1. iPad/Tablet Usage Secondary Research & Insights April, 2011

3. There is an engaging and intuitive magic to these touch screen devices. But the big question we are tackling is: “How can we help our clients to leverage tablet user expectations and behaviors to unlock new value for their brand and deliver a memorable experience for their customers?” And many, rightfully, want to know the most efficient and effective way to ensure there is a measurable return on the investment required to do this right.

4. So, as we are wired to do, we are starting with facts. We created this document to help give some context to the data that is informing our decisions and that of our clients. We think you will find some of the answers surprising and, as often is the case, quite different from what some of the “experts” predicted.

5. We hope you find this helpful in the discussions you are having as you continue to craft and execute your strategies. 2 Introduction

6. 3 Tablet Market Overview

7. 4 Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

8. However, putting this in to perspective, current tablet usage is still VERY small in comparison to the other interfaces we design for. 5 Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

9. iPad 2 now includes a double camera (similar to the iPhone 4) so that the user can do face-to-face interactions as well as take rear-facing photographs. 6 Planned tablet launches this year Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

10. 7 The move to mobile Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

12. Both products are the latest additions to the company's X series of ultraportable notebooks and tablet/notebooks with 12.5-inch screens, and both are slated to reach store shelves April 2011.8 Desktop reinvention? Source: http://news.cnet.com/8301-1001_3-20040537-92.html#ixzz1Il8AKzHs (8 March 2011)

14. That timetable is inline with the PlayBook’s rumored launch, but RIM has not officially announced its launch details including release date or price. This move does somewhat hint about the PlayBook’s future though.

15. It only makes sense that at least the PlayBook sold by Staples will not have 3G connectivity and just WiFi. The retailer does not sell any wireless carrier-specific products and that will likely not change with the PlayBook. Staples is about grab and go-type items. 9 iPad competition Source: http://www.crunchgear.com/2011/03/08/staples-to-sell-motorola-xoom-and-blackberry-playbook-this-april/(8 March 2011)

17. “While Apple’s iPad may continue to set the bar high for experience, we expect Android to dominate (40% share Tablets by 2014), given its broader support from OEMs and carriers and expected budget-priced Android Tablets from Asia.”

18. The deciding factors, according to the analyst (who also covers Apple), will be innovation from Apple’s competitors and the appearance of cheap Android tablets from Asia.

19. Bryan Chaffin from Mac Observer questions this, given that so far few Android tablets have shipped and those that have are markedly more expensive than Apple’s iPad line. Apple seems also to have 60% of the world’s capacitive touch displays locked up in contract, therefore chances of competitors getting their hands on cheap supply is unlikely.10 Continued iPad dominance? Source: http://www.macobserver.com/tmo/article/rbc_expects_erroneously_android_to_dominate_tablets_by_2014/(4 March 2011)

21. There are rumors that Amazon could launch a fully functional tablet, and have shown they are capable of building good hardware (note the success of the Kindle).

22. They could according to Business Insider, be perhaps one of the most serious threats to Apple’s dominance.11 Continued iPad dominance? Source: http://www.businessinsider.com/amazon-tablet-2011-3 (22 March 2011)

23. 12 iPad Audience

24. Initial reports when the iPad first came on to the market suggested that the typical user was older males with greater disposable incomes. However, this research conducted by Nielsen suggested that in fact only sixty-five percent of them are male and 63 percent of them are under the age of 35. 13 Who is using the iPad? Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

25. These are broader statistics for table usage in general, showing that the Gen X age group is also quite predominant tablet owners. 14 Source: http://www.pewinternet.org/Reports/2011/Generations-and-gadgets/Report/eBook-Readers-and-Tablet-Computers.aspx(3 Feb 2011)

27. They also tend to have more education: 27 percent of Kindle owners have Master’s degrees or doctorates.

28. The kindle is used by a distinctly older age group than the iPad.15 Source: http://blog.nielsen.com/nielsenwire/consumer/the-connected-devices-age-ipads-kindles-smartphones-and-the-connected-consumer/ (28 Sep 2010)

30. The Kindle was one of the most common 2009 Christmas presents for this group, and Amazon's e-books outsold paper books for the first time on Christmas day. They believe that the boomers like its low price, simple lines, keyboard and the fact it is "grandchild proof."16 Source: http://seekingalpha.com/article/185409-kindle-ipad-search-for-niche-in-differing-demographics (29 Jan 2010)

32. 70% of iPad 2 buyers were new to the iPad, compared with 23% of iPhone 4 buyers who were new to the iPhone at launch.

33. Buyers were split almost evenly between Mac and PC users (51%/49%). By contrast, the split for the original iPad was 74%/26%.

