Initial iPad Demand Greater Than Initial iPhone Demand
Given the years of speculation and hype that led up to its announcement, it’s not at all surprising that there is significant pent-up demand for Apple’s iPad. But that it exceeds demand estimates for the original iPhone, as a new survey from RBC/ChangeWave suggests, is a bit unexpected. The iPad is, after all, an entirely new device category between the laptop computer and the smartphone. And unlike the iPhone, its market is unproven.
Still, RBC/ChangeWave found that 13 percent of the 3,200 respondents who participated in its iPad survey were either somewhat or very likely to purchase the device, compared with the nine percent who gave the same reply for the original iPhone in a similar survey conducted prior to its launch (see chart below; click on charts to enlarge). Said RBC analyst Mike Abramsky: “While we do not expect feverish initial launch lines like iPhone, the data portends well for healthy initial iPad uptake.”
The reason? The iPad’s unexpectedly low price point. Starting at $499, it is significantly below the $999 price expected. “Only 8 percent (of respondents) appear unwilling to pay Apple’s indicated iPad prices,” Abramsky notes. “That’s below the 28 percent who balked at initial iPhone pricing. Interest appears strongest with both Entry-Level and Tech-Savvy Buyers; 19 percent of declared iPad buyers indicated interest in the $499 16GB WiFi-only iPad, and 19 percent in the $829 64GB 3G iPad.”
Top planned uses for the device among both groups of buyers: Surfing the Internet (68 percent), checking e-mail (44 percent), and reading e-books (37 percent).
Evidently, Apple (AAPL) has managed to hit the pricing sweet spot at both the high and low ends of the market, which, as Abramsky observes, bodes well for its chances for success. “This data, while preliminary, suggests iPad may have greater potential than expected, to expand Apple’s addressable PC, iPod markets and to capture a segment of the home PC market (est. 35M+ units/yr),” he writes.
Abramsky’s estimate for iPad sales in CY 2010: Five million units, for revenue of $2.4 billion and earnings per share of 33 cents.
Comments
I'm having a little problem with the reasoning used in this article. When the iPad was still a figment of press imagination, the thing was supposed to do everything but bake muffins. At that time everyone thought there was a much more potent OS, memory capacity, etc. and therefore the anticipation of a higher price. Now that we know the iPad is an ereader, that for $30 per month can surf the web, I'm not so sure the iPad reality has set in yet. I think people still think this thing is going to do more than it will.
Posted by techtrader10 at February 23rd, 2010 at 5:41 pmThank you. Finally an article that compares survey results to a known quantity. Others say “87% not going to buy an iPad” and make that sound bad without putting the number in context.
I will likely be buying an iPad for the exact reason others pooh-pooh it. It *IS* a huge iPod touch, but it addresses my only complaint about the touch — it is too small to share content with others or to use for personally for an extended period of use for ebooks, web, and video. The fact that it has nearly 150,000 apps available right out of the chute is something that no other 'new category' device has ever been able to brag. What a great boost to early adoption. The fact text entry is so much better , new tools (e.g. iWork) are available, and the fact everything is so much bigger (new capabilities for existing apps) and you have a sure fire winner. What many are missing in the size difference will open up myriad business uses – doctors, inventory mgmt, education, sales etc. The new size means you can enter better, view better, and share your screen with others. Yes, it is a huge iPod touch, and that is THE killer feature.
Posted by tedcranmore at February 23rd, 2010 at 5:50 pmWait a minute. The iPad won't bake muffins. That's it. I am not buying one.¡
Posted by davebarnes at February 23rd, 2010 at 6:13 pmTwo comments. One is that specifically because iPad is an evolutionary device in that it builds upon a platform proven out over 70M iPhones and iPod Touches, it's less of a conceptual leap for consumer to see how they might use this device (worst case: it's a iPod Touch with a bigger screen).
Two is that a material subset of the 70M iPhone/iPod Touch installed base saw iPad intro and instantly were ready to get one of these for their family, their travel/cafe/on-the-go device, etc., whereas it was a somewhat bigger conceptual leap from iPod to iPhone.
