Two thirds of people who are thinking of buying an iPad in the next 12 months are expecting to pay less than the current lowest retail price, according to the latest research from our Tablet and Touchscreen Strategies service. 66% say they will pay less than $500 or €500, and half of those say they want to pay less than $300 or €300. We surveyed nearly 5000 consumers across the US and 4 major European markets. These findings won't concern Apple too much as there is enough momentum from early adopters to support growing iPad sales for the next few months. But they should serve as a clear warning that today's price points are unsustainable in the longer term. Already we are seeing a proliferation of (mostly Android-based) tablets arriving on retailers' shelves, often at iPad-undercutting prices. Staples is offering a 10" Viewsonic, Android 2.2 device at $400. I am awaiting delivery of a £150 7" Android 2.2 tablet from UK electronics specialist retailer Maplin. Clearly these devices will not match Apple in every respect; many observers doubt whether the latest versions of Google's OS are up to the job. But then the question is what "job" tablets are expected to carry out. iPad behaviour so far has been truly multifunctional, with a mix of games, browsing, video, communications, and the huge variety of apps which are impossible to categorise. I overheard one potential tablet buyer in Staples inquiring (of the Viewsonic device) whether it was good for reading books, and specifically whether it could do "things like Kindle". Unfortunately she happened to address the question'to a sales assistant who claimed to be "still training" on these devices and so couldn't commit to an answer. But the fact that customers are inquiring about specific capabilities suggests that all-round superiority may not necessarily be a requirement for tablet market entrants hoping to eat into Apple's dominant market position. That's not to say that device implementations shouldn't pass the bare minimum of usability requirements. There are still too many early Android devices floating around which really are not fit for purpose, even if they are practically being given away. Consumers want to pay $300 or $400 but they expect something that does at least a few things reasonably well. The sooner Android matures and its partners introduce devices to undercut the iPad, the better for the tablet market as a whole. Client Reading: Apple's iPad: Users, Buying Intentions and Price Expectations

It’s no surprise that a majority of early iPad buyers had already bought into the Apple ecosystem, but the fact that fully 90% of people who say they will buy an iPad during the next 12 months already own an Apple device is perhaps surprising. It might have been reasonable to assume that the novelty of the tablet form factor would open up a whole new wave of potential customers attracted by its innovative design, regardless of how familiar they were with the benefits of Apple’s user interface and design. It seems, however, that in the early days at least demand for the iPad will be met almost entirely by existing Apple owners. Our survey of 2000 US consumers also suggests that a third or more of existing iPhone and Macbook owners have already gained access to an iPad (at least they say they have used one at home). And nearly a half of the early iPad adopters say they are somewhat or very likely to buy another iPad during the coming year – an indication of strong customer satisfaction if ever there was one. So how should Apple respond to this news? On the one hand the company should relax in the knowledge that so many of its core and loyal customers are saving up to buy the company’s latest device. On the other hand, there may be just the slightest concern that the iPad has so far failed to win new hearts and minds amongst the half of US homes which do not already own at least one Apple product. That may change as the tablet category becomes more widely recognised. New entrants will shortly be flooding the market with iPad alternatives which will help raise general awareness of this new category. As Apple struggles to meet demand from its existing customers, the opportunity is there for competitors to target the remaining market segments with iPad alternatives. Client Reading: Apple's iPad: Identifying Early Adopters and Intentions to Buy Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