34. 47% of buyers were purchasing a 3G model, which carries a $130 premium.

35. 41% purchased the 32GB iPad 2, up from 32% who bought the 32GB version of the original iPad. The 64GB models also gained a slight share.

36. 65% of buyers owned an iPhone, 24% owned a Kindle (up from 13% of original iPad buyers), but only 6% plan to read with their iPad (down from 19% in Piper Jaffray's first iPad survey).

37. 17% expect to use apps and play games, up from 9%, which suggests that the App Store ecosystem is growing.17 Source: http://tech.fortune.cnn.com/2011/03/13/piper-jaffray-ipad-2-totally-sold-out-70-to-new-buyers/(13 Mar 2011)

38. 18 iPad Usage

40. Web browsing occupies 37.7 percent of the time spent on the iPad, followed by 23.6 percent of time spent on email, Facebook, and other communication apps. The lowest category, at only 10.2 percent, was spent playing games.

41. Nearly 80 percent of respondents (77.6) said they use their iPads more often now than they did when they first got them – so it wasn’t a novelty purchase people did, in fact, find a use, or even more uses as time went on.

42. 71 percent of participants use their iPads between one and five hours per day. Additionally, 28.9 percent said that their iPad has become their primary computer. The iPad was found to be used most often by those surveyed: 31.8 percent of the time. Laptop usage, at 31 percent, fell just under, with the desktop further back still at 22.1 percent, and smartphone usage coming in last at 15.2 percent.19 Source: http://www.businessinsider.com/ipad-survey-results-2010-11#two-thirds-of-ipad-owners-use-their-ipads-1-5-hours-a-day-1 (15 Nov 2010)

44. 74.5 percent of those surveyed read books on their iPad. But, though the iPad is a popular book device, 50 percent of users who read on their iPads chose the Kindle app as their preferred reading app. Only 42.4 percent chose iBooks first. Amazon is clearly winning the e-book war by being platform-agnostic.

45. AlokSaboo in June 2010 analyzed the popular downloads in the Apple app store for the iPad and iPhone and found that reading constitutes an important element on the iPad. For example, Books, News, and Education apps are far more important in the case of iPads, accounting for around 20% usage, whereas they only account for about 3% on the iPhone.

46. Similarly Morgan Stanley argues that iPads are currently about consumption as opposed to creation.But this could be entirely due to the apps available. Over time, as more ‘creation’ focused tools become available, this usage could increase.20 How are iPads used? Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

47. 21 How areiPads used? Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#people-use-tablets-mostly-to-consume-content-7 (16 Feb 2011)

48. 22 How areiPads used? A survey conducted by Google found similar usage patterns: Source: http://www.readwriteweb.com/archives/google_survey_reveals_how_we_use_our_ipads.php (8 April 2011)

50. As a result, 46% of tablet users allow others to use their devices, while only about one-third of smartphone and eReader users do the same (34% smartphone users, 33% eReader users).Source: http://blog.nielsen.com/nielsenwire/consumer/the-connected-devices-age-ipads-kindles-smartphones-and-the-connected-consumer/ (28 Sep 2010)

52. Nielsen’s survey of 5000 iPad users in August 2010 found that 32 percent, may not be downloading any apps from the App Store, a Nielsen study suggests.

53. Whether it be paid or free, most people use 10 apps or fewer on a regular basis, leaving half or more of their apps ignored shortly after download. In fact, the most commonly used app is one you don’t even download: Safari. The built-in browser remains the iPad’s killer app.

54. When viewing news on the iPad, the majority (37 percent) preferred the iPad’s web browser, while those using news apps came in a close second at 34.7 percent. In last place was newsreader apps such as Flipboard or Reeder with 28.3 percent.24 Source: http://www.businessinsider.com/ipad-survey-results-2010-11#two-thirds-of-ipad-owners-use-their-ipads-1-5-hours-a-day-1 (15 Nov2010) http://www.macnn.com/articles/10/10/21/nielsen.figures.chart.early.patterns.of.ipad.use/ (21 Oct 2010)

56. The top three categories on the iPhone (i.e., Games, Entertainment, and Utilities) account for over 75% of usage. In contrast, on the iPad the top three categories (i.e., Games, Entertainment, and Productivity) account for only 46%. The iPad is clearly being used for a variety of purposes.25 Source: http://www.businessinsider.com/ipad-survey-results-2010-11#two-thirds-of-ipad-owners-use-their-ipads-1-5-hours-a-day-1 (15 Nov2010)

57. 26 What are the most used iPad apps? Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

58. 27 What are the most used paid iPad apps? Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

59. 28 What are the most used freeiPad apps? Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

60. 29 In comparison: most used iPhoneapps? Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

61. 30 In comparison: most used paid iPhone apps Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

62. 31 In comparison: most used free iPhone apps Source: http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ (3 June 2010)

64. Their data is based on survey responses as opposed to tracking popularity lists in the Apple app store. Source: http://www.macnn.com/articles/10/10/21/nielsen.figures.chart.early.patterns.of.ipad.use/ (21 Oct 2010)

65. 33 Impact on Other Devices

68. Many people suggest their PC or laptop is now being used as a storage device for files, while they consume content on their tablet.

