By Adam Satariano and Katie Linsell - Nov 28, 2011 12:01 PM GMT+0700
One iPad isn’t enough for Patrick Smith’s family.
Smith, an American Web designer living in Germany, has two kids vying for their tablet computer. The youngest started tapping and finger-swiping the screen by age 1, leading to tussles over who gets to play with the Apple Inc. (AAPL) device. Now Smith is considering buying another tablet for Christmas.
“It’s usually a fight to decide whose turn it is,” said Smith, whose sons are now 2 and 5.
The family jockeying shows how big the youth market may be for Apple and its tablet competitors, including Amazon.com Inc. (AMZN) and makers of Android devices. Among kids age 6 to 12, the iPad is the most-wanted holiday gift for the second year in a row, according to Nielsen Co. Even so, the industry faces hurdles. That includes setting a price parents can live with and dealing with concerns about kids getting hooked on technology too early.
About 61 percent of iPad buyers are parents, estimates BlueKai Inc., which compiles consumer data. The market’s growth isn’t just generating revenue for tablet makers, it’s increasing demand for kid-oriented content. Companies ranging from Walt Disney Co. (DIS) to small startups are developing games, interactive books and other software to appeal to children.
“Kids just get it -- they touch it and it moves,” said Jamie Pearson, founder of BestKidsApps.com, a review website with almost 300,000 monthly page views, 40 percent of which are for apps aimed at kids under 5. “It’s like any other natural language at that age; they just pick it up.”
Learning to Write
According to Forrester Research Inc. (FORR), 29 percent of tablet owners regularly share the device with their kids. Among mothers, it’s 65 percent. One Apple commercial shows a young child learning to write using the iPad 2.
For Apple, the youth market presents opportunities and challenges. While the iPad is the top-selling tablet, many parents may opt for lower-cost models if they know they’re putting them in the hands of children. Amazon’s Kindle Fire is less than half the price of the iPad.
When asked to choose between the $199 Kindle Fire and the $499 iPad, 51 percent of consumers opted for the Amazon product, according to a survey by Parks Associates. Smith said he is considering a Kindle Fire for his family’s second tablet.
“It’s a low enough price point that it forces that couch- potato consumer to get up off the couch and buy something like this,” said Sucharita Mulpuru, an analyst at Cambridge, Massachusetts-based Forrester. “There’s almost no reason not to.”
‘Digital Pacifier’
Still, tablets have raised concerns among child advocates. As much as kids enjoy playing with an iPad, parents should limit the amount of time they spend plopped down with the device, said Gwenn O’Keeffe, a pediatrician in Boston who has studied the effects of technology on children and works with the American Academy of Pediatrics. Toddlers under 2 shouldn’t play with an iPad unless it’s only being used to display books, she said.
Victoria Nash, a researcher at the Oxford Internet Institute who also has studied the topic, said some parents use gadgets as a “digital pacifier.”
“We know already that there are dangers with watching too much television and doing too much online gaming,” she said.
A new book, “Goodnight iPad,” a parody of the popular children’s book “Goodnight Moon,” reminds parents to unplug by poking fun at the how much time is spent in front of computer and television screens each day.
Apple has sold more than 28.7 million iPads since the product’s debut last year, generating $18.4 billion. Apple may sell a record 20 million iPads globally during the holiday quarter, according to Forrester.
Games, Books
Companies are lining up to capitalize on that growth. Disney has released an iPad game linked to its movie “Cars” in which kids can drive a small plastic car along a road shown on the iPad. Bertelsmann AG’s Random House has released interactive versions of “Dr. Seuss” books as apps. Smaller companies such as Callaway Digital Arts and TouchyBooks also are introducing titles tailored to youngsters.
Steve Jobs, Apple’s late co-founder, saw potential for applications aimed at children. Jobs introduced Callaway Digital Arts founder Nicholas Callaway to Kleiner Perkins Caufield & Byers, a venture firm that then led an investment round of almost $7 million in the startup. Callaway Digital Arts makes titles based on “Sesame Street” and “Thomas & Friends.”
Rex Ishibashi, chief executive officer of the company, puts the U.S. market for kids’ iPads apps at more than $500 million.
“The kids are gravitating towards these devices because they make sense,” he said. “They are intuitive.”
Tapping the TV
Ilan Abehassera, an Internet entrepreneur in New York, has his own tales of iPad-infatuated kids. His 2-year-old son constantly reaches for his iPad to see YouTube clips and interactive books. That’s forced Abehassera to limit how much time the boy spends with the tablet.
“When we don’t give it to him, he goes crazy,” Abehassera said.
The iPad will be many children’s first experience with a computer, a phenomenon that will affect the design of future consumer electronics, said Tom Mainelli, an analyst with Framingham, Massachusetts-based IDC.
A popular YouTube video shows a toddler frustrated with a magazine because she can’t zoom in on the pictures. In Abehassera’s case, his son taps the television screen to try to get it to play videos.
“The generation that is growing up with touch is going to demand it on all their devices going forward,” Mainelli said.
To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Katie Linsell in London at klinsell@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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