The Apple iPad

Trends and Statistics

Brought to you by web and iPad publishing specialists

Apple iPad – Trends and Statistics

“People are loving iPad as it becomes a part of their daily lives. We’re working hard
to get this magical product into the hands of even more people around the world.”
Steve Jobs, Apple CEO
“
“
Apple’s iPad is redefining the future of not just mobile media, but also
computing devices in general. It has brought in a more enjoyable, intuitive and
personal dimension to computing, and gives users the power to use it as a complete
mobile computing device… to browse the Web, check and send emails, share and
enjoy photos, watch videos in HD, play music, read eBooks, play games and much
more, at just 0.5 inches thin and with a starting price of $499 (US) and £429 (UK).

Steve Job’s confidence is well-founded. In just over 4 months since its launch in
April 2010, the iPad had already shipped ` and is the
fastest ever consumer device to achieve $1 billion in sales. In tandem with the
launch of the iPhone 4, Apple’s latest quarter (April – June) brought in profits of
$3.25 billion, a full ten per cent higher than Wall Street analysts had been
expecting.

In this report we outline the key trends that have emerged since the iPad
launched three months ago, using statistics that were available mid August 2010.
We will continue to monitor the iPad statistics and issue an updated trend
reports quarterly.

1
 1 iPad is fast becoming the
most popular mobile device
According to a report by
Morgan Stanley analyst
Katy Huberty, the iPad is
on track to become the
world’s most popular
mobile device, within just
3 months of its launch.
Morgan Stanley projects
sales of 16 million units in
the first year alone. With
over 3.3 million iPads sold
in less than 3 months,
that’s an argument hard
to refute.

In the latest quarter (April to June), the iPad generated $2.17 billion in revenues, rep-
resenting almost 14% of Apple’s total income for the period. “Revenues were driven
primarily by the iPad” said Peter Oppenheimer, Apple’s chief financial officer.
“That was out of nowhere,” says Brian Marshall, an analyst with Gleacher & Company,
about the iPad’s numbers. “Phenomenal.”

According to Forrester’s Consumer Technographics surveys

Awareness of the iPad is extremely high
Nearly 10 million US consumers say they either own or intend to buy an iPad

Resolve Market Research, the New Media research consulting firm, conducted
a study on the impact of the iPad on other media and entertainment devices.
According to the survey results, the No. 1 reason to own an iPad is: “It’s an
entertaining and cool device.”

2
The top reasons for wanting an iPad support the assertion:
1 56% — Entertainment
2 42% — Cool factor
3 40% — Convenience
4 28% — Brand (Apple)

iPad on pace to become one of the most popular

mobile devices in history, we believe
Cumulative Shipments Over First Two Years of Product History, Millions

After 12 Months
iPod (Legacy): 0.4M
iPhone: 6.1M
Netbooks: 7.6M
iPod Touch: 8.6M
Nintendo DS: 8.8M
Ipad (Base Case): 13.0M
Sony PSP: 14.5M
iPad (Bull Case): 16.0M

Source: Company reports, Morgan Stanley Research

Source: Business Insider

According to Yahoo’s recent survey on iPad users, most users are from the 30-54
age range (peaking in the 35-44 age group). Some reports suggest a relatively equal
split male and female users although Yahoo found that males outnumber females 2:1
among current iPad users on Yahoo’s network.

3
 iPad Users’ Age Indexed to Y! US Average

Yahoo also reported a high usage of Flickr, as well as Finance, News, and Sports sites
with iPad users, and that 94% of iPad users are more likely to be affluent consumers
with solid wealth and strong incomes.

iPad Users’ Age Properties Visit:

Penetration Rate Indexed to Y! US Average
Penetration Rate Index

4
 2 iPad is changing the rules
of digital publishing
“While it may not completely reinvent the rules of digital publishing in
2010, I have no doubt that within 18-24 months, you’ll begin to see the
iPad have a major impact on the way both publishing houses and casual
readers look at the digital publishing space, in which the gadget should
provide a major boom in coming years.”
Scott Steinberg, publisher and lead technology analyst,
“
“

Digital Trends

Increased browsing time

Web based magazine viewing from
desktop computers has traditionally
been at a low of a few minutes a month.
According to ComScore, the figures for
GQ.com and Vanityfair.com are
3.8 minutes and 2.1 minutes per month
respectively. However, the same titles’
iPad Apps are seeing 60 minutes worth
of online browsing.

Lou Cona, executive vice president at

Condé Nast Media Group (publisher of
the above titles) says that the iPad will,
“redefine publishing and also redefine
how advertisers connect with our
audience”.

Scott Dadich of Wired magazine (also a Condé Nast title), agrees, “We’re looking to
prove engagement in terms of hours, not minutes”. This is a staggering increase in
viewing time and a major shift in online habits.

5
Wired magazine has every reason to be confident. The magazine’s branded iPad
app lets readers browse a magazine in the way they would a print copy but with
additional video clips and graphics which can be activated with a finger swipe. With
Wired’s iPad app priced at $4.99 an issue, more than 66,000 people had downloaded
it after just a few weeks of sale compared to its hard copy average total of 82,000
newsstand copies per issue. It’s evident that the sales of Wired’s iPad edition will
surpass the print edition in the second half of 2010.