69. Google’s survey of 1,400 respondents found 43% spend more time with their tablet than with their desktop/laptop

70. One in three respondents spend more time with their tablet than they do watching TV.35 Multi-device usage Sources: http://www.readwriteweb.com/archives/google_survey_reveals_how_we_use_our_ipads.php (8 April 2011) http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

72. Only 4.2 percent of iPad users surveyed by Business Insider have purchased the new MacBook Air.

73. Of that small number, 95.8 percent say it hasn’t decreased their iPad usage.

74. Also, 76.1 percent of those surveyed felt that the iPad and MacBook Air weren’t competing devices. Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#no-other-category-of-mobile-device-has-ever-grown-so-fast-1 (16 Feb 2011)

75. Netbook sales also down 37 Source: http://www.businessinsider.com/morgan-stanley-tablets-2011-2#and-tablets-are-destroying-netbooks-14(3 June 2010)

76. ROI from iPad usage Interestingly, the Nielsen survey suggested that iPad owners are more receptive to advertising than other connected device users. 38 Source: http://blog.nielsen.com/nielsenwire/consumer/the-connected-devices-age-ipads-kindles-smartphones-and-the-connected-consumer/ (28 Sep 2010)

77. ROI from iPad usage 39 However Forrester (February, 2011) flags the fact that people are still very resistant to paying for content: “Sales of paid digital content have stalled, although consumer demand for many services is still growing. Despite a clear and profound shift in the way we access and consume media content, traditional content providers have, on the whole, failed to adapt their products to meet consumer needs. Social media, exemplified by Facebook, has changed the way Internet users engage with content: They now expect an interactive, engaged, and connected digital content experience — and, according to our surveys, they are willing to pay for it. Radical product innovation is required to build customer-centric premium digital content experiences. We have to add SPARC: Content must be social, participative, accessible, relevant, and connected.” Source: http://www.forrester.com/rb/Research/cant_pay%2C_wont_pay_why_paid_digital/q/id/58011/t/2 (17 Feb 2011)

78. 40 Where is the iPad Used?

80. Accessories such as Vogel’s RingO® Universal iPad Mounting System - their “iPad on the Wall” - keeping the iPad safe by securely mounting it and other tablets everywhere the user goes, helps make the tablet more accessible round the home.41 Sources: http://www.tuaw.com/2010/04/20/peace-in-the-home-sharing-an-ipad-with-your-spouse/ (20 April 2010) http://www.examiner.com/home-improvement-in-chicago/new-device-hangs-ipad-on-home-or-office-wall-car (8 Feb 2011)

84. They found that financial services firms accounted for 36% of iPad deployments. Surprisingly, this bested the high-tech sector, which accounted for 11.4% of deployments.

85. Their health care customers made up 10.5 percent of the company's iPad numbers.

86. The legal and government sectors rounded out Good's top 5 with 8.8% and 8.3% of iPad deployments, respectively.Source: http://www.eweek.com/c/a/Desktops-and-Notebooks/Apple-iPad-Popular-Among-Financial-Services-Firms-Good-475110/ (15 Nov 2010)

90. This fall, iPads will be distributed in “Research Methods in Global Health Sciences II,” a course in DGHI’s Master of Science in Global Health (MSc-GH) degree program, which is taught by DGHI member and sociologist Jen’nan Read. The course introduces students to a range of methodological techniques used in global health research, including qualitative field research, quantitative survey research, evaluations, and interventions.

91. In the article, Read goes on to give examples of how the iPad can increase research efficiency in the field by allowing students in low income areas to record more data than traditional methods are able to offer. Read mentions some of the key features of the iPad – small form factor, lightweight, touch-screen, Wi-Fi, and 3G – as being essential when it comes to field research and survey data collection.46 Source: http://www.imedicalapps.com/tag/ipad-for-research/ (8 July 2010)

93. However, all students and teachers in all pilots loved the use of the tool and teachers claimed that children became more engaged than they had been using traditional teaching methods. The ability to instantly ‘check a fact out’ made it infinitely more engaging.47 Source: http://www.convergemag.com/classtech/Impact-iPad-K12-Schools.html?page=1 (9 Feb 2011)

95. 49 Conclusions

97. The demographic of the users of the iPad swings to the younger, but slightly more affluent users. Sixty-five percent of owners are male.

