Other Mobile Devices

Teed Up: Mojiva Introduces Dedicated Tablet Ad Network

It's possible that "T-commerce" and "tabvertising" may over time become more important to brands than advertising on smartphones. Mindful of the growing number and importance of tablet devices ad network Mojiva today announced a dedicated tablet network:

The Mojiva ad network reached an estimated three million tablet devices in January 2011, grew to 25 million by January 2012, and reached 40 million tablet devices as of June 2012. The number of tablet ad requests per month on the Mojiva ad network was 119 million in January 2011, increased to 655 million as of January 2012, and reached an impressive 2.13 billion tablet ad requests per month as of August 2012 – a nearly 20-fold increase in 20 months.  

Mojiva's new tablet network will give advertisers and agencies the opportunity to purchase prime inventory and display rich media ad units across highly valuable audience channels, which include luxury goods, entertainment, news, parenting, tech enthusiasts and sports enthusiasts. 

The Mojiva announcement was being touted today as "the industry’s first tablet-only mobile advertising network." However that's not entirely accurate. Google introduced tablet-only targeting in July of last year. 

Data aggregator eMmarketer has forecast that by the end of the year there will be 53 million tablets in the US. However this estimate is probably low. It will probably be closer to 60 million or more, especially with more lower-priced tablets, the forthcoming iPad Mini and a big holiday shopping season in store for tablets. (PCs probably won't be so lucky.)

Third quarter reports from several digital agencies and marketing firms (RKG, Covario, Kenshoo) show that the tablet ad spend is growing and that ad performance outpaces smartphones and rivals the PC. In the chart below, according to Covario, the tablet share of mobile ad spend has grown to 48% from 27% a year ago. That suggests it will exceed 50% by the end of the year.

Tablet Share of Mobile Ad Spend Has Grown

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Source: Covario Q3 2012 Quarterly Global Paid Search Spend Analysis

Mobile devices generated 21% of paid search clicks in Q3. While the numbers vary from firm to firm, paid-click volume on PCs is still significantly greater than mobile devices. Accordingly there's quite a lot of growth ahead for paid clicks on mobile. 

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Source: Kenshoo Global Search Advertising Trends Q3 2012

Despite the fact that Internet traffic is still dominated by the PC, many data sources indicate that tablet CTRs are significantly higher than corresponding CTR rates on the PC. It's also harder to discount or dismiss tablet clicks as "unintended" the way that several firms are now doing with smartphones. Furthermore, RKG's Q3 digital advertising report shows that the revenue per click from ads on tablets is nearly as high as on the PC. 

Mobile vs Desktop: CPCs & Click-Through Rate

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Source: RKG Digital Marketing Report Q3 2012

While some data indicate that the cost per click of tablet ads may be approaching or even exceeding comparable ads on the desktop, most sources still show the cost of tablet ads being lower and a better value than ads on the PC.

Mobile vs. Desktop: Revenue per Click by Device
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Source: RKG Digital Marketing Report Q3 2012

The emerging challenge with tablet advertising, of course, is the varying screen sizes that are starting to take hold in the category. This is especially true with the 7-inch form factor. An equivalent of responsive web design will need to be created for advertising to accommodate the range of screen sizes coming into the market: 4-inch, 5-inch, 7-inch and 10-inch.

Report: Smartphones + Tablets = 21% of Organic Search

Digital marketing agency RKG has released a Q3 report (based on aggregated data from its client base). The report covers search optimization, paid search, social media, email, comparison shopping and mobile. I'll focus here only on the mobile data.

The firm said that tablets (mostly iPads) and smartphones combined to drive 21% of organic search traffic in the third quarter. RKG commented that "this was nearly double the level we saw in Q3 last year." Because of the iPad and iPhone, iOS dominates organic search traffic from non-PC devices. According to the RKG report, "iOS held a 77% share of mobile organic search in Q3, an increase from 75% in Q2."

Operating System Share of Organic Search

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RKG also said that "revenue per click" (RPC) was almost the same on the iPad as it was on the PC, while smartphone RPC "languished at roughly a fifth that of desktop." Part of this is because only e-commerce events are being measured and captured. RKG and its clients aren't seeing the indirect impact of smartphones on conversions or purchases that happen later on PCs, tablets or in stores. Accordingly these data are somewhat skewed. 

What's interesting to observe in a more "apples to apples" context, however, is the discrepancy between iPad owner-users and Android tablet owners: "the iPad generated an average RPC that was more than double that for Android tablets, including the Kindle Fire and Nexus 7." 

Mobile vs. Desktop: RPC by Device

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From a paid search marketing standpoint tablets and smartphones cost less and outperform PC (search) advertising. The discrepancy between costs and performance was greatest on smartphones. One reason why this may be so is that many marketers and platforms aren't necessarily valuing mobile correctly because of the conversion-tracking problem. Nonetheless it's a great opportunity for those that aggressively embrace it. 

