March 7, 2012, 1:06 PM

Get set: More iPad shoppers are on the way

Today’s debut of the iPad 3 raises the stakes in m-commerce.

Bill Siwicki

Managing Editor, Mobile Commerce

Lead Photo

When Apple Inc. introduced the iPad in 2010, many experts thought tablets would be, at best, a complement to desktops and laptops, a new niche market. But tablets have taken off, and taken on a life of their own.

Today comes the latest development in this white hot market—the iPad 3, which goes on sale March 16 with pre-orders beginning online today. The latest version of the market-dominating tablet comes with a variety of new features including a quad-core A5X processor that enhances power and speed; a high definition screen; a 5-megapixel camera called iSight that includes the ability to record video; 4G network connectivity, making the iPad 3 the first Apple device to graduate from 3G; and a microphone for voice dictation, though not the Siri speech recognition software found on the iPhone 4S. The iPad 3 price starts at $499 for the 16MB version. The 16MB iPad 2 now sells for $399.

“Consumers are transitioning their dependency on desktops to tablets,” says Pamela J. Goodfellow, consumer insights director at BIGinsight, a research firm that studies consumer behavior on mobile devices. “Retailers have to constantly work to improve the style and functionality of their sites to keep up with new innovations in the tablet arena.”

She adds that the iPad 3 is a potential game-changer for the tablet market. “Apple is consistently a leader in innovation, style and functionality,” she says, “and this newest tablet will likely send the competition scrambling to catch up.”

The iPad, for which there are now more than 200,000 apps, Apple says, owns the tablet market, and mobile experts expect the iPad 3 will only bolster Apple’s position. At its press conference today, Apple said it sold 15.4 million iPads in Q4 2011. In 2011 Apple sold 46.7 million iPads worldwide, while various competing manufacturers sold 11.0 million tablets running Google Inc.’s Android operating system, research firm Gartner reports. Other tablets accounted for 5.9 million. This means Apple’s iPad controlled 73.4% of the worldwide tablet market last year.

In the U.S., since February 2011, the number of iPad owners among consumers who also own mobile phones has more than doubled to reach 16 million for the three-month period ending January 2012, according to web and mobile measurement firm comScore. What’s more, the iPad accounts for a staggering 90.4% of all Internet traffic stemming from a tablet, comScore finds. Android tablets generate 9.1% and other tablets 0.5%. One reason why iPads can control three-quarters of the tablet market yet account for more than 90% of tablet web traffic is that tablet owners may buy other tablets for different purposes; for example, buying an Amazon.com Inc. Kindle Fire more for reading e-books than browsing the web, mobile experts say.

The iPad 3’s new features can help retailers. The quicker A5X processor, for example, can translate, depending on network connectivity, into faster loading sites. And it certainly translates into speedier apps, which depend less on network connectivity than sites because with apps much of the graphics and content needed is stored on the device.

Perhaps the new feature bound to have the greatest impact on retailers is the increase in screen resolution. Apple has bumped things up from the iPad 2’s 1024-by-768 display to the iPad 3's eye-popping 2048-by-1536 resolution. The screen contains 31 million pixels, Apple says. “A higher resolution display means that online retailers have a much richer environment in which to sell their goods,” says Avi Greengart, research director, consumer devices, at Current Analysis.

Better resolution sets a higher standard for retailers to meet in mobile commerce, Goodfellow says. “IPad 3 owners will expect the best,” she says. “Fuzzy imagery or visuals aren’t going to cut it for these consumers, who may move on to competing retailers as a result.”

There’s another reason retailers should be happy with, and be prepared for, the iPad 3. 92% of online sales that were not made on computers originated from an iPad, iPhone or iPod Touch in December 2011, up from 88% in April 2011, says personalization vendor RichRelevance Inc. It studied 3.4 billion shopping sessions on its retailer clients’ sites between April and December 2011. Further, shoppers using Apple mobile devices have a larger average order value compared with other mobile platforms—$123 for Apple versus $101 for Android in December 2011. And that far outstrips the desktop average order value of $87.

Similarly, e-commerce and m-commerce technology vendor Ability Commerce studied three retailer clients and found that during the 2011 holiday season sales stemming from iPads were 33% higher than those generated by iPhone and Android smartphones and tablets combined. It also found revenue from purchases made on Apple iOS devices—the iPad, the iPhone and the iPod Touch—were up 338% year over year.

While the iPad 3 is poised to be another successful Apple launch, it does not necessarily guarantee Apple’s continued enormous lead in market share and web traffic. Some analysts point to potential strides in 2012 by Android and other tablets.

“High on the list of challengers will be Google and Microsoft; both companies hoping to break into the growing tablet market by providing hardware manufacturers with the software platforms and developer ecosystems that will allow them to compete directly with Apple’s iOS,” says Adam Leach, principal analyst at technology research and consulting firm Ovum. "Google has finally bridged the smartphone and tablet divide with Android 4.0, offering developers a unified platform for the two types of devices. This should increase the number of tablet-optimized applications. In addition, Microsoft is set to launch Windows 8 this year, targeting tablet devices.”

But Apple doesn’t have anything to worry about yet, some analysts say.

“It will take time for Android 4.0 and Windows 8 products to come to market,” Leach says. “Apple will retain its market-leading position through 2012.”

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