Nokia’s annual development showcase is taking place this week in Stuttgart, conveniently placed, for the 2000+ international visitors, adjacent to Stuttgart airport, which is not nearly as bad as it sounds. After a day of analyst meetings we spent today listening to senior executives outline the company’s future plans and examining its latest device and service offerings. A major highlight was the unveiling of the recently announced Booklet 3G, Nokia’s first foray into non-handheld devices. Actually that’s not quite true, but you have to be an industry veteran of at least 20 years’ standing to remember when Nokia last manufactured PCs, or indeed the myriad of other products it used to be known for. It abandoned most of its traditional businesses as part of its rationalisation response to the Russian economic crisis of the early 1990s, and after it identifed mobile phones as the next technology wave the company has never looked back. Nokia’s explanation for (re)entering the PC space is that convergence is happening and is here to stay. In other words, it sees computing competitors (read Apple, Google) eating into its phone business, as phone handsets take on more and more of the capabilities associated with the PC. The logic is that Nokia can counter these threats by bringing its communications expertise to the PC space. The Booklet 3G is Nokia’s first response. I hope it is not their last. We could waste many hours discussing the finer points of English vocabulary, but this is indeed a “netbook”, at least as far as anyone can point to a clear definition of that word, and that may not be very far. It could also be a “laptop”, which is how John Hwang, who heads this new Nokia business, described it yesterday. Or to be precise, “a high end mini laptop”. So take your pick. It is, without doubt, a computer. From the various videos and demonstrations it seems that Nokia is trying to position the Booklet as a handheld device aimed clearly at portable applications. Promotional videos featured young, attractive (inevitably) people holding their Booklets in one hand while walking along streets, chatting idly with friends and surfing the web in attractive (inevitably) locations like ski resorts and wine bars. Actually I made that up, but you get the picture. For the record, the key features are Windows 7, 1.6GHz Intel Atom Z530 processor, 1GB RAM, 120GB HDD, claimed 12 hours battery life, 10.1” display, HDMI, GPS, accelerometer, Bluetooth, webcam. You may have spotted a couple of items which mark the device out from the usual netbook crowd. With GPS, accelerometer and 3G the Booklet is clearly designed to further strengthen Nokia’s position in the navigation and mobility applications segment. Retail price will be €575 plus tax. Nokia is confident (you can assume the deals are more or less done) that the Booklet will be heavily subsidised by mobile operators in return for the user’s long-term commitment to big fat monthly mobile data fees. The booklet is a nice-looking, well designed and high quality device. The to-ing and fro-ing around its categorisation is not coincidental, since its specification probably comes close to some low end notebooks/laptops. But prices for those start at €300 or less, while top end netbooks struggle to reach Nokia’s price point. As with Nokia’s phone business, it seems that close cooperation with operators will be necessary to ensure that Nokia’s return to the PC business is not a short-lived affair. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report

Last year we questioned whether the CES wow factor would make a return. Perhaps it is going too far to say the 2009 event fulfilled those wishes, but I got the sense that, in spite of the gloomy economic background, there was greater depth and commercial potential to the innovations than in recent years. And again perhaps it is reading too much into what inevitably are subjective impressions, but it may have been the challenging economy that encouraged exhibitors to demonstrate their readiness to benefit from the next technology transitions when the upturn finally appears. Of course there was nothing really new, and it would be wrong to go to CES or any other event with excessive expectations. Most innovations are evolutions or enhancements of existing technologies. The key is to look for genuine progress towards significant commercial opportunities, and this was clearly evident in connected TV, 3D and portable devices. While previous shows have seen a degree of experimentation in internet and web-enabled TV, this year there was a sense that widespread commercial rollouts are finally imminent. There is certainly no consistency in the approach to web TV, and, as we have seen, early implementations may be missing the real driver of consumer demand. But at least the products will be out there on retailer shelves, and vendors can start to learn what works and what doesn’t. 3D is at an even earlier stage in its lifecycle, although some would argue that its gestation began several decades ago. With so many false dawns behind it, 3D scepticism is understandable. But doubts over user acceptance should not cloud the fact that technical implementations are clearly improving year after year. The very best, such as Nvidia’s 3D gaming demonstrations, are very impressive indeed and well suited to their applications. Others, such as Panasonic’s 3D Blu-ray, can be extraordinarily good when the content production chain has been well designed, but are weaker with legacy material. As we move through the next decade 3D will certainly be playing an increasing role in some form or other in the digital home. The other broad trend is the increasing power of portable and mobile devices. Our research is tracking the role of personal technologies in bringing Internet applications to the digital home. As truly portable computing becomes ever more powerful, as evidenced by Nvidia’s new ION motherboard, growing numbers of consumers will see such devices as their primary digital home content gateway, connecting ad hoc to the large TV screen as required. These trends, while they will have near-term commercial impact, will also drive major new revenue streams for technology vendors and content providers alike over the coming decade. For that reason CES 2009 fulfilled its purpose to provide a vision of the future of consumer technology. The fact that fewer people – 110,000 attendees is the latest estimate – were there to see it is a sure sign that the industry is in the midst of a downturn, but it should not divert us from the fact that new technologies will inevitably replace old ones, fuelling new growth opportunities as soon as the economy allows. Twitter: www.twitter.com/dmercer15 Client Reading: Digital Media Devices Global Market Report