Mobile vs. Desktop: CPC vs. CTR

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Developer Survey: RIM Is Dying, Android Interest Declines

Appcelerator released its Q3 developer survey. The quarterly survey this time polled more than 5,500 developers globally on their attitudes toward various platforms and future-trend predictions.

The survey result that's going to get most of the attention is the one that found 66% of developers believe "that it is 'likely to very likely' that a mobile-first social startup will disrupt the market for social applications on mobile devices and take market share from Facebook." Indeed, this describes Instagram before Facebook acquired it for roughly $1 billion. 

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Other top-level survey findings include the following: 

  • By 2015 developers "will be building mobile applications for more than smartphones and tablets: TVs, connected cars, game consoles, Google Glass, and foldable screens" 
  • Mobile developers are disappointed with nearly every aspect of HTML5 (vs. apps) 
  • Apple continued as the "top platform of choice for developers"
  • Developer interest in Android "declined for a fourth quarter in a row" and RIM interest declined to "an all-time low"

The survey also indicated that developers were interested in Windows Phone 8 smartphones but that they were taking a wait-and-see approach. Only when Windows Phones crossed relatively high penetration levels would developers turn their attention to the platform in earnest. However developers were more sanguine about the prospects for forthcoming Windows 8 tablets. 

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It's also interesting that despite sales developers don't seem very interested in the Kindle Fire. Perhaps that will change if the recently upgraded line of Kindle tablets sell well.

Finally it's curious that despite continuing market-share gains developer interest in Android continues to erode. This must be a reflection of the challenges of making money on the platform.

Study: Most Mobile Device Usage at Home

Late last week Google released data (captured and collected by Compete) about the role of digital media, mobile devices and video in US consumers' apparel shopping habits. Overall the data reflect the now many influences operating on consumer decision-making. It also shows how traditional media still play a meaningful role in purchase behavior: they create awareness and stimulate further research on digital devices. 

But rather than identifying "which 50%" of the media spend is truly effective, it seems that it is getting progressively more complicated for marketers and correspondingly difficult to correctly attribute sales or "conversions" to specific campaigns.

Q: How soon after the last time you saw or heard each of the following types of apparel ads did you look up the advertiser online to get more information?

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The Google-sponsored research, as mentioned, offers a range of findings. Below I examine some of the mobile-specific data.

Q: Which of the following online sources did you access on your mobile phone?

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The largest single category in the slide above is search. Google uses this data in part to impliedly make the case for mobile search advertising. But the more interesting interpretation of this slide is that search penetration on mobile devices (in this study and apparel category) is far less than on the PC where as much as 95% of the online population uses search engines. (There are other data showing greater mobile search usage.)

In the slide below, echoing lots of other data, most mobile consumers are comparing prices, looking for deals and reading product reviews on their phones (and tablets). 

Q: Which of the following did you do on your mobile device while researching or shopping for apparel?

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One thing that's interesting about the findings of this Google-Compete study is the fact that most of the mobile usage happened at home vs. any other location. At least among apparel shoppers, fewer of them are using their devices in stores than other survey data have shown. In other surveys numbers have been as high as 80% - 90% of smartphone owners using devices while in retail stores for various purposes. 

Q: From which of the following locations did you use your mobile device(s) (e.g., mobile phone and/or tablet) to shop for apparel?

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The fact that tablets owners and tablet usage are included in these findings may account for the smaller in-store usage figures. In addition, the sample size was relatively small (n=161). Regardless, it's accurate to point out that a considerable amount of smartphone usage happens at home. Accordingly, marketers cannot and should not assume that smartphone users are always "out and about" when consulting their devices. 

Though not explored in this study, it's also generally true that mobile research is followed up by online or in-store (rather than mobile) purchases.

GoPago Courts Small Merchants with Free POS-Tablet Terminal

Being a payments startup is hard, even for one funded by megabank JP Morgan Chase. The Chase-backed GoPago, which launched a mobile app in late February this year, has struggled for awareness and consumer adoption in a crowded market where most people don't even recognize the need for mobile payments.

In addition to mobile payments the consumer-facing GoPago app also provides a range of additional services, including online ordering and a number of small-business marketing capabilities. Before launching the company developed a cloud-based POS system that interfaces with established POS systems. GoPago sought to create a kind of self-contained marketplace for local businesses and consumers not unlike PayPal's mobile marketing and payments strategy. 

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But that didn't work -- at least not yet. Now the company is using its cloud-based infrastructure to go after SMB merchants, who are also aggressively being courted by Square, PayPal, Intuit, Groupon and others.

