Wave II Research Results

IpsosVantisIdeaScan Wave II Research Results December, 2010

Research Background Wave I Key Findings: • Top PC purchase drivers included quality, reliability, durability, speed, and battery life • All of the above attributes were also among the top reasons to buy Macs • Industrial design factored into purchases, with keyboard/touchpadacting as dealbreakers Wave II Objectives: • Identify how Holiday & BTS prototype notebooks compete against Macs • Understand more in depth what Mac considerers want in a notebook: • Key purchase drivers • Brand perceptions and impact • Usability concerns Methodology: • In-person CLT group methodology, 120 minutes in length • 10 respondents per session (2 sessions per market across 2 markets, totaling 4 sessions) • 11 computers displayed and evaluated in simulated retail setting (8 PCs and 3 Macs) Sample: • 20 non-student and 20 student Mac considerers, split between San Diego and NYC • All respondents intended to purchase a new notebook computer within the next 6 months

Purchase driver findings were relatively consistent across waves, except for screen quality • Most Important • Overall PC quality was the most important factor in PC selection, followed by speed of the processor and screen quality • Least Important • Multimedia connectivity options such as WiMax, WiDi, Bluetooth, or TV tuner were the least important factors and not likely to drive purchase decisions • Color of the computer and built-in touch screen were second-tier attributes Most Important Factors Least Important Factors *40 respondents Percent indicated as Extremely Important Percent indicated as Not at all Important

Students place higher importance on portability factors Most Important Factors • Students • Quality was the top attribute, as they were looking for the best investment and focused on buying a trusted computer that would last • More sensitive to form factor, battery life, and temperature because of frequent mobile use • Non-Students • Non-Students were more strongly drawn to RAM and processor speed, possibly looking for the best configuration they could afford • However, they may not have completely understood what specific values meant Percent indicated as Extremely Important

Design and brand were relied on most to “tip the scales” “He made me change my mind because I didn’t really pay attention to memory and all that. I liked [the Macbook computer] – the one I chose first, but now I want an HP Pavilion because the price is cheaper and it’s got a lot more memory and it does the same thing as the other one. It’s just [the Macbook] looks better to me.” • After a thorough comparison of specs, people’s personal preferences for keyboard, screen brightness, etc. and their personal or anecdotal experiences of brand were important, deciding influencers • However, those who cared about design and brand struggled to defend it when dialog about price and value dominated • Design is as much about “how it looks;” caring about aesthetics in a social setting can be perceived as superficial and frivolous; not worth the money • For Students, affinity toward the Mac brand and development of the Apple product ecosystem were key factors driving interest in Mac computers

Quality and reliability were consistently the top factors within people’s understanding of key brands • No viruses • For students and creative types; people interested graphics and entertainment • All around durable, quality computers • Quality, long-lasting computers • Good value for the specs • Disconnect between brand (entertainment driven) and computing products (basic, work-oriented)

People had strong, mixed preferences for the keyboard, the chassis’ corners/edges, and color—all of which were integral to the purchase • CORNERS/EDGES: Square, round • Square/rounded corners and sharp/round edges were influential design elements • Designs with square corners were perceived to be masculine, modern, professional. • A design with rounded corners and edges was more likely to feel dated/retro and casual –– some preferred this if other balancing elements (like color and material) also conveyed a sense of sleekness / newness (e.g., Apple) SQUARE/SQUARE ROUND/ROUND KEYBOARD WITH NUMBER PAD • KEYBOARD • People had strong, mixed preferences for a keyboard with and without a number pad; those who did number-intensive work more easily understood its value. • Some people felt the island style keyboard presented too much space between keys; others felt it enabled them to better distinguish keys • Most respondents delighted the backlit feature of some keyboards; perceived to benefit someone in low light conditions and light feature was also considered modern, cool • Matte keys were preferred over sticky/glossy keys • Most people preferred a quiet keyboard that didn’t make a significant amount of noise when typing SQUARE/ROUND • COLOR: Bright or dull • Brighter, more vibrant colors stood out more than duller, less lustrous colors. • People felt Apple’s silver and black coloring felt both classic and unique; positively stood out from others • Vibrant colors (such as pink) were particularly polarizing; however, those people who enjoyed them, loved them BRIGHTER VIBRANT

