While smartphones have reached critical mass, tablets are poised to do the same soon. As a form factor, tablets simultaneously take a step toward the living room and the workplace. For consumers, these devices are multimedia machines, offering a glimpse into how consumers might one day accept connected television. For workers, IT departments are already reacting to the “Bring Your Own Device” wave changing the modern workforce. According to Forrester, 12% of workers already use a tablet at work.
The stakes are high. According to its latest earnings call, more than one out of every three Apple smart devices sold during the last quarter was a tablet, 14 million iPads versus about 27 million iPhones. And with the announcement of the lower-priced iPad mini, more directly competing with Amazon’s Kindle Fire HD, Google’s Nexus 7 and Samsung’s Galaxy Tab 2, we anticipate this ratio to increase more toward tablets during the holiday season.
This report focuses on how consumer demographics and behavior vary between smartphones and tablets. Taking a snapshot in September 2012 from Flurry Analytics, that totaled more than 6 billion application sessions across approximately 500 million smart devices, Flurry provides a comprehensive comparison between smartphones and tablets, spanning age, gender, time of day usage, category usage and engagement metrics. For age and gender comparisons, Flurry leverages a panel of more than 30 million consumers who have opted-in to share demographic data.
The chart above shows the distribution of age for smartphone versus tablet users across traditional age groupings (aka “age breaks”). The blue bars represent smartphone consumers and greens bars represent tablet consumers. Each group of same-colored bars totals 100%. On average, smartphone users are younger than tablet users, 30 versus 34 years of age. Nearly three quarters of smartphone users are 34 years of age or younger, while more than two thirds of tablet user are 25 years or older. Additionally, recent research from the OPA conducted by Frank N. Magid and Associates indicates that household incomes for tablet owners are becoming increasingly affluent, with 59% of household incomes for tablet owners surpassing $50,000 versus the U.S. average of 41% households with incomes over $50,000.
The pie charts above compare the gender split between smartphone and tablet users, with women shown in dark pink and men shown in blue. While smartphone usage trends slightly more male, tablet usage is nearly even. Traditionally, males adopt technology devices more than women. With an even gender split for tablets, this bucks the trend, indicating that tablets likely have more long-term mass-market appeal.
The chart above shows how consumers allocate their time using apps across a day, also called “dayparting.” Smartphone app usage is indicated with the blue line, and tablet app usage with the green line. Each line spans 24 hours of a day and totals 100% usage across the day. Studying the chart, tablets have a greater spike of usage during the prime-time television window, from 7 pm to 10 pm, whereas smartphone usage is more evenly distributed throughout the day. This would indicate that tablets are more often used alongside, or instead of television viewing than smartphones. In an earlier study, Flurry compared the combined usage of tablet and smartphone apps versus the Internet and television.
The chart above compares the time spent across app categories between smartphones and tablets. At a high level, consumers spend more time using tablets for media and entertainment, including Games (67%), Entertainment (9%) and News (2%) categories which account for nearly four-fifths of consumption on tablets. Smartphones claim a higher proportion of communication and task-oriented activities with Social Networking (24%), Utilities (17%), Health & Fitness (3%) and Lifestyle (3%) commanding nearly half of all usage on smartphones. Games are the most popular category on both form factors with 67% of time spent using games on tablets and 39% of time spent using games on smartphones. Further reinforcing that tablets are “media machines” is the fact that consumers spend 71% more of their time using games on tablets than they spend doing so on smartphones.
Finally, we compare engagement metrics between smartphones and tablets. On average, consumers use apps on smartphones more frequently but for shorter periods of time. With consumers using tablets more for media consumption, and during the evenings, this stands to reason. Conversely, consumers use their smartphones for shorter periods of time across more sessions over the course of a day to complete tasks like checking into social networks and using utility apps.
The Battle for the Living Room
Studying smartphone versus tablet usage differences not only provides insight into how developers should consider form factor when designing app experiences, but also how digital distribution could disrupt the living room. As we imagine a world of connected TVs, tablet usage gives us the best current-day hint of that world to come. Tablet users are older, more female, and we can surmise, more affluent. Additionally, they use more during the evenings and for longer sessions. Finally they consume more media and entertainment experiences, with a significant proportion spent on games. In particular, this would indicate that as Apple and Google enter the living room with connected TV initiatives, game consoles made by Sony, Microsoft and Nintendo would experience the greatest competition. The distribution of content into the living room may also significantly change for network and cable television content providers. In summary, the impact of smart devices on both work and play are profound. With a bevy of significant companies vying for tablet hegemony, including Apple, Google, Amazon, Microsoft and Samsung, developers and consumers should expect nothing short of tremendous innovation.
A Note about Engagement Metrics in this Study versus Previous Flurry Studies
Please note that in previous studies, Flurry combined all smartphone and tablet usage to generate total time spent by the average “smart device” user in a given day. Using the stats provided in this study, a clever reader could back into a comparison to that study. However, breaking out time spent per day using the metrics included in this study (by taking ‘number of sessions per week’ multiplied by ‘time per session’ then dividing by seven days to get to a daily figure) will not simply add up to the total ‘time spent per day’ provided in previous studies. This is because individual users of smartphones and tablets spread their total usage time across multiple devices. By separating out smartphone and tablet usage for this study, the overlap of users who have more than one device is not taken into account. In short, these two studies do not provide an apples-to-apples comparison.
Regardless of a company’s earlier success, thriving in the new mobile app economy depends on engagement and retention. After acquiring users, the real battle to keep and ultimately monetize consumers begins. In the brave new world of “mobile first,” engagement is the new battleground.