GoPago this morning introduced a POS terminal called "GoPago Live," which goes much further than its competitors. Rather than being simply an iPad and software (it uses an Android tablet), GoPago Live offers a complete POS system, a cash box, receipt printer, card reader and 4G Internet access -- all for free. There's also 24 hour customer support.

In return GoPago takes 2.85% per transaction, which is competitive with PayPal and Square. Payment processing is provided by Chase Paymentech. Interestingly GoPago even shields merchants from Amex's higher transaction fees. It will allow merchants to accept Amex for the same 2.85% fee. 

Assuming it all works as advertised, I haven't seen a demo, this is a pretty compelling package for local merchants. GoPago told me that the company is targeting neighborhood businesses with revenues in the "low six-digit range."

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The challenge once again is rising above all the "noise" in the market. But the substantial cost savings available to merchants using GoPago Live (perhaps between roughly $5K and $15K per year) should help drive word of mouth and general SMB awareness. And while the Chase connection didn't help very much in getting consumers to adopt the mobile app, GoPago may have more success using Chase to drive awareness and adoption on the merchant side.

Tablets Market Share: Shipments vs. Activations Part Deux

In the wake of yesterday's Apple earnings release -- including that it sold 17 million iPads -- Strategy Analytics has taken a crack at estimating the Q2 global tablet market. As with Gartner and IDC, Strategy Analytics' calcluations are based on "shipments," which generally do not accurately reflect consumer sales in the marketplace. 

Strategy Analytics reported that a total of 24.9 million tablets were "shipped" in the second quarter. The resulting market share distribution was as follows: 

  • Apple/iOS: 68.3% (vs. 62% in Q2 2011)
  • Android: 29.3% (vs. 29.3%)  
  • Microsoft/Windows: 1.2% (vs. 4%)
  • Other: 1.2% (vs 4.7%)  

Despite the fact that the Kindle Fire has sold several million units and the Samsung Galaxy Tab (7-inch) before it has enjoyed some modest success, there's no chance that 30% of the tablet-owning public are using Android tablets. In a year or so we may have a different market, espeically given the fast start for the Nexus 7, but for now it's almost all still about the iPad. 

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Good Technology's Q2 Data Report shows actual tablet activations in the enterprise market. (There's comparable empirical evidence on the consumer side as well.) What it reveals is that "iPads dominated tablet activations with 94.5 percent of total activations for the quarter (down from 97.3 percent in Q1 2012)." Comparatively, Android tablets accounted for 5.5% of activations, up from 2.7% in the previous quarter.

Good actually attributes Android enterprise tablet growth to the Samsung Galaxy Note, which is closer to a giant smartphone than a tablet. Regardless, we're likely to see Android start to genuinely gain tablet market share in the coming quarters -- driven by 7-inch devices if not across the board. 

Apple Has "Bad" Quarter but Sells 17 Million iPads

I was in a meeting when the Apple quarterly results came out this afternoon. As you've read, the company had revenue of $35 billion and profit of $8.8 billion. Still, this was below most analysts' expectations. Shares fell 5% in after-hours trading accordingly.

Quarterly device sales were as follows:

  • iPhones: 26 million
  • iPads: 17 million
  • Macs: 4 million
  • iPods: 6.8 million  

All the numbers came in under expectations except for the iPad; 17 million is a new quarterly record (vs 11.8 million last quarter). To date Apple has sold 83.8 million iPads on a global basis.

Sales of iPads will probably cross the 100 million threshold by the next earnings announcement. If not, then certainly by the end of the year.

CEO Tim Cook said that iPhone sales were likely depressed by talk of the forthcoming iPhone and consumers waiting for the new model.

Marketers and Publishers Better Quickly Get Used to 7-Inch Tablets

The early success of Google's Nexus 7 tablet sales, on the heels of Kindle Fire's success in Q4 last year, establishes that the 7-inch tablet category is here to stay. Before Kindle Fire there were no successful Android tablets of any size. Kindle Fire's combination of rock-bottom pricing ($199) and Amazon content helped drive several million in unit sales. Now Google's new device is off to a blazing start.

The company just released its first TV commercial for the tablet (a very Apple-like spot). 

As I previously discussed, the new Google tablet (starting at $199) is vastly superior to Kindle Fire. It now puts enormous pressure on Amazon to pull a rabbit out of the hat with its "2.0" release. Yet Amazon wants to release "five or six" new mobile devices (mostly tablets) of various sizes.

Apple is rumored to be releasing a smaller, lower cost tablet later this year. This is a defensive move for to prevent the iPad from being under-cut by lower-priced, almost-as-good products. A 7-inch iPad (or larger iPod Touch), combined with the Nexus 7, will likely dampen Amazon mobile device sales unless quality is dramatically improved. 

