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iPad Disconnect Could Prove Costly to Media, Advertisers

|Includes: Apple Inc. (AAPL), GOOG
The major disconnect between the explosive adoption of Apple's iPad by consumers and businesses, and the fumbled, reticent response from so many media and advertising players could quickly become a lost cause -- literally.

Companies that fail to keep pace with consumer habits and demands will miss interactive opportunities and new revenues triggered by the integration of the iPad and other e-tablets into routine, corporate and educational activities.

Apple reports that it sold 1 million iPads in the first month, compared to the 20 months it took to sell its first 1 million iPhones. The sale of more than 3 million iPads and 13,000 apps -- generating $2.2 billion revenues in the June quarter and making it Apple's third-largest business behind iPhones and Macs -- promises audience reach and experience that exceeds conventional print and analog media.

Wildly popular apps, which have generated nearly $1.43 billion in sales, or 1% of Apple's overall profits since they were launched in June 2008, present tremendous potential for anyone seeking paid, sustainable connections to key consumers. The new iPad app FlipBoard, a magazine-styled aggregation and management of social media content, is the latest reminder of the creative, albeit controversial boundless prospects.

Even the iPhone 4 is proving to be a catalyst for change. Despite the consternation and costs associated with its flawed antennae, the new 4G model boosted overall iPhone sales that were 61% last quarter over the prior year, outpacing industry smartphone growth forecasts of 38%.

Apple says iPad and iPhone sales are driven by rigorous enterprise and educational adoption as practical, effective enablers of interactivity

80% of Fortune 100 and 60% of Fortune 500 companies are deploying or piloting the iPhone. Within its first 90 days on the market, half of Fortune 100 companies are deploying or testing the iPad for service, sales and other enterprise functions, according to Apple COO Tim Cook. More than 400 schools have officially adopted iPhone use for their faculty, staff and students, he said.

Likewise, Google is in the process of building a comprehensive mobile presence that will put it alongside Apple at the center of the evolving mobile Internet ecosystem, where platforms and operating systems, advertising monetization and apps collide. Credit Suisse analysts estimate the two companies will emerge as the dominant platforms with more than a combined 40% global share by 2015.

All of this begs the question: Are content providers and advertisers proactively responding to these cues fast enough with innovative formats and applications to reinvent themselves?

Although some notable strides are being made, media and Madison Avenue generally are moving slowly and cautiously to creatively mine the iPad or other platforms they don't control for fear of compromising their crumbling legacy silos.

Many remain skeptical about turning over content and advertising on Apple's revenue-sharing iTunes and AppStore, even as they recognize the pressing need to reach consumers cross-platform.

This damaging disconnect could be partially a matter of perspective.

Moving beyond familiar and comfortable content and advertising forms to wade through the unknown to create potentially more lucrative endeavors can be as liberating as it is intimidating. The potential represented by the iPad, iPhone and other interactive mobile devices isn't about rocking television's video dominance or saving newspapers. It is about discovering and capitalizing on new content, commerce and communications trends exploding across multiple platforms.

With Apple's iTunes ranked third in top premium online video service behind Hulu and Netflix across all devices (TV, PC, and game console smartphones), entertainment and news producers have at least made their standard fare available to the Apple faithful, according to Parks Associates.

Ultimately, Apple also must learn to play nice with others as its content and advertising partners opt for onetime payment collection, access, commerce, security and measurement from other "digital lockers" in the clouds. Just this week, 21 content, consumer electronic and tech players announced UltraViolet service consortium , the latest example of a gateway, anywhere solution.

The one thing all video and text creators and marketers have to do is take the courageous, smart plunge to make the iPad and other dazzling interactive mobile devices their own.



Disclosure: None