Apples earnings call- all is great in Neverland and guess what! iPad owners will flock to iPhones! But so?

Posted on August 6, 2010

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Well, we all can see that the iPad has had an effect on the mobile stage. Lots of data is now starting to regurgitate forth in an endless stream of facts and figures. I just want to remind every one that tablet business is at the beginning of the beginning. Keep reviewing the information, but don’t lose sight of the big picture. A lot of companies are in attack mode on the tablet front.

Let the tablet games continue, but you might find the below tidbit interesting!

Fierce-Any concerns regarding a cannibalistic impact of the iPad on Mac sales were recently laid to rest by Apple’s third quarter 2010 earnings call: The iPhone and the iPad, which run on iOS, led an impressive, best-ever, everything-but-the-iPod, sales quarter. For a closer look at who is buying two of Apple’s most popular devices, we turn to The Nielsen Company’s survey of more than 64,000 mobile subscribers, fielded April through June 2010.

It’s no surprise that iPhone and especially iPad users are trending younger or that iPad and iPhone customers report higher incomes.

Only about 15 percent of iPad users are more than 56 years-old, compared with 33 percent of all mobile subscribers. While we observe a typical increase in users in the 18 to 24 segment, the real shift is in 25 to 36 year-olds. The data is clear: Affluent 25 to 36 year-olds are fertile ground for Apple products. As income grows, the willingness and ability to pay for more sophisticated devices increases, too. About 20 percent of wireless subscribers report earning more than $100,000, but almost 40 percent of iPad owners fall into that category. Over time, we believe those over 56 years-old could represent a significant growth opportunity for Apple. While these baby boomers are not known as “early adopters,” they do adopt, and we should not underestimate the appeal of Apple’s products as easily and intuitively usable devices for consuming content and Internet data.

But does owning an iPad make people more or less likely to want to own an iPhone as their next mobile device? While the form factor is significantly different, the data functionality is similar. Nielsen’s research reveals that there is a clear progression in the preference for an iPhone among likely smartphone upgraders the more they have been exposed to the iOS.

Twenty-five percent of likely smartphone upgraders who have not yet owned an iPhone or iPad indicate that they would purchase an Apple iPhone as their next smartphone. But when we asked iPad owners who do not have an iPhone this same question, this number more than doubled to 51 percent.

Clearly, exposure to Apple’s iOS creates a very positive pre-disposition to purchasing an iPhone. We see the same effect when comparing current iPhone owners, of whom an industry-leading 85 percent indicate that they would purchase another iPhone as their next smartphone.  And a whopping 91 percent of likely smartphone upgraders who already own both an iPhone and iPad want an iPhone next.

By creating a whole universe of devices and form factors around iOS–all with the easy-to-use interface design Apple is known for–Apple has created a mutually-reinforcing ecosphere that attracts new customers, and convinces them of the virtues of Apple. Being able to share the same applications they purchased on all their other devices free of charge leads consumers to add more devices from the same universe–and effectively retains them as upgrade customers. Customers have also the added benefit of being able to share the same applications they purchased for one iOS device (iPad, iPhone, iPod) on all their other devices free of charge.

The advent of connected devices, including the iPad and other tablet computers, ereaders like the Kindle and Nook, netbooks, and media players, is clearly changing how consumers engage with media. For a more in-depth look at this trend, stay tuned for Nielsen’s Connected Devices Playbook coming this fall.

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