Device Wars Ned May Director & Lead Analyst [email protected] 617.722.0850 And the Implications for the Enterprise

Device Wars

Ned May

Director & Lead Analyst

[email protected]

617.722.0850

And the Implications for the Enterprise

Agenda

• Why now • Device landscape• Penetration outlook• Content fit• Monetization paths• Enterprise Implications

Why All the Fuss?

The is to

as the is to ….

4 © 2010 Outsell, Inc. All rights reserved.

The Device Landscape – Three TypesSmart phones

Tablets

e-readers

Three Publisher Concerns:

1. The device adoption rate

2. The content fit across each device

3. How to monetize

#1 Device Adoption Rate

Personal Media Device Sales

0.01

0.1

1

10

100

1000

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Years Since Introduced

To

tal

Un

its

So

ld (

Mil

lio

ns)

iPod iPhone Sony Reader Kindle ?iPad

Source: Outsell estimates and company reports

iPhone

iPod

Sony Reader

Kindle

iPad


Are e-Readers An Interim Device?

iPad Reaction by Device Owned

3%

28%

56%

13%6%

39%

49%

6%12%

38%42%

8%

Yes, and I can't wait to buyone

Yes, and I wi l l probablytake a closer look

Yes, but I think i t i s anoverpriced toy

No, I haven't heard aboutthese

Al l Respondents Smartphone Owners E-Reader OwnersResponses to: Have you heard about new computing tablets like Apple's recently announced iPad?Bases = Total: 803Source: Outsell’s Untethered Device Survey, Feb. 2010©2010 Outsell, Inc. Reproduction strictly prohibited.


e-Readers Become Niche

Base = 37Source: Outsell’s February 2010 e-book survey, interim results

0%

20%

40%

60%

80%

100%

Two Years or More One year Less than a yearLength of Ownership

Always Frequently Occasionally Rarely Never


#1: The Device Adoption Rate

Conclusions:

Smartphones Nearly ubiquitous

Tablets Likely high

e-Readers Low but loyal


#2: The Content Fit Across Each Device


Content Fit – Lessons from iPhone

Devices Used to Read News or Get Information

0.5%

1.2%

3.3%

3.9%

16.5%

38.7%

47.5%

64.3%

78.7%

E-READER

MP3 CD PLAYER

NO DEVICES - USE PRINT ONLY

IPOD OR OTHER HARD DRIVE-BASEDPLAYER

CELL PHONE/SMARTPHONE/PDA

RADIO/SATELLITE RADIO

LAPTOP COMPUTER

TV/CABLE/SATELLITE

DESKTOP COMPUTER

Bases = Total: 2,540Source: Outsell’s News Users Survey June 2009. Q33


Handheld Device Task Usage

4.4%

6.1%

10.0%

10.6%

23.6%

33.7%

51.6%

57.2%

60.4%

4.2%

4.4%

7.3%

8.3%

20.0%

27.5%

44.7%

50.1%

52.9%

1.7%

18.4%

28.2%

24.3%

38.3%

65.6%

72.6%

74.9%

79.9%

Other

Investing/Financial concerns

Shopping

Educational pursuits

Documentation

Reference

Managing schedule

Entertainment

Communicating w ith colleagues

Total non Iphone iPhone Users

Bases = Total: 5,660; iPhone Users: 358; Non Iphone Users 5,302Source: Outsell’s Information Markets & Users Database, December 2008 Survey, Q20f



Handheld Device Task Usage

2.6%

2.3%

3.0%

3.7%

4.3%

4.6%

4.5%

4.8%

5.6%

9.0%

11.5%

12.6%

12.6%

15.8%

17.1%

21.6%

23.0%

26.1%

29.0%

32.7%

38.8%

0.3%

8.9%

15.1%

22.6%

18.2%

20.1%

31.8%

29.9%

31.6%

33.5%

47.8%

38.5%

56.1%

56.4%

75.7%

58.9%

69.6%

71.5%

74.0%

78.2%

89.9%

Other

Textbooks

Medical/Health

TV shows

Books

Articles

Stock/Financial/Business

Movies

Video clips

Sports

News & media

Office suite documents

Weather

Games

Maps

To-do list

Photos

Music

Address/Phone numbers

Appointments/Calendar

Emails &/or text messages

Non iPhone Users iPhone Users

Bases = iPhone Users: 358; Non Iphone Users 5,302Source: Outsell’s Information Markets & Users Database, December 2008 Survey, Q20



#2: The Content Fit Across Each Device

Conclusions / observations:

e-Readers Linear / static / engrossing

Smartphones Interactive / tactical / demand driven

Tablets Engaging / rich media / leisurely


An Aside - Segmentation Matters


#3: How to Monetization

Conclusions / observations:

e-Readers Transactional / Subscription

Smartphones Advertising

Tablets All paths


Enterprise Implications?