Regardless, the rise of the 7-inch tablet category now creates additional options for consumers and additional complexity for advertisers and to some degree publishers. I suppose it's an argument for "responsive web design."

With Kindle Fire 2, Nexus 7 and the coming Apple 7-inch tablet (and the accompanying low price of these devices) we should see 7-inch tablets sell millions of units. Many people will now have smartphones, small tablets for travel and "on the go," and 10-inch tablets for home. PCs will largely be used for "work" or become secondary devices for most consumers. 

Indeed, the device market is moving much faster than publishers and marketers. Publisher content and ads generally don't look particularly good on the 7-inch form factor. Tiny mobile banners are barely noticeable and landing pages look awkward filling only part of the screen. In addition, right now there are only a few apps optimized for 7-inch tablets. Smartphone apps look OK but often appear stretched or out-of-proportion.

All this will have to change -- and relatively quickly.

The PC market, where the attention of most publishers and marketers is still largely concentrated, is not going to grow. And by Q1 of 2013 there will be millions more tablets in people's hands. In fact, I believe that there will be 100 million tablets in the US market much more quickly than anyone is predicting: by the end of 2014.

With sales driven by competitive prices many of these will be 7-inchers, which don't play well with ads and content designed for smaller smartphones and which can't render apps, content or ads created for 10-inch tablets.

Nexus 7 Beats the Pants off Kindle Fire

I've been using the new Nexus 7 Google tablet since I obtained one at the Google developer conference late last week. I also own a Kindle Fire, which I use regularly for reading and watching movies. After just a short time it's clear that the Nexus 7 beats the Kindle Fire, the best-selling Android tablet to date, by a mile.

Outside of the Amazon content universe the Kindle Fire offers a generally sloppy and lackluster tablet experience. Whether you agree depends on your expectations and whether or not you own an iPad. Some people argue that Kindle Fire, as a basic Kindle upgrade is great for the price. But as an owner of two iPads, my view is that it offers a poor overall experience beyond the borders and boundaries of Amazon's media and shopping content.

Beyond this, I'm not a fan of Android tablets in general. I owned the Samsung Galaxy 10.1, which was a real clunker next to the iPad. That's partly because there were and still are so few tablet apps for Android. Indeed, none of the 10-inch competitors to the iPad have sold well. By contrast Kindle Fire sold because there’s no Apple entry in the 7-inch category. But its rock-bottom $199 price and the Amazon brand were the big drivers of sales, which have now slowed.

Yet the Kindle Fire tablet is an Android device in a technical sense only; it marginalizes Google. Accordingly Google felt compelled to act and the company has now taken direct aim at Kindle Fire with its new 7-inch tablet, built by Taiwan computer maker ASUS. It’s priced identically at $199 (although there's a $249 version with more memory). Google has also followed Amazon’s lead and made content from its "Google Play" store a major part of the Nexus 7 experience.

After a week of very heavy use, I'm very pleased with the performance of the Google device. If I think of it as a tablet it still falls short of the iPad by a considerable margin. However if I think of it as a larger smartphone it's great.

It fits easily in your hand and the larger (than a smartphone) screen makes almost everything better about the experience. There are still relatively few tablet apps, and the 7-inch size is awkward in certain respects. Steve Jobs referred to it as a “tweener." It doesn’t fit in your pocket like a smartphone but doesn’t offer the full-screen experience of the iPad. However smartphone-optimized apps and mobile websites don't look as awkward on a 7-inch screen as they do on a 10-inch Android screen.

Unless you're a loyal Amazon Prime customer and/or a very heavy Kindle user, in choosing between the Fire and the Nexus 7, there's no question about which device to buy: the Nexus 7.

It offers such a superior experience for virtually everything you'd do on a tablet -- and you can download the Kindle reader Android app. Indeed, the full range of Android apps are available from Google Play. On the Amazon tablet you get a subset of Android apps (no Google Maps for example).

Google should have a very successful product in the Nexus 7. The one major challenge is that right now there’s no retail distribution. Google is selling it directly through the Google Play store. And while there’s a huge installed base of Android users who are the primary market for this device, Google will need Best Buy and other retailers to offer the Nexus 7 before it can realize its full sales potential.

Tablets Demand Attention As Separate Device Category

Last week mobile ad network inMobi released tablet survey findings, drawn from 9,600 respondents in seven international markets. US responses were just under 1,000 (904). The company asserts that "tablet use has risen quickly to 29.5 million U.S. users, 11% of the total U.S. population." 

By comparison, in January of this year the Pew Internet Project released survey data that showed 19% of US adults owned tablets (mostly iPads). And comScore released data showing that roughly 24% of smartphone owners also have tablets. If we extrapolate these numbers, the Pew data suggest that there are roughly 42 million tablet owners in the US (as of January 2012). The comScore data argue the number is closer to 56 million.