CES got off to a roaring start this afternoon as Asus announced a series of innovations, some due for imminent market launch and some for the longer term. Building on the success of its Eee PC, which has helped turn the company into a $22Bn business, it is now aggressively attacking the digital home space. Its new S121 is an ultrathin (sub 1”) notebook integrating a 512GB solid state drive. The company also showed its new N20 netbook with touch screen display. Microsoft Virtual Earth was demonstrated, but unfortunately the computer crashed before the demo could be completed. But the logic of touch screen computing seems to be quite powerful if the glitches can be ironed out. Also introduced was a dual-screen notebook. This is basically a standard notebook configuration, with a small 4.3” display integrated just below the keyboard and next to the touchpad. This is actually virtually a separate pocket PC device from the main notebook, although it shares the same battery. To demonstrate one application, a movie was played from the small PC onto the larger display. The benefit is that small PC requires much less power, giving the device a total of 12 hours playing time. Asus also showed its T91 touch netbook with built in GPS and TV tuner. Perhaps most startling was a Atom-based Windows Media Center computer designed to look exactly like a keyboard, which connects to any display device with ultra wideband HDMI technology. The keyboard PC has a small display built in. It is a concept at the moment, and displays today obviously do not have UWB HDMI capability built in, but other connection options would be possible. Asus also introduced its Eee Top, an internet appliance for the digital home. Asus calls these products net tops. CEO Johnny Shih said his company models itself on Apple. Judging from this press conference it is not unreasonable to imagine that Asus may have as much influence on digital consumer technologies in the next decade as Apple has had over the past ten years. Client Reading: IFA 2008: Internet and 3D Offer Hope During Europe's CE Recession

I thought I'd share a personal angle on an industry issue that's grabbing the home PC sector's attention right now. It was sparked by a meeting yesterday with Zoostorm, a UK PC manufacturer, which is launching its range of children's laptops under the Fizzbook brand. Based on Intel's Atom processor, running Windows, and with choices of 7" or 8.9" displays, Fizzbooks will be available in UK stores from next month at £199 and £269 price points. The company expects to sell 70,000 units in the pre-Christmas period. To quote Zoostorm's Sion Roberts: "The Fizzbook is the type of product parents can feel good about buying and children actually want. The educational and office software with the Fizzbook make it a great aid to learning and development, but the excellent general computing capabilities make it perfect for surfing the internet, playing games or watching movies." As the parent of a child slap bang in the middle of Zoostorm's target 6-14 market, I beg to differ. Fizzbooks' snazzy design may appeal to some kids on the surface, and I'm sure Zoostorm will sell plenty of units to parents and indeed grandparents who like to feel they haven't wasted their money on frivolous gadgets. My fear is that these good intentions may turn to disappointment on all sides once their kids realise they have been given what is basically half a machine. Based on my experience of my own and many other children, the one thing kids want to do with the family PC is play games. And not just any old Flash-based browser nonsense either: they want the latest and greatest games that arrive on DVDs (Fizzbooks have no optical drive), need the latest processors and require GBs of hard disk drive storage before they even get going. I'm thinking in particular of EA's The Sims 2, whose arrival in my household three years ago necessitated the purchase of an expensive new laptop with a dedicated graphics card that copes, just about, with the demands of the latest 3D games. I'm currently in the market for a "kids laptop", but I still don't quite know what one of those is. PC World, the UK's largest high street computer retailer, offers its own label range of Kids Laptops. They have a nice range of colours and designs, which I know will appeal to its intended audience. But in response to my email (albeit five days later), I received the following information: "Having searched on our system, I can confirm that Kids laptops will support T&L applications but I would not advise you to use the laptop for games." T&L refers to "Transform and Lighting", which some graphics cards are compatible with and which enables the more sophisticated 3D environments to be rendered successfully. Sims 2 is one game that demands this capability, and it is very difficult to discover which laptops, never mind "kids laptops", have it. From PC World's response, I assume they think the CPU and other PC components in their kids laptops are not up to the job. I'll break the news to my daughter gently... The Fizzbook and its rivals aimed at the kids market are repeating a mistake so often made by technology companies aiming devices at children: they regular products aren't suited to kids, for whatever reason. In my experience, this is misguided. In many cases it is children who are much happier coping with the complexity of PCs than their parents, and, in the case of the latest games, driving demand for the latest processors and graphics cards. Fizzbooks are nicely designed and rugged, and will be bought because of their attractive price points. They may suit the youngest age groups particularly well. But older kids will soon tire of their limitations and yearn for time on "Dad's laptop" so that they can get on with the real job of shooting aliens or building virtual worlds. Either that or their parents will save up an extra £100 or so and buy them a proper laptop in the first place. If you want better insight than I can ever give on the "real" PC and mobile computing space, see the excellent enterprise mobility blog run by my colleague, Philippe Winthrop. Visit us at IBC: Web TV and Virtual Worlds Analyst Breakfast Client Reading: Online Games: Global Market Forecast