Digital Music Players, Gaming Consoles & eReaders Help Grow New Users

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Smartphone penetration has risen dramatically over the past years, with penetration higher within developed markets versus emerging markets. In 2012, 70 percent of handsets shipped in developed markets would be smartphones vs. 29 percent in emerging markets, and in 2013, 81 percent of handsets shipped in developed markets will be smartphones vs. 39 percent in emerging markets. Despite the growing numbers for Smartphone users, a report from Goldman believes that three types of devices could serve as a seeding ground for a brand new user: digital music players, gaming consoles, and eReaders.

Digital Music Players, Gaming Consoles & eReaders Help Grow New Users

As per the report, digital music players will continue to be a prospective feeder device. Among the teenagers, iPod turned out to be the favorite. In comparison to other products, Apple Inc. (NASDAQ:AAPL)’s iPod has already gained the maximum market share of almost 70 percent of the U.S. market for MP3 players in the September Quarter. In the current situation, the iPod receives little attention from the buyers, but it served a major role in creating a consumer base for iOS. In June, 2012, a survey done by comScore and AdMob revealed that 69 percent of iPod touch users were 13-24 years old, while iPhone’s share was only 25 percent. The features and user interface of the iPod touch reflect those of iPhone and iPad, giving the Apple users easy switching between the devices and attracting the younger population into its iPhone and iPad ecosystem. “We continue to see the iPod touch as capturing the incremental opportunity for users that want a handheld computing device without voice functionality. This has been particularly attractive to younger consumers, as well as handheld gaming enthusiasts”, the report says.

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In the gaming consoles, Microsoft Corporation (NASDAQ:MSFT) clearly rules the category. The Xbox 360 can be a major supporter in the success of Windows, according to the report.  The Xbox has fascinated traditional, as well as casual users. The console also provides the features like the ability to access music content and video/TV programming. It is not yet clear that if the success of Xbox will help Windows Phone (Xbox live is integrated into Windows Phone) or tablets to gain market share. According to the report, Xbox provides undoubtedly the best gaming experience, but smartphones and tablets provide a more casual experience and need not to be integrated with Xbox live. The report says “For example, games customized for the smartphone or tablet, accessed through applications could suffice”.

The eReader market is “being subsumed by the broader tablet market over time”, says report.  The market share of, Inc. (NASDAQ:AMZN) in the eReader category declined, because the customers preferred Kindle Fire tablets (launched in September, 2011) over the eReader.  Other tablets in the sub-10 inch category are Samsung Electronics Co., Ltd. (LON:BC94) Galaxy Tab (launched in September 2010), the Google Inc (NASDAQ:GOOG)’s Nexus (launched June 2012) and the iPad mini (launched October 2012).

As per the report, the teenage demographic will be the prime target factor, as these users are likely to represent the greatest opportunity to grow an installed base. “Users are exposed to a platform at an early age and as a result, not only become familiar with the user interface, but also begin to build a library of content, effectively creating lock-in”, says the report. Such users, if retained will represent the highest lifetime value of a customer, users older than 45 may not be as financially attractive.

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