Laptop size, touchpad, and screen resolution were also significant factors in decision making • TOUCH PAD & MOUSE CLICK • People felt strongly about touch pad/mouse click behavior overall. • Mixed preferences for separate vs. all-in-one touch pads; “They're raised and they're separated, you can tell which one is the left- or the right-click, and I like that it's separate from the actual mouse part, I don't like how this is one part.” • Perceived loudness of touch pad clicking was a dealbreaker for some; less loud was good • Some noticed the amount of pressure needing to be applied to click; the Toshiba required considerably more pressure than most and people felt it was “a lot of work” • Desired a way to avoid accidentally touching the touch pad while typing (e.g., turning on/off) ALL ONE PIECE BRIGHT, VIBRANT SCREEN • SCREEN RESOLUTION • Not everyone understood the meaning of resolution; instead, they described their desires for screens that were “bright” and “clear.” • People imagined assessing the brightness, clarity of the screen at POP by looking at the computer • Few referred to the specs to understand resolution; nor did this data really impact their understanding or experience • Apple consistently perceived to have the best screens; HP Envy was also noted SEPARATE PIECES • LAPTOP SIZE • Smaller laptops = 13”, larger = 15”. • People who desired an extremely portable laptop tended to choose those that were smaller. Also of importance in their decision making was weight, screen size, and battery life • People who desired a larger computer tended to want a larger screen size; some felt there computer would most likely reside on a desk, others imagined it being portable and cared more about its weight

Many features are not part of the purchase decision, but are crucial to delivering a quality experience, and would benefit from increased education • SOUND QUALITY • People had low expectations for sound quality from laptops • Most important among people who frequently used their computer for media, gaming and entertainment • HARD DRIVE RPMs • No understanding of this term, a few thought they knew but did not accurately describe it • One respondent felt a lower HDD RPM was better because anything faster was too loud • POWER PLUG • Preference among some for the power plug to be located on the side of the computer, not the back; “My charger plug breaks because it’s in the back” • People also preferred a magnetic power plug; those who had not seen this feature on the Macs before perceived it to be useful and innovative APPLE MAGSAFE PLUG • WEBCAM RESOLUTION • Despite the fact that webcam resolution on several PCs was 2.0MP HD webcams, perception was that Mac webcam was the highest resolution because no one tests this at POP and MP info on webcams is often not displayed or hard to find for comparisons • Consumers tended to evaluate “better” resolution by looking at the picture (not specs) • Webcam resolution was not an important factor in their purchase decision; as in many cases, resolution appears good enough • For applications like Skype, people perceived the Internet connection to affect the resolution of their picture • GRAPHICS CARD MEMORY • Low awareness of what “graphics card memory” meant; some understanding among gamers • Not mentioned as a key factor in consumers’ purchase decisions • Intel HD graphics: Perceived to be an excellent graphics card as a result of it saying “HD” • BOOT TIME • Considered important; but not a deal breaker and not something they can evaluate at POP • People had their own tolerances for boot time, some said ideally it would be no long than 30 seconds – 1 minute

What most differentiated Macs from PCs? Apple vs. PCs Current, new, modern brand image Most innovative Amazing screen / resolution No viruses Durability (e.g., aluminum chassis) Apple product ecosystem Apple users are evangelists All about brand image; little substance For “creative types” only Pricey Speedy computers Many more options to suit my needs Lower-priced options Options that lack visual appeal (hardware, desktop screen background) Cluttered software usability (too many options) Too many features; disorganized Variability of quality among computers

Vantis Benchmarks still show highest success metrics for Apple… Macs scored well across the standard metrics of performance, with strong need and liking perceptions. Solid brand trust resulted in strong believability perceptions for each of the Apple computers. The budget-priced Pavilion dm4 and mid-priced Envy 14 were on par with other PCs. HP dm4 and Envy were second and third most popular PCs among non-students, driven by value and quality perceptions. Average scores do indicate possible vulnerability to other competitors not included in this study. VantisKey Measures