Three key points to consider

1. These are side pocket devices

2. Consumer expectations will trickle over

3. Not all devices are equal

Come By and Visit UsOutsell, Inc.

In the United States:

Call +1 650.342.6060

Fax +1 650.342.7135

330 Primrose Road, Suite 510

Burlingame, California 94010

In the United Kingdom:

Call +44 (0)20 8090 6590

Fax +44 (0)20 7031 8101

25 Floral Street, London, WC2E 9DS

[email protected]

www.outsellinc.com

Copyright 2010

All rights reserved

Appendix

Publisher Paths to Monetization

Books Sales Move to e-Readers

US Trade Wholesale Electronic Book Sales

See data from International Digital Publishing Forum: http://www.idpf.org/doc_library/industrystats.htm

But What About Other Content?

Number of Handheld Apps Purchased in a Year

60.7%

31.1%

5.8% 1.5%0.9%

No App Ready Device None Bought 1 TO 5 6 TO 10 More than 10

Base = 2,787Source: Outsell’s New User Survey 2009

News Unlikely To Ever Get Paid

Amount Willing to Pay for iTunes Like News Service

93.3%

4.9%

1.5%

0.1%

0.0%0.2%

Nothing Up to $5 $5 to $10 $11 to $15 $16 to $25 More than $25

Base = 2,787Source: Outsell’s New User Survey 2009

Application Overdose

http://www.knowyourcell.com/news/415234/inapp_advertising_still_a_bad_model_for_mobile_apps.html

“A new report fromFlurry Analytics tells the

same old story wheremobile app retentionrates are concerned.

For developers,the best way to makemoney in the mobileapp ecosystem is to

take the money and run.” [6 months, 100 apps,

800 million user sessions]

B2B: Highest ROI Marketing Methods

24.3%23.0%

21.0%

20.0%13.6%

10.7%

10.4%

8.1%7.7%

7.3%

6.6%

4.2%4.2%3.9%

3.2%

2.3%1.2%

0.4%

0.4%

26.4%28.0%

54.5%

0.01%

Own company's Web site

In-person conferences

In-person exhibitions & trade shows

Print direct mail marketing

Search engine site keywords

E-mail marketing/e-newsletters

Custom print publications

Print magazines

Print directories & catalogues

Public relations

Sales collaterals

Print newspapers

Print newsletters

Industry specific trade Web site

Vertical search sites

Social networking sites

Other

Webinars/Online seminars

Marketing on Blogs

Sponsoring online content

Virtual trade shows

Online Web sites incl. News

Mobile/Wireless marketing/IMBase = 633, Target B2BSource: OutsellÕs Ad Spending Database, December 2009 Survey, Q22a©2010 Outsell, Inc. Reproduction strictly prohibited.

Advertising Not Viable Route TodayB2B: % Freq Selected in Top 3 for ROI

Some B2B Segments Showing Promise Today

Source: Outsell Advertising & Marketing Study 2009

Key Adoption Rate Findings

• Highest usage in Business and Financial Services

• Usage up more than 2x in 2009 over 2008 in maximum use industries

• Rate of use varies greatly: max 10.6% is 7x more than min 1.5%

Yet Dollars Remain Low

Source: Outsell Advertising & Marketing Study 2009

Key Spending Findings

• Highest wireless marketing spending in Business and Financial Services

• Rate of spending groups into 3 industries near 2% of total, 3 industries at one-third of that level near 0.7% and Legal trailing at a very low 0.4%

• Note that other Outsell Ad Study data shows advertisers primarily targeting consumers are spending approximately 2x the level of B2B wireless spending. Note: Percents are Based on Online Marketing Spending Excluding

Spending on Companies’ Own Sites

But Change Is Coming

“iAd is a breakthrough mobile advertising platform from Apple. With it, apps can feature rich media ads that combine the emotion of TV with the interactivity of the web. For developers, it means a new, easy-to-implement source of revenue. For advertisers, it creates a new media outlet that offers consumers highly targeted information.” Apple Inc.

Documents

Device Wars Ned May Director & Lead Analyst [email protected] 617.722.0850 And the Implications for the Enterprise