98. There appears to be a trend of people buying a tablet and finding far more uses for them than they originally expected. Consequently, the role of other devices in the home have changed or reduced.

99. Issues however exist around privacy and security, especially in homes were the iPad is a shared resource.

100. Interestingly there is also an ever increasing adoption of tablet usage at work, both through individuals choosing to use their own tablet, but also as a consequence of some enterprise organizations making significant investments in the device for staff, Financial Services being one of the earliest adopters.

101. Games, Entertainment, and Productivity are the top reasons for using an iPad, but there is still some resistance to purchasing apps, with Nielsen suggesting thirty-two percent of iPad owners have never downloaded an app.

102. Safari is still the most commonly used app.50

103. References http://www.tuaw.com/2010/11/15/ipad-owners-usage-increasing-over-time/ http://www.businessinsider.com/ipad-creative-2010-10#photo-editing-6 http://www.businessinsider.com/ipad-100-day-review-2010-8#its-my-favorite-device-for-reading-the-web-1 http://www.businessinsider.com/ipad-survey-results-2010-11#now-dont-miss-19#ixzz1DZeTp8Jl http://gigaom.com/apple/survey-ipad-is-replacing-computers-for-many/ http://truvoipbuzz.com/2010/06/ipad-usage-demystified-what-people-use-ipads-for/ http://www.readwriteweb.com/enterprise/2010/11/enterprise-ipad-usage.php http://www.forrester.com/rb/Research/apples_ipad_is_new_kind_of_pc/q/id/57008/t/2 http://www.mybanktracker.com/bank-news/2010/05/10/ipad-popular-among-rich-finance-minded/ http://www.wired.com/epicenter/2010/07/ipad-owner-are-selfish-elites-critics-are-independent-geeks-says-study/ http://seekingalpha.com/article/185409-kindle-ipad-search-for-niche-in-differing-demographics http://www.ipadforums.net/forumindex.php http://blog.nielsen.com/nielsenwire/consumer/the-connected-devices-age-ipads-kindles-smartphones-and-the-connected-consumer/ http://www.imedicalapps.com/tag/ipad-for-research/ http://www.macobserver.com/tmo/article/80_percent_of_fortune_100_companies_onboard_with_ipad/ http://tech.fortune.cnn.com/2011/03/13/piper-jaffray-ipad-2-totally-sold-out-70-to-new-buyers/ http://www.readwriteweb.com/archives/google_survey_reveals_how_we_use_our_ipads.php 51

104. References http://www.businessinsider.com/morgan-stanley-tablets-2011-2#whats-more-its-huge-in-the-enterprise-as-well-2 http://www.convergemag.com/classtech/Impact-iPad-K12-Schools.html?page=1 http://www.labnol.org/home/ipad-as-drawing-tablet/13735/ http://www.tuaw.com/2011/02/07/british-house-of-lords-will-soon-allow-ipad-use-during-debates/ http://mashable.com/2011/02/17/ipad-business-going-green/ http://www.intomobile.com/2010/05/05/ipad-at-home-have-you-been-wishin-for-an-ipad-in-the-kitchen/ http://www.tuaw.com/2010/04/20/peace-in-the-home-sharing-an-ipad-with-your-spouse/ http://www.examiner.com/home-improvement-in-chicago/new-device-hangs-ipad-on-home-or-office-wall-car http://www.forrester.com/rb/Research/cant_pay%2C_wont_pay_why_paid_digital/q/id/58011/t/2 http://www.pcworld.com/article/205457/pew_americans_have_apps_on_their_phone_but_wont_pay_for_them.html http://www.pewinternet.org/Reports/2011/Generations-and-gadgets/Report/eBook-Readers-and-Tablet-Computers.aspx?_id=D7AA528565D94DBA8FA222B95DCFCA2A&_z=z http://www.infoworld.com/d/mobilize/apples-ipad-subscriptions-troubles-all-around-832?page=0,0 http://www.macobserver.com/tmo/article/rbc_expects_erroneously_android_to_dominate_tablets_by_2014/ http://www.tabletpcreview.com/default.asp?newsID=2053&news=4g+tablet+motorola+xoom+verizon+lte+sprint+wimax+t-mobile http://mashable.com/2011/03/08/business-ipad-apps/ http://www.prweb.com/releases/2010/10/prweb4594594.htm 52

105. Contact Information For more information or questions about this report contact: Catalyst Group 345 Seventh Avenue, 11th Floor New York, NY 10001 Phone +212.243.7777 x43 Fax +212.243.7077 Email Address info@catalystnyc.com Website Address www.catalystnyc.com