I really liked this piece to get a quick insight into how people are using iPad. And now I know, why I should get one and pretty sure now how I see this fits into my daily life! Advertising agencies will be paying close attention to this!
By Jean-Baptiste Coumau, Georges Desvaux, Bengi Korkmaz, and Jean-Hubert Lenotte
At its core, Apple is about creating innovative products that delight both techies and the general public, and then marketing them brilliantly. With the iPad, Apple hit the sweet spot. In the first nine months after launch, 14.8 million iPads were sold, faster even than the iPhone, and more five times as fast as many analysts’ predictions. To put it in perspective: it took three months to sell a million iPhones, and just 28 days to sell as many iPads. In fact, the iPad is on its way to becoming the fastest-selling consumer electronic device ever, in its first year.
In retrospect, the success of the iPad was certainly not obvious when Apple decided to develop it. It was an audacious innovation because it was positioned as a “third device” between the smartphone and the laptop. Remember, there was no evidence that consumers were clamoring for a third device. Moreover, there was real concern that the iPad could eat into the sales of Apple’s other products.
That didn’t happen. Right from the beginning, it was not the typical corps of tech-addicted early adopters who lined up to buy the iPad. It was ordinary people as well, who saw the iPad and bought it, either because they were intrigued, or they liked Apple products or that they had seen one and liked it enough to shell out. “A friend had one and I had seen it. I thought it was really cool and wanted one, and so that is what made me go and get one,” was one typical comment. “I really bought it based on the hype,” a 33-year-old man admitted. The iPad, in effect, created its own market—one that dozens of competitors are now entering.
McKinsey recently did extensive research to understand who buys the iPad; why; how they use it; and what they like and dislike about it. This research included quantitative analysis, in addition to 90-minute interviews with a variety of users and several “safaris”—in-home explorations with families. On this basis, we believe we have insights that tech, media and telecoms (TMT) companies can benefit from.
Here is what we found.
How owners they use the iPad: For all the bells and whistles associated with the iPad, the most common uses are the most basic: web browsing and video/movie-watching. The iPad is used most often in the home/family environment, and less often as a personal device. Only 16 percent of users mostly or always take the iPad with them when they leave home. People are reluctant to take out a device they see as expensive and somewhat flashy when there are mobile alternatives, such as smartphones.
The presence of an iPad at home means that the laptop begins to get short shrift. Since an iPad does not need to be plugged in or booted up, it displaces quick searches or checking emails, and it is easier to use in bed to watch television or videos. “It’s a consumption device for couch surfing, e-reading, taking to bed when my Mac is too cumbersome,” one user told us.
In iPad households, the PC is getting a reputation as a workaday machine, while the iPad is more for fun. But the iPad is not only about browsing. Reading and gaming are two uses that are growing fast. People who love reading, love reading on the iPad, because it includes all the e-book stores, and provides instant access to newspapers and magazines.
As for gaming, iPad introduces a whole new generation of people – ie, grown-ups - to the fun, while still appealing to young users and even hard-core gamers. “At the start, obviously, it was a bit hard for [my parents] to use,” one young man told McKinsey. “They’re not used to the touch screen, but now I’ll come back and my dad’s playing games on it.”Other home uses are developing, such as making the iPad a remote control for other devices. In fact, the longer owners have an iPad, the more willing they are to experiment with it.
Unsurprisingly, a driver of increased usage is applications: 60 percent of owners have downloaded 10 or more apps. Early adopters, who tend be tech trendsetters, spent 27 euros on apps in their first month, confirming their economic potential. we believe this is only a start. The vast majority of the 300,000 apps available were created for the iPhone and do not fully exploit the capabilities of an iPad. By contrast, iPad-dedicated applications create higher user satisfaction, and generate more demand. And users want more of them.
Outside of home, usages have been, so far, less developed. The desire for permanent (e.g. 3G) connectivity is limited, and many who bought the device with 3G connectivity say WiFi is sufficient. In fact, 30 percent of those who bought a 3G-enabled iPad did not subscribe to a 3G offer.
Still, we see nomadic usages developing. First, some reasons for not taking it outside will disappear. A number of people told McKinsey that they didn’t want to be seen showing off, a concern that will diminish as the iPad becomes even more common. Second, people already see the iPad’s potential as a travel companion.
What people love about the iPad: Among the iPad owners McKinsey surveyed, 98 percent said they were satisfied with it; 95 percent they would recommend it to their friends. There are not many products that can boast those numbers.
How do owners love the iPad? Let us count the ways.