The inMobi number is too small, while the comScore number is probably too large. Pew is likely closer to the actual number of tablet users in the US at this point. However, by the end of the year it could be closing in on 70 million. 

The inMobi survey data are from a report entitled, The Role of Connected Devices in the Consumer Sales Journey. Below are some of the top-level findings: 

General consumption habits

  • Over 60% of US tablet owners spend at least 30 minutes each day accessing media content on their tablets
  • 52% use a tablet to fill what previously would have been “dead time.” 
  • 29% of US tablet users said they have reduced reading books in print.
  • 29% of tablet owners claimed they reduced surfing the internet via their PC and/or laptop.
  • 48% of respondents agree that tablets’ appealing design and accessibility make it is easier to access media content than on a PC or laptop.

Shopping and e-commerce 

  • 22% of tablet users claim they have shopped less in physical stores since purchasing a tablet
  • 55% of tablet owners make purchases on their device in an average month. 

According to the survey data, "tablets have become the preferred device at home and smartphones are preferred on the go." These devices play different roles in the "purchase consideration cycle." Tablets are used in a "lean back" mode in the evenings and on weekends, almost exclusively at home. 

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A recent tablet-centric e-commerce report from Monetate also observed that tablets are used primarily at home, as a PC substitute, and offered the following advice:

With increases in website traffic from devices such as the iPad and Kindle Fire, e-commerce businesses must treat customers using tablets as a unique audience segment. Tablet users expect a different experience that takes advantage of their devices’ features, such as touch/swipe functionality and screen rotation.

Accordingly it's not enough to simply assume the PC site will translate onto tablets. While non-flash PC sites often render relatively well on tablets they typically fail to take full advantage of the tablet opportunity.

Monetate: Non-PC Devices to Grab 25% of Traffic in Less than a Year

E-commerce optimization firm Monetate has published its latest "E-commerce Quarterly" report. The report addresses a number of issues including social commerce. For purposes of this post, I'll focus on the mobile and tablet findings.

The data in the report are drawn from "analyzing a random sample from over 100 million online shopping sessions on 100-plus major e-commerce websites." Here are some of the major findings: 

  • 88% of website visits now come from PCs, down from 92.1% in the prior quarter.
  • Tablet traffic increased 348% in one year, while visits from smartphones increased 117% during the same time period.
  • More than 6% of all website visits now come from tablet users; 95% of this traffic is from iPads.

Website Traffic Sources

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Q1 2012 Conversion Rates by Device Category

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Compare similar data from Marin Software. Directionally they're almost identical to the Monetate findings.

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What both the Marin and Monetate conversion findings lack, however, is data about offline conversions. If those were tracked and factored in I suspect we'd see mobile conversion figures outstrip the PC and potentially tablets.

Monetate's focus is strictly on e-commerce conversions. But most people don't buy conventional products on their smartphone, though they may do things like banking transactions or buy apps or rent movies. 

The use cases for smartphone are different than PCs and tablets, which are mostly used at home and often as a substitute for the PC. According to Monetate's report:

It seems clear that smartphone users are either doing more comparison shopping or are dissatisfied with the user experience. In fact, a recent study from comScore Inc., Shop.org, and The Partnering Group revealed that 43% of smartphone owners have used their mobile device while in a store for a shopping purpose.

Monetate also argues, despite that at-home usage of tablets, that there's a different user expectation vs. the PC experience:

With increases in website traffic from devices such as the iPad and Kindle Fire, e-commerce businesses must treat customers using tablets as a unique audience segment. Tablet users expect a different experience that takes advantage of their devices’ features, such as touch/swipe functionality and screen rotation.

This argues in favor of tablet apps as well as a tablet-optimized HTML5 site. Finally, the firm predicts that at current growth rates, "website traffic from PC users will dip below 75% in less than one year" -- meaning that smartphones and tablets will represent 25% of site traffic. 

Google to Announce $199 7-inch Tablet This Week

The long-anticipated Google (Nexus) tablet is set to debut this week at Google's developer conference, Google I/O. Gizmodo Australia has specs and apparent pictures of the device. CNET has additional information.

Gizmodo reports an 8GB model will cost $199, matching Kindle Fire, and a 16GB model will carry a $249 price tag.

Google's tablet announcement comes on the heels of the Microsoft Surface announcement last week. However Surface pricing wasn't disclosed. Rumors argue that the lower-end RT model will not come in below $599, with the higher end Pro costing at least $700.

Unless Microsoft can get the RT price down to $499, as I and others have argued, Surface is unlikely to compete with or impact the iPad very much. Rather it will likely affect competing Windows laptop sales. 