…but PCs have improved across waves Wave 2 Wave 1 • Pavilion dm4 was in both waves, and performance has improved with the exception of top two box purchase intent • MBPs performed similarly across waves, while the MB showed improvements in key areas such as purchase intent and liking • Macs in general are being perceived as less unique *Change in computer sample set likely had an impact: MBPs remained among the most expensive, but MBand HP price went from above to below average in Wave 2. VantisKey Measures

Respondent choices also showed improvement in PCs OVERALL SCORING Students were most likely to choose the Macbook Pro 13”, and least likely to choose the Macbook Pro 15” and HP Envy 14. Non-students were second most likely to choose the HP Pavilion dm4 and the Envy 14. # of people who chose this computer 2nd 3rd 1 3 2 2

3/40 people chose this computer Apple Macbook • The Macbook was the most affordable option among the three brands of Apple computers shown. • AUDIENCE • PURCHASES: 1 non-student, 2 student • Resonated most with casual professionals looking for a multi-purpose device, and students with high demands for music and entertainment • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • BRAND • Apple was particularly polarizing among all groups; some embraced the current brand image seen in advertising and some rejected it completely • Price was a common deterrent • ROLE OF DESIGN / DESIGN IMPACT • Apple computers are perceived to be better designed as a result of more friendly, accessible, useable hardware and OS • Advertising plays an important role in shaping these perceptions • As a result, the creative, design oriented respondents more quickly and easily connected with the Apple computers • Good camera • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • USABILITY • The most desirable features included screen resolution and the usability of Apple’s OS

2nd OVERALL 7/40 people chose the Macbook Pro 13” Apple Macbook Pro 13” / 15” 2/40 people chose the Macbook Pro 15” • The 13” model stood out as a small, more powerful alternative to the Macbook; the 15” had less perceived value for the price. • AUDIENCE • PURCHASES (13”): 1 non-student, 6 students; (15”) 2 non-student, 0 student • Resonated most with price insensitive people who preferred the Apple aesthetic and OS, and wanted a powerful processing and graphics solution • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • BRAND • Price was a deterrent (definitely for the 15”) • Limited selection compared to PCs; “It’s like going to In N’ Out, you have three selections. Apple [struggles] to provide more selection to meet your needs.” • ROLE OF DESIGN / DESIGN IMPACT • Keyboard too small for some • Great screen resolution; 15” a good size for graphics though perceived to be too large for some students • Contemporary design; sleek; modern • Classic style; Black keyboard / silver base • Good camera • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • USABILITY • Fast; Great graphics • Greater keyboard spacing felt more comfortable to some, less so to other • Great sound quality • 13” better, more convenient size • Great battery life (8-10 hours) • Backlit keyboard a plus

3rd OVERALL 4/40 people chose this computer HP Pavilion dm4 • ROLE OF DESIGN / DESIGN IMPACT • Perceived to be bulky looking compared to other PCs; felt heavier than other similar sized computers • Some felt it was odd that the touch pad did not line up with keyboard; keyboard not as responsive as others; touch pad clicks loudly • Metallic design felt clean and unique; some liked this and perceived it to have a more personal feel; others did not like the engraved lines since it made the design less simplistic • Color felt too feminine for some with slight pink tones • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • USABILITY • Finger print reader felt innovative for most as an extra delighter • HP dm4 was considered to be one of the best values overall based on a spec-by-spec comparison. • AUDIENCE • PURCHASES: 3 non-student, 1 student • Resonated most with people looking for a good value for their money; processor speed, RAM and size were particularly important • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • BRAND • Good overall package; good value in terms of size, price, visual appeal, and specifications