This research is a redux to one of Flurry’s most popular reports, entitled Mobile Apps: Money, Models and Loyalty. Released three years ago, the initial report organized app category usage into a loyalty matrix. We do the same again now, while also acknowledging that a lot has changed in the app economy since then. To start, there is an order of magnitude more available apps in the App Store, now brimming with over 700,000 app choices for consumers. We are three generations beyond the then-new iPhone 3GS. We have since met the iPad, and perhaps tomorrow will meet the iPad Mini.
Combined, smart devices – iOS and Android smartphones and tablets – are the fastest adopted technology in history; adopted faster than electricity, televisions, microwaves, personal computers, cell phones, the Internet, dishwashers, stoves, and a whole lot more. Last month, Mark Zuckerberg, CEO of Facebook – the number two most visited website on the web – declared “we are now a mobile company” explaining that “you just could do so much better by doing native [application] work” versus using languages like HTML5 on top of browsers. Each month, approximately 600 million of Facebook’s 1 billion monthly active users already accesses Facebook via mobile.
Each app category has different user engagement and loyalty characteristics. Understanding a given app audience based on the category to which it belongs can inform a company’s app acquisition, retention and monetization strategies. For this analysis, we use a sample of apps used more than 1.7 billion times each week. In total, more than 80,000 companies use Flurry Analytics across more than 230,000 apps to understand consumer behavior and improve their apps.
The above matrix plots application categories by how often they’re used compared to how long consumers continue to use them over time. Specifically, we plot the 90-day retention rate of app categories on the x-axis against the frequency of use per week on the y-axis. We lay the “scatterplot” out in a Cartesian coordinate system with four quadrants. For our categories, we started by taking the application categories defined by Apple in the App Store. In cases where a cluster of applications within a parent category showed meaningful usage differences, we created a sub-category. For example, Flurry divides games into Social Games and Single Player Games given how differently consumers use these sub-categories.
Quadrant I includes apps that are used intensively and to which consumers are loyal over time. News and Communication apps are the two categories that appear in this category. On average, because these apps tend to have stable, growing audiences, they are best positioned to generate advertising revenue or charge a subscription. Consumers perceive these apps to deliver enduring value over time.
Quadrant II is comprised of apps that are used intensively, but for finite periods of time. They are perceived by consumers to deliver value in bursts. Streaming Music, Dating and Social Games best typify this quadrant. Consider for a moment why Dating is a category that appears in this quadrant. For most people, we can assume that finding a long-term “significant other” is the ultimate goal of dating. As a result, the app maker should expect customer churn. While usage may be high during the time when a consumer looks for a suitable partner, once that person is found, usage stops. An implication could be that to maintain a growing audience, apps in this category require heavy, constant acquisition to find consumers who are “in the market” for dating. Ironically, the better the app is at match making, the more churn it should expect.
Quadrant III contains apps that are used infrequently and have high churn. They contain the most “one-and-dones.” Personalization is an example that makes sense for this quadrant, since a consumer uses this app to change her screen saver or select a theme for her operating system. Once this set-up is complete, it’s unlikely that the user will need to re-use this application. Since the app’s value is diminished almost immediately, applications with this kind of usage pattern are best served with premium pricing models; that is, charging the consumer before providing access to the content.
Quadrant IV is made up of apps that are used infrequently but deliver very high value when used. Even though they’re used only occasionally, these apps can remain on a consumer's handset almost indefinitely. For example, consider how useful an airline, hotel or rental car-booking app is to a business traveler. While the app remains unused between business trips, its value spikes as soon as the next business trip needs to be scheduled.
Which Pill to Take
The quadrant an app falls into can help the content creator decide what business model is best. On average, Quadrants I and IV (the right-hand side) are better suited to subscription and advertising-supported models. The main reason is that these apps have perceived enduring value by consumers over a long period of time, and therefore more successfully retain their user bases. For ad-supported apps, high repeat usage translates into more ad impressions served. Categories on the left-hand side, Quadrants II and III, are better suited for one-time download fees. Additionally, quadrants II and IV (top left and bottom right) are likely best for in-app purchase models. For Quadrant II, the intense usage means that consumers find very high value during a short window. This creates the opportunity to offer new content or functionality during “binge” usage. Adroit social game makers are masters at driving in-app purchases during a consumer’s greatest moment of engagement. For Quadrant IV, because the user will return again and again, there also exists the possibility to find new ways of increasing value, which includes offering add-on functionality or content for a fee.
For more data, the table below provides 30, 60 and 90-day retention rates as well as weekly frequency of use numbers. Note that some of the categories included in the table below are not included in the matrix chart above.
Compared to Flurry’s 2009 analysis, 90-day retention rates have increased from 25% to 35%. Additionally, frequency of use has decreased from 6.7 in 2009 to an average of 3.7 now. We attribute increased retention rates to increased quality in the market, driven by more competition. With tens of thousands of more companies building apps and hundreds of thousands of more available apps, the quality of apps has risen dramatically. Simply put, app makers are getting better at holding a consumer's attention longer. Additionally, we believe usage rates are lower because consumers have more choice than ever and are splitting their time across more applications. While Flurry included 19 categories in its 2009 report, we now include 30 distinct categories as the industry has matured and more distinct verticals have appeared.
Brave New World
With more than a billion smartphones and tablets now in use, as well as the eventual move of apps into the living room through connected TV efforts by the likes of Apple and Google, digital distribution is changing the way the world does business. No matter what category your app belongs to, understanding and improving user engagement is the new currency of doing business in the new digital world.