Posted by hypermark at February 23rd, 2010 at 6:21 pmI'm sorry Dave, I thought you knew…
Posted by techtrader10 at February 23rd, 2010 at 7:07 pmExactly.
Posted by mediagrunt at February 23rd, 2010 at 7:32 pmI am a huge fan of the iPad and as a designer and developer I am all in.
Posted by toddsherman at February 23rd, 2010 at 9:42 pmtodd, i am desinger and developer too but i a device i cant proof how my developed work look like und a touch screen device its just not usefull at all. since we also develop flash sites and especially for fashion industry customers who are crazy for mac… they ar just suprised to see that flash will not be available. so in the interests of such a company who spent a coupele of thousand dollars for web developement the ipad is at all just not intresting. therefore you must not expect much support in advertising used on such devices like ipad. if i know i do advetising for a website it dont appear on the ipad. would you do advertising for ipads? i dont think.
more things from a tech geek perspektive… no usb, no sd sim, cut you phone sim card in pieces = rip off at&t, no flash, no camera = no video skype calls, no multitasking, no widescreen, no no. too much no´s i could go on but just read and see by yourself
Posted by rickooo at February 24th, 2010 at 7:55 amI'm not surprised by this. Lots of people already had phones before the iPhone and didn't really know why they needed a smart one until later on. But nobody has a sexy touch tablet yet and 95% of all sci-fi movies have already explained why you want one.
I've heard from a number of my friends who are pure business people, not computer people or gadget hounds, and they want to know when is the iPad out? They want an iPad on the table in front of them at all of their meetings. They totally get it. When I tell them it has Keynote for $10 and can hook onto a projector and even has a virtual laser pointer they pretty much lose their minds.
> While we do not expect feverish initial launch lines
I walked past the Yerba Buena Center an hour before the iPad introduction and it was feverish, and that was just press people. And a minute after the presentation started, the Verizon cell around Yerba Buena crashed and the Internet itself staggered.
I think there is a massive amount of non-nerd interest in this device that we're not used to measuring. I think people who quietly run Facebook all day and never go to Engadget will be buying this device en masse.
Posted by JohnDoey at February 24th, 2010 at 8:11 pm> At that time everyone thought there was a much
> more potent OS, memory capacity, etc.
The only people who care about that are those that know what an OS is, what memory is. 95% of Facebook users have no idea what you just said. The features they are looking for are does it run Facebook, YouTube, iTunes, Kindle, 3D games, podcasts, photos? Yes to all. Is it fast? People who have used one says it is surprisingly fast (see Kara Swisher, Andy Inatko, many others.)
And when you talk about the potency of the OS, note that the bottom 3/4 of iPhone OS and the bottom 3/4 of Mac OS are bit-for-bit the same, that is the part that is called OS X. So iPad has a fully certified Unix in there with the best graphics in the world and a very sophisticated object-oriented application framework. It has a more potent OS than any Windows, that is for sure. It's just not shoved in your face … much of it has to be exposed by apps. So you don't realize that there is a very high-end multichannel digital audio mixer in there until you run an app like FourTrack which performs better than the music and audio apps on Windows. And for artists you have apps like Brushes that take advantage of how accurate and fast the touch screen hardware/software is. You don't realize you can draw a 1 pixel line with tremendous accuracy until you use a drawing app.
> Now that we know the iPad is an ereader,
No, it's not an eReader. It does not even come with an eReader app built-in, that is just one of the 150,000 3rd party apps you can add very easily if you choose, with no I-T work required and no risk of viruses or malware. It's a multifunction computer that will replace a PC for many people in many use cases.
Computer science traditionalists will tell you it's not a “real computer” because only a handful of apps can run at one time, but when you watch people use an iPhone OS device, they actually run MORE apps, not fewer apps than when they use a Mac/PC. That is why App Store is so popular. The home screen acts as an application switcher, not launcher. The users think all of the apps on the device are running at all times. And for many people, iPhone is the first computer they ever felt like they mastered. People are anxious to get that kind of power when they make a spreadsheet or a presentation.