The new Google Nexus tablet will probably have an immediate -- and potentially dramatic -- impact on Kindle Fire sales. The Kindle Fire is a nice upgrade from regular Kindle reading devices but a lousy tablet overall for other than accessing Amazon's content universe. The Nexus tablet is likely to be a much better device for Internet browsing with a larger app library. Android non-tablet apps will look better on a 7-inch device than they did on the 10.1-inch Android Galaxy Tab. 

Those not loyal to Amazon will be inclined to choose Google's tablet over the Kindle Fire -- all things being equal. However we may see Amazon respond with a price cut, which would be very interesting since the company already looses money on every Kindle Fire sold (but makes it back on content and other sales). 

What Exactly Is Microsoft Surface and What Impact Will It Have on the Market?

No doubt you've already read a great deal about Microsoft's new hybrid tablet-PC, Surface. It's being described as Microsoft's challenge to the iPad. Some have already called it a "game-changer." But that remains to be seen. It's also probably more of a challenge to Microsoft's own hardware partners than to the iPad.

Surface is a "new family of PCs." There will be at least three versions of the computing device, sporting slightly different specs and features. The screens apparently will all be 10.6 inches. All will come with a version of Windows 8. Perhaps the most compelling feature of the device is a "smart cover" that also operates as a keyboard. 

Unfortunately at yesterday's press conference, which I was not present for, the company provided no release date or pricing information. The latter is critical. However Microsoft said that Surface devices would be competitively priced. In the case of Surface for Windows 8 Pro, the company said it would be priced “on par with Ultrabook-class PCs." Right now Ultrabooks run from about $700 to $1,000

If Microsoft hopes to compete with the iPad, the lesser Windows RT version will have to start at $499. 

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There are some who believe that Microsoft took the bull by the horns in creating Surface, frustrated that its partners were not building compelling hardware while the iPad increasingly stole PC sales. It may well be that this will be the "kick in the pants" that Dell, HP, Acer and the rest need to start developing sexier machines. 

However it's more likely that this device -- provided it works well and delivers against its promise -- will compete with those same hardware partners. It could well capture sales that might have gone to Ultrabooks. I would also imagine that enterprises will adopt these machines, it's not as clear that consumers will. That's where price comes in. 

Another factor is Windows 8 and the public response to the new OS and UI. Microsoft is no longer in the position it has enjoyed for the last 15 years: when it released an OS update people bought it (until Vista). Now Android tablets and iPads do provide a viable alternative for those not doing heavy duty Office-oriented PC content creation.

Windows 8 has so far received mixed to negative reviews. While its Windows Phone OS has been critically praised, the devices aren't selling. This is partly because the UI and OS are unfamiliar to smartphone owners who've already become accustomed to the look/operation of iOS and Android. There are also too many competing options. Android has taken Microsoft's place in the smartphone world; it has become the alternative-to-Apple software supplier.

If consumers find Windows 8 jarring they may delay buying or avoid it. That's why price is so important. Surface is a sexy little device that must be priced very aggressively to get consumer attention. Otherwise, Surface could go the way of the Zune or the even shorter-lived Kin.

Survey: 74 Million Tablets in Use in US Today

The Online Publishers Association followed up its 2011 tablet users survey with the release of an encore study (n=2,540 online adults). It contains a rich trove of data about US tablet usage among adults. According to the survey Android and the iPad have roughly equal shares of the US tablet market. This finding is contradicted by other data sources that show more than 90% of all US tablet traffic comes from the iPad. 

The survey found that 31% of the Internet audience (vs. all US adults) owned a tablet today -- or 74.1 million users. Here are a selection of other findings: 

  • 90% of tablet users are "very satisfied" or "satisfied" with their tablets
  • 60% of tablet owners use the device several times a day, 14 hrs per week on average
  • Home is the dominant use location; majority of usage comes between 5pm and 11pm
  • Top usage categories: accessing content/information, Internet and email
  • 85% of tablet owners are two-screen multitaskers; 66% are three-screen multitaskers.
  • 61% of tablet owners have purchased content

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Tablet owners have bought plenty of apps but they prefer ad-supported free apps if given the choice. Below is the list of paid-content categories, according to the survey: 

  • Magazines -- 10%
  • Entertainment -- 8%
  • Sports -- 6%
  • Weather -- 6%
  • Shopping -- 5%
  • Newspapers -- 5%
  • Fitness and Health -- 5%
  • News -- 4%
  • Business/professional -- 4%
  • Fashion/Beauty -- 4%
  • Travel -- 4%
  • Finance -- 4%
  • Lifestyle -- 3%
  • Reference -- 3%

The following were the top product-research categories on tablets:

  • Consumer Electronics -- 37%
  • Restaurants/Fast Food -- 36%
  • Media and Entertainment -- 35%
  • Retail and Apparel -- 35%
  • Food and Beverage -- 30%
  • Sports/Recreation/Hobbies -- 30%
  • Travel Service -- 30%
  • Personal Care and Beauty -- 28%
  • Automotive (incl. Parts) -- 25%
  • Health, Healthcare and Pharma -- 24%
  • Fin.Services, Insurance, Real Estate -- 23%
  • Telecom., B2B/B2C Services -- 22%
  • Home Furnishings -- 21%

Generally speaking attitudes and response to advertising are positive among tablet owners, with large numbers using the devices for research and buying. According to the survey, tablet owners spent an average of $359 buying products on tablets in the past year. 