The mammoth jump in viewing/reading time has been made possible because of
the iPad’s unique features, which allows a well-designed iPad app to provide a
much more interactive, immersive reader experience. John Gapper from the
Financial Times Blog explains why Wired’s app, as just one example, is so impressive,

“The most impressive thing about it is the way that it re-imagines the entire
magazine format by integrating words, data, graphics, photos and video into a
“
seamless blend. Even the advertisements, complete with videos, seem interesting.”

“
Increase in eBook sales
The iPad has come to the market precisely at a time when eBooks (digital books)
have finally come of age. Amazon.com, one of the largest booksellers globally, has
just announced that for the last 3 months, eBook sales have been outnumbering
sales of traditional hardcover books. In the last month alone, 180 digital books were
sold for every 100 hardcover copies. This is in spite of the fact that Amazon’s eBook
collection is just a small fraction of the millions of paper books sold on its website.

In the 3 months that the iPad has been on sale, readers bought more than
1.5 million books for the device from Apple’s online book store. According to
ChangeWave Research, the iPad has already captured 16% of the eReader market,
shooting past entrenched players like the Sony Reader (10%) and coming up at
second place behind Amazon Kindle (62%), which it will soon overtake if current
growth rates are maintained.

6
How will iPad affect the publishing industry in the longer term? While that remains
to be seen, we can draw parallels and conclusions from how the iPod and digital
music affected the music industry.

In 2007, physical sales represented 80% of all music sales

In 2010, physical sales represent just 64%

Digital sales increased 80% in these 3 years

Record stores are closing in record numbers

If these trends were replicated in the book publishing industry, in the next 2 years we
may see over $20 billion wiped off the publishing industry’s annual sales figures.

The Telegraph’s Robert Colville says that, “the result might be a golden age for self-
publishing, as authors market cheap eBooks directly to consumers. The only physical
books that would make a profit, apart from the cheapest of paperbacks, would
be super-deluxe collectors’ editions, sold in boutique stores and accompanied by
personalized letters from the author.”

Custom-built iPad Apps can cost anything from £25k - £100K ($40K - $157K USD)
but it’s now possible to purchase a branded iPad Reader App and self publish
your publications into the App using an online publishing platform. This reduces
the cost dramatically and there are numerous pricing models to suit different
publishers and titles.

7
 3 iPad is becoming a
major gaming platform
The iPad as a gaming console? Hardcore gamers might not warm to the idea,
however no one thought that the iPhone would become a sensation in the gaming
industry either. It’s therefore no surprise to see the iPad also become a major
gaming platform. Here are some of the early winners:

Source: Kotaku.com

8
High-quality games are taking advantage of the iPad’s superior hardware, and some
of the top paid applications for iPad are currently ‘games apps’. According to app
store analytics company Distimo, over a third of iPad-only apps are games, as can
be seen in the chart below:

Number of iPad Applications

Number of Applications Compatible with iPad Only

Source: NeuroSoftware

9
 4 iPad is creating a
netbook sales drop
For the first time ever, just after the iPad launched in April, netbook sales growth
declined with figures dropping by 13% (compared to a 25% Y-O-Y growth the
previous month).

iPad/Tablets At Least Partially Responsible For

Netbook Drop in April
US Retail PC Netbook Fundamentals

Source NPD, Morgan Stanley Research

Source: Business Insider

10
 iPad apps are bringing in
5 more revenue for developers
and publishers
Many iPad apps are priced higher than their iPhone or iPod version. According to
new research from app store analytics company Distimo, the average iPad app
costs $4.67 compared to $3.87 for the average iPhone app. Because of a more
optimised user experience and larger screen size, users are also willing to pay the
higher price. Also, around 1% of iPad apps charge a monthly subscription instead of
a one-off fee. This trend seems to indicate that people are quite willing to pay for a
better user experience and added convenience.

Selling iPad Apps on the app Store enables publishers to harness the huge
potential global audience in order to boost dwindling print circulation and
generate additional profit.

11
 6 iPad Internet usage is at par
with traditional PCs
Although there are ‘only’ 3.3 million iPads sold to date, the device’s share of the
browser market globally is already larger than BlackBerry, Android and iPod Touch.
According to Katy Huberty’s research report (Morgan Stanley), the iPad’s Internet
usage is almost at par with traditional PCs despite it being classed as a
mobile device.

iPad Internet usage closer to traditional PCs

Source: Company data, comScore, Gartner, Net Applications, Morgan Stanley Research

Source: Business Insider

12
The Morgan Stanley report shows that iPad Internet usage is closer to a PC than a
smartphone, which is in part surprising, since users have traditionally preferred to
browse the web from their computers. This trend reversal started with the iPhone,
and now the iPad is close to turning the tables on PCs altogether.