> that for $30 per month can surf the web
It can surf the Web on Wi-Fi with no monthly charge, and it has Wi-Fi “n” and it has HTML5 and the browser has multitouch and advanced typography, color management, ISO audio video, and the content is GPU-accelerated unlike any other browser. When you consider that 90% of computer users use the Web 90% of the time, the iPad browsing experience is going to be very attractive to many users. When you run Facebook in the iPad browser, you can swipe through photo galleries, it is a very luxurious experience where the device goes away and you're just working with a stack of photos.
> I'm not so sure the iPad reality has set in yet.
Lots of people have iPhones, iPod touch, or have seen either of those, or tried either of those. iPad is running iPhone OS 3.2, it's a fairly known quantity. It's not hard to extrapolate the utility of a larger screen, faster processor, and larger battery.
Posted by JohnDoey at February 24th, 2010 at 8:45 pmI can't count the number of times over the past few years that I heard people say “I love my iPod touch, I just wish there was a bigger one I could buy.”
I was at a friend's place and they had an iPod touch on their coffee table instead of the typical coffee table books. They wanted Google and Wikipedia and Facebook as their coffee table books. They were like “it works perfectly except it's not coffee table book -sized.”
Posted by JohnDoey at February 24th, 2010 at 8:52 pmNothing in what you said made any sense to me at all.
How the iPhone performed after the price drop or performs today is immaterial, not part of this study or discussion at all. It was a massive hit even in the first year at the elevated price and with no 3rd party apps. Understand that 9% maybe sounds small, but when 9% of everyone wants to buy 1 single unreleased product from 1 company, that is actually ridiculously large demand. When it is 13% that is incredible.
Further, the iPad will also likely get cheaper later. I expect them to do away with the Wi-Fi only model fairly quickly, like they did away with the 4GB iPhone fairly quickly, and go to $499-$699 all with 3G. In 3 years, when the iPad gets to where the iPhone is now, the $499 model will have 128GB of storage and 3G if trends hold. You may be able to get it for $199 with a 2 year carrier commitment at $30 per month.
And by the time iPad is as old as iPhone is right now, we will be in 4G. There are many future opportunities for iPad to gain even more demand.
The key takeaways from this are that even though iPad is a fairly newfangled device type, it has even higher demand than Apple's cell phone initially did, which is a very proven market. How things are 3 years from now, we don't know yet.
Posted by JohnDoey at February 24th, 2010 at 9:05 pmTo me, the iPad Web browser is the browser I'm developing for now. In 5-10 years all Web browsers will be like that.
Touch was made for the Web because pages are filled with buttons that need pressing, various sizes that need zooming, and various lengths that need scrolling. All 3 of those actions — pressing buttons, zooming in and out, and scrolling — are so easy and intuitive in the iPhone OS browser that they become as second nature as turning the page of a book. The device goes away and you are left focused on the content.
Also the iPhone browser has HTML5, ISO audio video, GPU accelerated animations and transitions, world class typography, and color managed images. It's a Rolls Royce on a Web filled with Model T's.
Posted by JohnDoey at February 24th, 2010 at 9:12 pm> since we also develop flash sites
That's not the Web. There is not now and has not ever been any FlashPlayer in any W3C specification. However there is nothing at all stopping Adobe from creating an HTML5 export target in the Flash IDE so that you can re-publish your Flash sites as W3C standard HTML5 that runs universally on every Internet-connected device. The CSS transitions and transforms in iPad are GPU-accelerated, they are beautiful and fast and they are painless to program.
Further, you can create native iPhone apps with Flash today, and will be able to create native iPad apps with Flash soon. I have 3 or 4 apps on my iPhone right now that were 100% built in Flash.