There are also plenty of indications in the survey that people prefer their tablets to other devices for the various activities they're engaged in. 

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Tablet Market Exploding: How Is It Affecting PC Usage?

In January of this year the Pew Internet Project released survey data that showed 19% of US adults owning tablets (iPads). That was up from just 10% only a month before in December. Now comScore has released data showing that roughly 24% of smartphone owners also have tablets.

If we extrapolate these numbers, the Pew data suggest that there are roughly 42 million tablet owners in the US (as of January 2012). The comScore data argue the number is now 55 million. These figures seem entirely reasonable. Apple CEO Tim Cook reported 55 million iPads sold to date in February. 

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People use the term "tablet" but the market remains largely about the iPad. The only other two models with any traction are the Kindle Fire and the Samsung Galaxy Tab. According to Gartner Apple's share of the tablet market will be 61.4% at the end of the year. IDC says Apple had a 68% share of the global tablet market in Q1 2012.

Both of these figures are incorrect and largely based on shipment estimates. Shipments don't equal sales to consumers. 

Perhaps I should say instead that people may be buying other devices but it still doesn't matter. According to ad network Chitika, based on an analysis of millions of impressions in the US, the iPad "accounted for 94.64% of all tablet based traffic." By contrast Chitika said that the nearest competitor, the Samsung Galaxy tablet, "boasts a lack luster market share of 1.22%."  

Late last week ad network InMobi released its own tablet data, showing gains by the Kindle Fire and total Android tablet ad-impression share of 28%. That argues the iPad controls a 72% share of the total tablet market. 

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We're likely to hear an update of tablet numbers this morning from Tim Cook during the Apple WWDC keynote. 

Back to the comScore tablet data: the company says that just over half of tablet owners are watching video on the device, while nearly 10% are doing so every day. 

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A year ago in March AdMob found, based on a survey, that 77% of tablet owners were using their PCs less. In addition 28% of respondents said that the tablet had become their "primary computer." Clearly tablet ownership does cannibalize PC usage, while smartphone ownership may complement it. Roughly 80% to 90% of tablets are used mainly at home. 

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Once Microsoft puts Office on the iPad it will become a true PC substitute.

iPad: How Do We Reconcile Tablet Projections with Actual Traffic Data?

IDC and Gartner both released revised tablet projections in the past month. According to Gartner Apple will control 61.4% of the tablet market in 2012. IDC says Apple had a 68% share of the global tablet market in Q1 2012. Gartner is counting projected sales, while IDC is measuring shipments.

Shipments have been definitively shown to be an inaccurate metric in the past. Shipments do not equal sales. 

Yet late last week ad network Chitika found, based on millions of impressions on its US-based network, "that the iPad accounted for 94.64% of all tablet based traffic." By contrast Chitika said that the nearest competitor, the Samsung Galaxy tablet, "boasts a lack luster market share of 1.22%."  

The ad network found that for every 100 iPads there were just over 1 Samsung Galaxy Tabs, as measured by traffic generated. For every 100 iPads there were 0.8% Kindle Fires. As an aside Kindle Fire sales have dramatically slowed this past quarter. 

While Chitika's network is not synonymous with the entire Internet it's going to be generally representative of traffic trends. In Q3 2011 comScore reported that "iPads delivered 97.2 percent of all tablet traffic in the US." 

There's something really out of alignment between what IDC, Gartner, NPD and several others are reporting in terms of tablet market share and what's actually happening "on the ground" in terms of usage.  

Kindle Fire Controls More than 50% of Android Tablet Market

Today comScore confirmed what we already knew: Kindle Fire is the dominant tablet in the non-iPad universe. Comscore reported that the Kindle Fire had 54% of the US Android tablet market and was far ahead of all other Android tablet OEMs including Samsung.

Here's the market-share breakdown in the US Android tablet market according to comScore: 

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Kindle Fire is a weak competitor to the iPad in terms of overall user experience. However its $199 price has made it extraordinarily successful. Accordingly it set the bar for Android pricing in the 7 inch category, if not the rest of the Android tablet market. 

Google will reportedly match or beat that pricing when its own branded tablet goes on sale later this year. 