Global Internet Browsing Share, 4/10 - 5/10

Source: Net Applications, Morgan Stanley

Source: Business Insider

TechCrunch have supported this finding with their recent blog reporting a
surge in iPad browsing traffic to their website. In April 2010 they found that 1.15%
of traffic came from iPads, the fifth most popular browsing device behind Windows
machines, Macs, iPhones and Linux machines (surprisingly high given that device
wasn’t even a month old). However, 4 months on and the iPad now accounts for
4.51% of TechCrunch traffic, having surged past Linux machines to become the
fourth most popular OS, only behind Windows machines, Macs and iPhones.

13
 Tech Crunch percentages for April 2010:
1. Windows - 59.68% 6. Android - 0.99%
2. Mac - 27.78% 7. iPod - 0.67%
3. iPhone - 5% 8. (not set) - 0.54%
4. Linux - 3.72% 9. BlackBerry - 0.28%
5. iPad - 1.18% 10. SymbianOS - 0.07%

TechCruch latest figures (mid July - mid Aug 2010)

1. Windows - 55.20% 6. Android - 2.08%
2. Mac - 26.88% 7. (not set) - 0.69%
3. iPhone - 6.13% 8. iPod - 0.60%
4. iPad - 4.51% 9. BlackBerry - 0.37%
5. Linux - 3.38% 10. SymbianOS - 0.08%

Based on these numbers, it’s clear that the iPad is eating into both Windows
and Mac internet browsing share.

As well as internet browsing, the iPads’ large computer-like screen and

lightweight portability is also ideal for the leisurely browsing of books,
magazines, brochures and catalogues. Where these types of publications are
contained within an iPad app they can also be read offline, even when there is
no internet connection available.

14
 7 iPad is being adopted for
commercial applications
Whilst many people believe the iPad is a more entertainment focused device, its
adoption is already underway by leading corporations. 50% of the Fortune 100 are
now testing and evaluating the iPad - even conservative companies like SAP, Tellabs,
Daimler’s Mercedes-Benz and Wells-Fargo are adopting the iPad in order to make
workers more productive without risking the security of sensitive customer information.

The degree to which corporate perceptions are changing is evident by the fact that
Wells Fargo bank spent 2 years studying the iPhone before allowing its employees
to use it for work. The iPad, on the contrary, took just weeks to get cleared.
A Zogby International survey shows that more than half of American
smartphone users would use the iPad or a similar device for work if they could.

The most popular iPad apps for corporate users, according to ZDNet Asia, are
WebEx for iPad (Free)
LogMeIn Ignition (US$29.99)
MobileIron Sentry (Free)
Office2 HD (US$7.99)
Dropbox (Free)

The iPad is also an ideal device to view corporate or promotional literature.

Branded Apps housing brochures, product catalogs, maintenance guides and
manuals and other publications are an ideal way to communicate with customers
and prospects and help build brands. The iPad allows for a more customer
interaction on a more intimate level and can work as another touch point in any
digital strategy.

15
 8 iPad provides higher
conversion rates in eCommerce

According to Shopatron, a global provider of eCommerce solutions for consumer

goods manufacturers, sales conversion rates for iPad are much higher than for the
other mobile devices.

These findings are based on conversion rates analysis from over 800 branded stores
on the Shopatron platform, throughout 35 industries. The average conversion
rate from mobile devices like the iPhone, iPod and Android is around 0.37%. The
conversion rate for the iPad, by contrast, is 5.5 times more, an average of 2.04%.

Shopatron believes that the conversion rates are higher on iPad because of a “much
richer shopping experience with its large screen real-estate and fast connection
speeds”.

Companies can publish their digital catalogs into iPad Apps in much the same
way you can a brochure, book or magazine, enabling users to click and buy
direct from the iPad. As well as a marketing tool that drives traffic to eCommerce
websites, these findings suggest that there’s more likely to be a higher sales
conversion rate from a catalog on an iPad than on other mobile devices.

16
Conclusion

The iPad is “defying common assumptions about consumer technology adoption”

Sarah Rotman Epps, Analyst at Forrester Research “
“
The iPad is defying assumptions to such an extent it even took leading technology
market research firm Forrester by surprise, so much so that they are now planning to
significantly revise upward their original forecast for the tablet computer market.

ABI Research also says that it “has revisited its forecasts, almost tripling the original
estimate to reach about 11 million tablets expected to ship by the end of 2010...
based on the broader availability of the iPad.”

Market research firm iSuppli is even more optimistic in its outlook. “iSuppli now
predicts Apple will ship 12.9 million iPads in 2010, an increase from the previous
forecast issued April 2nd of 7.1 million units.”

The trends are clear. The iPad is a global phenomenon that is already revolutionizing
online reading, browsing and viewing habits and also providing highest conversion
rates for mobile eCommerce. Just like the iPod overturned the established order
in the music industry, the iPad is threatening to disrupt a few industries of its own,
especially the gaming and publishing industries.

As the iPad TV ad concludes, “It’s already a revolution, and it’s only just
begun.”

17
 For more information on YUDU’s iPad solution
email ipad@yudu.com
or
visit www.yudupro.com/ipad

Robert Elding
Marketing Director
YUDU Media
www.yudupro.com

UK Tel: (+44) 870 760 9258 US Tel: 1-888-FOR-YUDU (367-9838)