You are essentially creating glossy fashion magazines for your clients. Glossy fashion magazines are one of the things that has publishers so excited about iPad. It is actually a great thing for your career. You just have to realize that your work will be compiled as native iPhone OS code out of Flash on your development system and then downloaded as as an app to the device from App Store instead of being downloaded over the Web to Mac/PC and just-in-time compiled by the end user again and again and again. Not only is native a better user experience, you can also charge 99 cents or whatever for the magazine, and when you study the energy use, it is greener also. You compile once instead of a million times.
For like 6-12 months now, magazine publishers have been making Flash mockups of their iPad apps which now need to be turned into shipping magazines. Which can all be done in Flash, it has an iPhone OS export target. Your Flash skills are going to be more in-demand going forward than they were before iPad.
> would you do advertising for ipads? i dont think.
iPhone apps are full of advertising. There is so much of it that both Google and Apple each bought the 2 leading mobile ad companies.
There are maybe 1 billion PC's in the world, including Macs. There are 5 billion mobiles. The ads you make only run on the 1 billion PC's. The ads that Google and Apple make run on all 6 billion devices. Guess who is going to win out long-term?
> more things from a tech geek perspektive.
In the first place, that means you are in the 10% of the population for which the iPad was not necessarily designed. Tech geeks can already cobble together a solution for many things with a PC. Tech geeks run the Kindle app on a netbook and like it.
Secondly, if you're going to talk tech specs, you should at least be informed. You're wrong on many counts:
> no usb
The dock connector has 5 or 6 cables in it, one of which is USB. That is how iPods talk to Mac/PC, that is how iPhone talks to a credit card reader. That is how iPad talks to it's keyboard dock.
> no sd
There is an SD reader for iPad directly from Apple, called “iPad SD Card Kit”. It's a cable with an SD slot on one side and an iPod dock connector on the other.
> sim
The iPad has a new kind of SIM that is a tiny size. However, being a SIM it is a global standard, not some Apple invention. The next iPhone will also have these. All phones will have them within the next couple of years. That is innovation. Time marches on. iPad will work worldwide.
> rip off at&t
$30 per month for unlimited 3G with worldwide compatibility is not a rip off. Verizon offers 5GB for $60 per month, at half the speed of AT&T and with no compatibility with non-Verizon networks. In addition to that, iPad is the very first mobile with Wi-Fi “n”, that is 5x faster Wi-Fi than what you find on other mobiles.
> no flash, no camera
You an connect a USB camera to iPad with the “iPad Camera Connection Kit” directly from Apple. It's a USB on one end of the cable and dock connector on the other. You can connect an SLR and shoot directly into the iPad Photos app.
> no video skype calls
In the same way you can dock an iPad to a keyboard, or an iPhone into a credit card reader, you could easily dock iPad into a stand that is the rest of the videophone. By the end of the first year there will probably be 10 of these to choose from, just like there are 10 microphones for iPod touch. You could easily attach a dock connector with a camera in it which would launch a matching app (even Skype) and the fact it is on the dock connector means it could include a pivot so you can aim it at your face, or it could even automatically pivot to track your face as you move around.
The sky is the limit because 3rd party apps can talk to USB accessories through the dock connector.
> no multitasking,
It is always running 5 or 6 apps just like any mobile, and since apps save state, it is easy to run 50 apps within an hour without any need to manage them and many people do exactly that with their iPhones already. That is very hard to do on another mobile or even a PC. iPhone OS users use more apps than Mac/PC users, that's why the App Store is so popular. There is so much multitasking that the OS cannot let apps just sit in memory like barnacles. There are 150,000 apps to run.
> no widescreen
Compared to other mobiles, that is one hell of a wide screen on the iPad. The 3G iPad is only $50 more than a Nexus One but the screen is much, much bigger and wider. If you have widescreen movies in iTunes on Mac/PC, you can watch them widescreen on iPad, or zoom in to 4:3 if that is what you want. Double-tapping a movie while it's playing changes from 4:3 to widescreen on iPhone OS.
The amazing thing to me is how many tech geeks are fervent traditionalists. There is more to life than a 1991 PowerBook form factor with a 1995 Microsoft OS.
