iPad won't be print media's silver bullet

Despite forecasting a 'gold-rush effect' that will see the total value of downloaded applications on the iPad hitting US$68.8 million (about R525 million) this year and US$511.8 million (about R3.9 billion) in 2011**, Ovum believes Apple's much-hyped tablet device alone will fail to secure the future of news and magazine publishing.

By way of contrast, Ovum has forecast that the global mobile applications market will be worth US$5.7 billion (about R43.5 billion) by 2014, with total paid downloads of 3.3 billion applications.

Ovum's research indicates that volumes of the iPad will take time to build. In addition, the tablet media market will soon become as congested as the smartphone app store market.

Adrian Drury, Ovum's principal media and broadcasting analyst and report co-author, said: "The iPad promise is a set of new distribution channels for packaged media, but it is one device and volumes will take time to build. Traditional publishing's challenge to find a new and sustainable business model is immediate."

Apple's doing more than just selling

He added: "Previous attempts at defining this fourth screen product category have so far failed. Apple, however, is doing more than just selling a hardware platform; it is also leveraging the content and the volume of pre-existing iPhone applications (most of which will run on the iPad) to demonstrate the utility of this form factor. Apple needs the content ecosystem to drive mass-market appeal.

"The iPad and the tablet product category are a revenue opportunity and a showcase for the future of packaged media. However, this new fourth screen does not alone represent the silver bullet for the news and magazine industry."

Ovum forecasts total shipments of Apple's iPad to reach 13.2 million by end of 2011 (by comparison, Apple shipped 25 million iPhones in 2009 alone).

*The report, authored by Ovum analysts Adrian Drury and Tim Renowden, is entitled Reformatting News & Magazine Media.

** This figure excludes revenues from web advertising, iTunes music and video sales and sales through the iBook bookstore. Based on empirical iPod Touch data, Ovum estimates average application revenue per user per month of US$7.05 (about R54) for the iPad, and discounted average application revenue per user per month of US$6.35 (about R48.50) for tablets based on Android and other platforms. Using this analysis, Ovum estimates total gross application retail revenues of US$86.5 million (about R660 million) in 2010, and US$570 million (about R4.35 billion) in 2011 for the tablet market as a whole. The iPad will attract the lion's share of this revenue, with revenues of US$68.8 million (about R525 million) and US$511.8 million (about R3.9 billion) in 2010 and 2011 respectively.

Source: Ovum, part of the Datamonitor group