Cheap Google Tablet Almost Certain to Be a Hit

Yesterday the Wall Street Journal published what amounts to a round-up of recent Google tablet rumors. None of the information was really new.

Previously Eric Schmidt confirmed that Google would be putting out a "highest quality" tablet at some point later this year. A Google-branded tablet (expected to be 7-inches) is intended to compete directly with the Kindle Fire. It's also a direct response to the failure of other Android tablets to date.

Here's are the quasi-factual nuggets extracted from the WSJ piece: 

  • Co-branded Google tablets (think Nexus smartphones) will be made by Asus and Samsung
  • Google's Motorola unit will make Google-branded tablets
  • Pricing of a Google tablet would match or beat the Kindle Fire ($199); Google will subsidize the device accordingly

Earlier rumors suggested that the price might be $149. Either at $149 or $199 a decent 7-inch Google tablet is likely to be highly successful.

The Kindle Fire is actually quite a mediocre tablet compared to the iPad. It's well integrated with Amazon content but that's about it. Email and web surfing are quite painful on the device. Google almost certainly would make a more functional tablet for general purposes. It would also have the benefit of Google's voice actions. 

Google also has nearly the content ecosystem that Amazon does (i.e., Google Play). It can also afford to subsidize the device because it will make money on search and mobile display advertising. 

A $149 Google tablet would undermine Kindle Fire, compelling Amazon to lower its prices. Pricing here is a key variable. Regardless of whether it comes in at $199 or less, a cheap 7-inch Google tablet will be successful. The outlook for a larger tablet and direct iPad competitior would be more murky. 

However I would predict that Google will sell millions of these smaller, highly subsidized devices. 

Report: Newsstand iPad Apps Generating $70K per Day in Revenue

In a new report on the iPad and related user behavior just released by app-store analytics provider Distimo finds that news publications and magazines on the iPad in the US are generating $70,000 daily (among the top 100 newsstand apps). The top five grossing US publications in order are Murdoch's The Daily, The New York Times, The New Yorker, National Geographic and Cosmopolitan. 

The report also says that China is now the largest market in the world for free iPad apps, but it's not among the top five countries for paid app revenues. Distimo reported that the top 200 paid apps globally are generating roughly $2 million per day in revenues. The top iPad app-revenue countries are US, UK, Canada and Australia.

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The iPad has far more tablet-specfic apps than any of its competitors. The company says that Samsung tablets have roughly 32,000 apps available for various screen sizes. According to Distimo:

However, only a small proportion of applications in Google Play are optimized for tablets. When we look at the Samsung Appstore . . . we see that roughly 32K Android applications are available in the device stores for tablets (Galaxy Tab 10.1, Galaxy Tab 7.0 and Galaxy Tab). The majority of applications are available for the Galaxy Tab and Galaxy Tab 10.1 only, but there are also a substantial 4K applications available for the Galaxy Tab 7.0, which has a different screen ratio. 

I'm quite surprised by the finding of 32K apps for Android tablets. In my roughly 9 months of 10-inch Galaxy Tab ownership I found almost zero apps for the device. This paucity of tablet-optimized apps is one of the reasons for the failure of Android tablets generally. It's the same catch-22 scenario I discussed yesterday regarding Windows Phones and the lack of apps: because most Android tablets haven't sold, developers so far aren't creating tablet-optimized apps for these devices (Kindle Fire may be an exception). 

Given the success of Kindle Fire and Nook it appears that Android tablets will mostly focus on the 7-inch form factor. And at that size smartphone apps are not as glaringly ill-formatted as they are on the 10-inch screen. 

Distimo also identified most popular iPad app categories (by downloads) in pink in the chart below:

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The gray bar on the right indicates the number of available apps in the category. Where the pink bar exceeds the gray bar, Distimo says there's high demand vs available supply and a corresponding developer opportunity.

Apple CEO: 'We Had a Record [iPad] Weekend'

On a conference call this morning discussing Apple's decision to issue a dividend and buy back $10 billion worth of shares, CEO Tim Cook said the following about iPad sales so far: “We had a record weekend and we’re thrilled with it.” He declined to discuss it further.

Some analysts and pundits over the weekend were arguing that sales were less than anticipated. However, according to AT&T (via CNN) the company said it saw record activations of the 4G iPad on its network: 

On Friday, March 16, AT&T set a new single-day record for its iPad sales and activations, demonstrating robust demand for the new iPad on the nation's largest 4G network, covering nearly 250 million people.

We won't know what pre-order and initial weekend sales were unless or until Apple puts out a press release. Given AT&T and Tim Cook's remarks, however, I suspect the company will do so. 

Update: And they did a little while ago. Apple said it had sold more than 3 million "new iPads" as of today: "Apple today announced it has sold three million of its incredible new iPad, since its launch on Friday, March 16."