First, they love that it is intuitive and easy to use; users praise it for its speed, screen quality and reliability and are pleasantly surprised that it comes out of the box ready to go. And the more they learn, they more they like: The most delighted users are those who have discovered new uses for themselves.
Second, they love that they can, and do, use it almost everywhere—kitchen, living room, bathroom, on the lap and in bed.
Third, they love that it can easily be shared; in fact, it re-introduces a social aspect to some of the activities that are often performed individually. On our domestic safaris, we noticed children playing together on the family iPad. One 10-year-old girl told us: “I prefer the iPad to go on Facebook, because I can do it in the kitchen with my Mum, rather than being alone in the study”.
As a result, while many people initially bought an iPad without knowing what they would do with it, the vast majority consider it worth the cost. Almost two-thirds (64 percent) called it “extremely good value” and 33 percent “somewhat good value.”
What they don’t love: The key frustration is around the inability of the iPad to easily connect and share data with other devices. The iPad has no USB ports; instead, it has a single Dock Connecter. It is therefore not possible to directly plug in a camera or printer. This is an issue for a product designed to watch pictures and videos, browse and use emails. Those who don’t have already a Mac at home, lose out in terms of functionality and ease of use.
In addition to the lack of connectivity, users regret the lack of storage capacity and processing power that would make it either the central hub for the home, or simply a better device for personal use. And owners question the usability of the touch-screen keyboard for extended periods.
People also express frustration when it comes to entertainment. For instance, the iPad is not ideal for music. It is too big to be practical for on-the-move music, which remains the territory of the iPod and similar devices; and the quality is not good enough for in-home music, where users say better options exist. Finally, the iPad is incompatible with Adobe Flash, so users cannot watch some web videos or Flash games.
Implications for players
In our view, there is enormous potential for the iPad - particularly if it can address these shortcomings. And that should be good news for the consumer electronics industry as a whole, as other tablets build out this new product category.
The implications for other industries—particularly media and telecoms—are intriguing. Players in these fields should act now to seize short-term opportunities and to prepare for, and shape, the longer-term evolution of the device.The reading app, for example, could inject new life into old media, through subscription and aggregation services for newspapers, magazines and radio. It could also benefit e-tailers like Amazon as digital book distribution increases: “I’ll read the papers much more now. In the bath, on the toilet, in bed,” says one user.
There is real potential for monetization, using video, interactive graphics, and other features that take advantage of the iPad’s capabilities, combined with an easy payment processes. So far, it has to be said, these great expectations have not materialized. At Wired magazine, for example, its iPad downloads dropped sharply after a few months as the novelty wore off. More work is required, on the one hand, to tap into the tablet’s full potential and on the other, to create the offers that will attract new readers and enhance the loyalty of current ones.
For telecoms, new usages are generating more traffic/ bandwidth requirements. There are also emerging opportunities to integrate with telecoms firms to link video on television with the iPad.
In general, the emergence of the iPad raises important questions:
1. How to generate more mobile network usage? We believe that many current data plans do not meet the demand for occasional usage; high data prices are a real deterrent. In France, despite aggressive marketing, Orange sold only 30,000 tablets during the 2010 Christmas season, in large part because of concern over high data costs. The need is to create appealing plans for mobility, for example by bundling with wi-fi access; creating plans for occasional 3G usage (e.g. pre-paid); and offering one click purchase.
2. How to leverage Wi-Fi networks to maximize customer lifetime value? The iPad, at the moment, is a sedentary device, deeply rooted in the home, but nomadic uses are increasing—while traveling, on holidays, and in public places. As the iPad becomes the on-the-go media interface, encapsulating all basic entertainment needs in one device, it is essential to develop a Wi Fi strategy and invest in Wi-Fi brands as a separate product. The key: Wi-Fi networks will be assessed on wideness of coverage and local access point density.
3. How to get more of the home-entertainment and services? Tablets are likely to become the control point of home entertainment. One approach is to work with tablet OEMs, and to develop cloud solutions, to develop killer functionality that links the tablet to the television. Enhanced interactive experiences might include cloud gaming; interactive education; sharing with friends while watching; even polling and perhaps voting. The goal should be to create an interactive experience across devices, allowing consumers to search, program and engage with content they watch on TV.
The iPad will no doubt begin to affect other industries and institutions. Companies are learning new ways for their road warriors to use it, and some countries are experimenting with it in the schools.
Predicting the future is a good way to be proved wrong down the line. What is certain, though, is that the iPad’s journey has only just begun.
Bengi Korkmaz is an associate principal in McKinsey's Istanbul office. Jean-Baptiste Coumau and Jean-Hubert Lenotte are principals in the Paris office.
Source: Analysys International 2010