3/40 people chose this computer HP Envy 14 • Considered the “bigger sister” to the Pavilion, the Envy offers slightly less value for the price. • AUDIENCE • PURCHASES: 3 non-student, 0 student • Resonated most with professionals looking for a well-rounded, artsy and personalized computer • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • BRAND • Good price / value, but not as good as the Pavilion • Bigger hard drive (640 GB) a plus • Perceived to be competing with Apple in the audio space with “Dr. Dré”/Beats audio; HP brand seen as trying too hard by some to build entertainment/lifestyle credibility • ROLE OF DESIGN / DESIGN IMPACT • Metallic “Snakeskin” design feels “artsy,” “pretty”; too personalized for some; desirable for others • Great screen brightness, crispness • Keyboard not as responsive as desired for some; too much space in between keys; • AC adapter too large and heavy • Desktop background felt muted/dull relative to brighter alternatives like Mac • Smooth transition between screen/frame • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • USABILITY • Very heavy relative to others • Liked the Beats Audio (though only a few noticed this) • Difficult to click the touchpad; Some felt it was odd that the touch pad did not line up with keyboard

Key fundamental recommendations for all Apple Compete PCs DESIGN FOR… Quality, durability and reliability Quick boot times; fast and responsive No crashing or freezingRegulated heat / temperature (of chassis and power strip) Sturdy / durable (chassis, hinges, power plug, jacks/ports) Power and endurance Powerful processing (Intel Core i3, i5, i7) Long battery life (Minimum 4 hrs, ideally 6+ hrs)Good graphics (and better consumer education on graphics) High HDD and RAM specs (500GB+ HDD, 4GB+ RAM) Usability and clean aesthetic Fewer applications, buttons, and ways to do the same thing Quiet and responsive, matte keyboard and touchpad Singular, neutral chassis color, with only 1-2 materials Personalization in design can come in the form of skins • MARKET… • Innovation and quality • Tell a consistent story to consumers around an innovative aspect of your PC’s hardware or design, to gain credit for PC innovations • Establish yourself as a trusted brand by marketing and consistently delivering on quality, durability, reliability, and support • Lesser known, differentiating features • Sound quality, TV tuners, blu-ray drives, etc. that only PCs offer • Provide simple, benefits-based positioning and consumer education around specs that PCs deliver better on (such as HDD rpm, graphics, webcam resolution, etc.) • Without “copying” Apple • Differentiate product and marketing in a way that is uniquely PC • Students particularly view PCs with an eye of skepticism, and prefer PCs to be more modern and innovative in a way that does not resemble Apple in any way 1 1 2 2 3 3

Optimize on different scenarios for Student vs. Non-Student PCs • STUDENTS DESIRE… • Significant portability • Smaller screens (13” or 14”) with higher resolution or • Larger screens (15”), but thinner and lighter weightLightweight (3 - 4 pounds)Longer battery life (6+ hrs) • More Entertainment • High screen quality; brighter, more vibrant, high resolution HDMI port for TV viewing, TV tuner High performance sound and video (e.g., speakers, high resolution web cams) • NON-STUDENTS DESIRE… • Higher productivity, multiple uses • Multiple ports (3+ USB, HDMI, VGA)Number pad on keyboard for larger sized laptopsHigh resolution screens (1600x900) • Better specs for lower price • Powerful processing (Intel Core i5 and Core i7)Discrete graphics High HDD and RAM specs (500GB+ HDD, 4GB+ RAM) • <$1000 price points 1 1 2 2

Appendix Detailed Feedback on Computers

Apple Macbook FIRST IMPRESSIONS “Futuristic” “Specs are small for the price, love the color, very fast” “Heavy, great brightness” “Sterile, too white” “Model is getting old”

What factors influenced the consumer experience of each PC?A framework to organize our thoughts: POSITIVE NEGATIVE PURCHASE DELIGHTERS DETRACTORS KEY DRIVERS DEALBREAKERS Non-essential desires of customers Non-critical detractors within the experience Essential elements of the experience that customers desire Critical turn-offs within the experience

