales boost on the iPad

How easy do you find the iPad magazine reading experience

Easier than the print versionAs easy as the print version

Less easy than the print version52%42%

6%

Source: Gartner

iPads and tablets appear to be very conducive todeeper, more information-packed experiences

Localytics

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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 purchased individual issues at $4.99 each. According to Conde Nast estimates, the New Yorker already 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.

More and more companies are seeing the benefits of deploying tablet devices in the workplace. Although perhaps less publicised than its success as a commercial product, the iPad has already proven an essential business tool for many companies, and remains the corporate tablet device of choice.

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4 The iPad is the dominant enterprise & consumer tablet

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%

0%

20%

40%

60%

Apple Samsung Dell

Source: ChangeWave Research

6% 7% 6% 5%

Motorola

10%4%

80% 80%

RIM/Blackberry

8%3%

Although consumers have been using mobiletechnology for a while, in the last year, there has

been an awakening on the corporate sideGeorge Ravich, CMO at Fundtech

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As this recent Changewave survey displays, Apple’s position as the dominantcorporate tablet has not deviated over the past quarter. Significantly, this 80 per cent share is of an increasingly bigger pie. According to data by from technology research group 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 in the 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 tabletsBonin Bough head of digital at Pepsico

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Purchases 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 have emerged to suggest that both internet browser and app purchasing has massivelyincreased, and has the potential to grow much further.

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5 The iPad is a purchasing machine

Significantly for retailers, research has shown that owners of the iPad spend more money via the device than through any other platform. The Wall Street Journal has reported that, on average, PC and Laptop users buy a product 3% of the time, whereas a consumer browsing on the iPad or iPad 2 has a conversion rate of between 4-5%.

We see [the iPad] as a key growth vehicle Claire Watts, CEO of QVC

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Tablet owners tend to be wealthier, which givesretailers a self-selected audience of their best customers

Dana Mattioli, Wall Street Journal

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These estimates are reflected in the results of Imano’s survey into iPad usage, which found that 48 per cent of iPad users spent the most money through the device, while only 19 per cent said they spent most through their computer.

The 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 10 have bought 50-99 Apps.

Source: Imano

10 to 19 24%

20 to 49 33%

0 to 9 26%

50 to 99 11%

100+ 6%

How easy do you find the iPad magazine reading experience

iPadMobile PhoneLaptop

Source: Gartner

Laptop 16%

Computer 19%

Cable/Internet TV 4%

Mobile Phone

11%

iPad 48%

I Don’t SpendMoney on a Device

3%

ComputerCable / Internet TVDon’t Spend Money on a Device

How many Apps have you paid for using your iPad

An 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 catalogue before 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.

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6 Catalogue apps are flourishingon the iPad

A 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 data that 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.

Tablet users are spending three times as much timeon the catalogue app than on the website

Wall Street Journal

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7 Conclusion Although the tablet landscape has changed dramatically throughout 2011, the iPad and the iPad 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.

“Both the current and projected sales figures have proven that the iPad is still king in the tablet market, and will remain the key player in an industry that is set for unprecedented overall year-on-year growth up until at least 2015. But the newest threat to the iPod’s tablet dominance is perhaps the largest. Amazon’s Kindle Fire looks set to offer a unified service that rivals the iPad’s own. Amazon’s established presence as a content-delivery channel, already in possession of millions of consumer’s details, encouraged the pre-ordering of around 95,000 devices on the first day of pre-release. While this may be slightly troubling news for Apple, the larger pool of tablet devices can only be considered as a positive for digital magazine publishers. As we reported in a recent blog post, the Kindle Fire will be geared towards media consumption, and in particular, interactive colour reading experiences. It is truly exciting and encouraging for Amazon to put their name to hardware that allows for this kind of reading. Perhaps what it emphasises more than anything however is the enduring potential of the industry, and how important digital reading experiences will be in this overall growth. If Amazon’s faith is well placed, 2012 looks set to be a huge year for tablet magazine publishers and the devices they are viewed upon.

Apple delivers a superior and unified user experience acrossits hardware, software and services. Unless competitors can

respond with a similar approach, challenges to Apple’sposition will be minimal

Carolina Milanesi, Gartner Research

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