Posted by JohnDoey at February 24th, 2010 at 9:58 pmget over Flash and move on
Posted by kazzmedia at February 24th, 2010 at 10:22 pmAgreed. In fact I am finding that I need to rethink my designs and aim for future use. Our current iPad game is coming along nicely. I was working on the Help section today and had to limit myself on what could be done. So many great choices now.
Posted by toddsherman at February 24th, 2010 at 11:57 pmDo you have a twitter account I can follow you on or LinkedIn?
Posted by Todd Sherman at February 25th, 2010 at 12:08 amOK, here's what I meant…
Just to set the parameters for discussion, I submit that there are two
surveys being compared here:
(1) a “ChangeWave” survey to determine what percentage of people intended to
buy the iPhone just before the initial launch of the first version, and
(2) a “ChangeWave” survey to determine what percentage of people intend to
buy the iPad just before its initial launch
iPhone was not a huge hit in the couple of months, when it was priced at
$500 and $600 (4 Gig and 8 Gig versions, respectively). Sure, it had a big
spike the first weekend (270,000 units, if memory serves) due to pent up
demand from us fan-boys (I was and still am one of them) but sales cooled
off considerably after the initial burst, prompting a surprise $200 price
cut in early September. This had the intended effect of juicing up the
demand again. It took 74 days for the original iPhone to reach the 1
million mark, and part of the problem was apparently the price, because
about 400,000 of that 1 million occurred either on the first weekend or
during the 5 days after the big price drop. Here's a link for you…
http://www.tipb.com/2007/09/12/surprise-price-d...
sts-stunned/
My opinion is that the 9% positive response for the initial ChangeWave
survey was probably harmed by the initial price. It would have been higher
had the initial price been more reasonable to the typical consumer.
So my first point was basically that we shouldn't compare the 13% for iPad
now to the 9% for $500-$600 iPhone then and just extrapolate from the
subsequent (great) iPhone performance. It's just not that simple. The
price of the iPhone had a considerable effect on the demand, as does the
price of the iPad, which is in a nice range now, and as you say, will likely
drop even more over time.
I agree that if you assume that “13% of everyone wants to buy one” then that
would be ridiculously large demand. But that leads to my second point: the
sample group of a ChangeWave survey is not random. Not even close. To be
part of the survey, you have to join their group, and the group membership
is heavily biased towards tech geeks and early adopters. You can't just
assume that because 13% of ChangeWavers want an iPad that 13% of everyone
else does too. It doesn't necessarily carry over to the general population.
The rest of my post suggested that a well-integrated mobile device such as
iPhone has immediate appeal to everyone, not just tech geeks. The iPad…
well, let's just say it's going to take some time for the general population
to clue in about why they want one. (I know why I want one… but I'm a
geek.) I think there will be a surge of early adopters, followed by a
cooling off but nice steady rhythm for a while, and then a steady build as
word spreads and iPad owners show off their devices to friends, etc. This
is similar to the uptake of Mac OS computers that is happening now, as
opposed to the “I've GOT to replace my current cell phone with THAT thing”
emotion that iPhone enjoys.
The only wild card is what level of uptake Apple is aiming for, because they
will surely drop the price abruptly if they aren't reaching it. (They said
as much in an interview.) Even at the current modest iPad price, there is
enough profit margin to allow for price drops, and Apple stated that they
are willing to do so to achieve the level of sales they are after. But what
level is that? It is probably dependent upon manufacturing capability as
well as profit and market share desires. Complicated.
My prediction is that iPad will sell no more than 5 million units through
Posted by thompson_97 at February 25th, 2010 at 4:13 pmthe end of this calendar year, and even if they do that, it will be a great
success. I'm trying to keep a lid on this wild-eyed expectations of 20
million units of iPad sales, which some people seem to expect based upon
this survey comparison.
The interest in the ipad will increase even more if, in the next generation: add a still and video camera for chat; add phone – must have service anyway it seems. they must already have these and are saving them for announcements in the future but it is a shame to have to wait.
Posted by brianreagan at February 27th, 2010 at 3:01 pm