3/40 people chose this computer Apple Macbook POSITIVE NEGATIVE Small Affordable Touchpad is one piece Good webcam . White color perceived to be new, modern, and proprietary to Apple Better, more durable hinge Magnetic power connector Does not integrate well with my existing system of devices Not great value relative to others when comparing functional specs (STUDENTS) Poor speaker quality (STUDENTS) Limited durability White color perceived to be sterile, casual, unprofessional DETRACTORS DELIGHTERS KEY DRIVERS DEAL BREAKERS Brand perceived as new, cutting edge, here and now Screen clarity / resolution No viruses Easier to use / better UI Greater compatibility with same brand products(especially important for STUDENTS seeking to streamline their communications, entertainment and music) Price too high Unfamiliar operating system / too great a learning curve Perception of all looks / advertising, limited substance

Apple Macbook Pro 13” / 15” FIRST IMPRESSIONS “Sleek, fast, nice keyboard, simplekeyboard, easy accessible charge,good design” Good enough speed, low storage/RAM,lies about battery life, pretty expensive” “Too heavy, nice keyboard, nice lighting,too expensive” Heavy, big, lots of unused space onkeyboard, nice touch pad”

2nd OVERALL 7/40 people chose the Macbook Pro 13” Apple Macbook Pro 13” / 15” POSITIVE NEGATIVE 2/40 people chose the Macbook Pro 15” • Screen resolution and graphics program available make it a better solution for media/entertainment • Graphics capabilities • Durable; aluminum frame • Backlit keyboard • Better, more durable hinges • Magnetic power connector Does not integrate well with my existing system of devices Not great value relative to others when comparing functional specs Limited hard drive space relative to others (320GB vs. perceived 500GB on average) Limited choice; entry point product still too high priced for some Heavy DETRACTORS DELIGHTERS KEY DRIVERS DEAL BREAKERS Overall aesthetic Screen resolution, “It’s such a pleasure to look at!” No viruses 13” is a good size Battery life of 8-10 hours Price too high; “I wouldn’t pay this kind of money for the name.” 15” too large; less value for the price compared to the 13” (less battery life, heavier) Limited power/storage specs relative to other computers (RAM, hard drive, processor speed)

HP Pavilion dm4 FIRST IMPRESSIONS “Functional, gets the job done” “Medium weight, easy to typekeypad, large icons, easy to navigate,sleek design with silver and black keys” “Nice design, good mouse” “Too round. 4GB memory,5GB HD, better second glance”

4/40 people chose this computer 3rd OVERALL HP Pavilion dm4 POSITIVE NEGATIVE Fast processor Better camera; HD Webcam Fingerprint reader viewed as innovative and “cool” Comfortable keys, nice to the touch Engraved lines patternfelt unique, personalized Bulky looking; rounded overall feel Too much included (too powerful, “I don’t need all that.”) Heavier than other similar-sized PC alternatives Touchpad does not line up with keyboard; less responsive keyboard; loud touchpad click DETRACTORS DELIGHTERS KEY DRIVERS DEAL BREAKERS Great overallspecs for power Great value for the money Engraved lines pattern felt too embellished, not simple Feminine color (pink undertones)

HP Envy 14 FIRST IMPRESSIONS “Modern/sleek” “Too personalized. I don’t like it,looks feminine. Mouse feels a little hard.Seems too expensive for what you get” Screen great, easy to use, great processor” “Very nice design”

3/40 people chose this computer HP Envy 14 POSITIVE NEGATIVE Faster processor than Pavilion More hard drive space than Pavilion Smooth screen (not indented where screen meets frame) “Dr. Dré”/Beats Audio Snakeskin”-like aesthetic Desktop background felt muted/dull relatives to Apple Pricey relative to Pavilion (less perceived value) No HDMI port No fingerprint scanner Trying to “envy” the Mac; perceive music to be marketed similarly and “copying” Mac Large and heavy AC adapter DETRACTORS DELIGHTERS KEY DRIVERS DEAL BREAKERS Great screenquality; perceived to be high-definition / high resolution; brighter; colors more vibrant, more pronounced Powerful overall specs Metallic snakeskinpattern appeared too busy Heavy Keyboard not as responsive as desired Touch pad difficult to click; not centered with keyboard

Wave II Research Results