When the original iPad arrived last April, the amount of buzz surrounding it might have seemed bizarre. Now, some 15 million iPad sales later and with the iPad 2 on store shelves, it’s clear that the tablet isn’t just another gadget. iPads, along with a slew of new, competing devices, are emerging as a significant platform for marketers to use in connecting with consumers.
The penetration forecasts for the tablet category as a whole are striking, considering it’s something few consumers had even heard of a year ago. Research firm IHS iSuppli expects global shipments to reach 57.6 million units this year, up from 17.1 million last year. Looking further ahead, Forrester Research foresees 82 million consumers in the U.S. alone having tablets by 2015, while Gartner predicts global end-user sales of 208 million units in 2014.
That said, a report this month from Boston Consulting Group (BCG) appends a caveat to such gaudy numbers: Prices will have to come down before tablets become a true mass-market item. It’s not that BCG sees a lack of consumer interest in tablets and e-readers. In polling conducted in December, 67 percent of U.S. respondents said they’re at least somewhat familiar with such devices, including 16 percent who already own one. Thirty-four percent said they intend to buy one within the next year, and 54 percent see themselves doing so within three years. The polling also detected a “strong preference” for multipurpose tablets (like the iPad) vs. single-purpose e-readers (like the Kindle).
However, the amount people said they’d pay for these gadgets is well below the current price tag. While the bottom end of the price range for the iPad (and its iPad 2 successor) is $499, BCG’s respondents in the U.S. expressed a willingness to pay in the range of $110 to $200 for a multipurpose tablet. Is this gap likely to stall the widely predicted growth of the tablet market?
“‘Stall’ is too strong a word,” said John Rose, a senior partner at BCG and global leader of its media practice, in an interview with CMO.com. “[But] in order to get the volume everyone is talking about in the time frame everyone is talking about, prices are going to have to come down.”
And will they? “I’m confident that over a time frame, prices will drop,” he added.
But even if the current base of tablet users doesn’t already constitute a full-fledged mass market, it’s certainly bigger than the marketing community anticipated when the original iPad debuted. “The adoption rate has been much faster than expected,” said Ritu Trivedi, managing partner/media director at Mindshare, a global media agency whose clients include Unilever, IBM, and American Express. “With iPad, the tipping point has come very quickly.” This has encouraged advertisers, as well as publishers and other content creators, to latch onto the iPad, she told CMO.com.
In her role as executive VP for integrated sales and marketing at Martha Stewart Living Omnimedia (MSLO), Sally Preston also has seen advertisers eager to get started. “They have the desire for it--they know that using tablets is part of their future,” even if they don’t necessarily have the material yet to capitalize on it, she told CMO.com. “They want to create something that’s unique to the device.” That’s to their credit, she said. “The big challenge now is in the conversation about scale,” Preston added. “Hopefully that will be resolved in the next six to 12 months.”
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