Chart/data courtesy of Forrester Research

Currently, 37 percent of all adults online in the United States today qualify, and it is probably no huge surprise that the greatest concentration occurs among what Forrester terms Generation Y and Generation Z, those between the ages of 18 and 31. But one of the more interesting tidbits here (besides the fact that Forrester describes those between 46 and 55 as “Young Boomers”) is that Generation X will be mostly Addressable by the end of the year — an increase of more than 6 percent.

Chart/data courtesy of Forrester Research

Wearables have enormous potential for uses in health and fitness, navigation, social networking, commerce, and media. Imagine videogames that happen in real space. Or glasses that remind you of a colleague’s name that you really should know. Or paying for a coffee at Starbucks with your watch instead of your phone. Wearables will transform our lives in numerous ways, trivial and substantial, that we are just starting to imagine.

So what will it take to elevate these accessories from niche to mainstream? Hardware advances in battery life and the way sensors interact with each other will get us further than we are today, but the software platforms that drive the hardware hold the key to consumer adoption. In the same way that Windows took the PC mainstream and iOS and Android are powering the smartphone revolution today, wearables’ success depends on backing from one or more of the big five software platforms — Apple, Google, Microsoft, Amazon and Facebook. These platforms — and their developer communities — hold the key to the consumer connection. How so?

Apple has the most polished marketing, channel and brand. More than any other company, Apple has the potential to make any product go mainstream (witness the iPad). Apple’s expertise in hardware manufacturing, its developer network, its marketing prowess and its channel strength in Apple Stores and partner retailers all add up to a fertile petri dish for wearables. Already, Apple has inspired a number of “app-cessories” built to sync with iOS devices, like the Lark sleep sensor wristband and the (now discontinued) Jawbone UP fitness wristband.

Google has an open platform and a license to dabble. Google’s Android is the platform of choice for WIMM Labs, the Sony SmartWatch and others because it’s open: Product strategists can build whatever products they want on top of Google’s code while still taking advantage of the growing number of developers and companies that build Android apps. Additionally, Google has crucial elements of search infrastructure, with the ability to recognize and retrieve vast amounts of information like location-based data, which could be the basis for many wearable device features.

Microsoft has the best depth sensor yet. Windows Embedded, Microsoft’s operating systems and related solutions for “intelligent systems,” powers a wide range of products from Ford’s Sync automobile information system to Polycom conference phones. But to date, these solutions have been geared more for enterprise use, and haven’t attracted the same breadth of professional and amateur developers that iOS and Android platforms have — a crucial component for taking wearables mainstream. But another Microsoft product, the Kinect for Xbox 360, has captured developers’ imaginations, prompting a Kinect application programming interface for Windows. The potential of a Microsoft powered wearable becomes much more tangible when you imagine the depth sensor of the Kinect turned outward from your body, toward the world rather than toward you.

Amazon has information on more than 100 million products and their buyers. More and more consumers are starting their product searches with Amazon. Its all-encompassing product catalog, detailed product specs and reviews and personalized recommendations would all be assets in wearables. But despite Amazon’s success in manufacturing the Kindle line, we think it’s more likely that Amazon’s wearables strategy will center on distributing apps for other companies’ devices, rather than manufacturing the device itself.

Facebook has a Rolodex — and facial recognition — for 800 million people. Facebook, like Amazon, has the tool kit to be a partner player in the wearables market. Facebook is controversially implementing facial recognition software to autotag photos from its 800 million users — software that would be a perfect fit with a wearable device. Like that guy on the train? Sorry, he’s “in a relationship.”

In three years, we believe wearables will matter to every product strategist, just as mobile and tablets matter today. And because the software platforms are the key to mainstream, these devices have the power to intensify the platform wars among the big five — over issues like talent, intellectual property and patents, developers and customers. Wearables will shift toward mainstream in three phases:

• Phase one: Apple grows the app-cessory market with a deeper investment in wearables. For instance, by adding more sensors and connectivity to the iPod nano, as well as Siri voice control, Apple could immediately spark innovation in iOS apps and more accessories for nano beyond its existing watchbands.
• Phase two: Google broadens wearable experimentation with its open platform. Our call that Google will dominate in wearables — at least in the short term — may be surprising given our skepticism about Android’s prospects on tablets in the past. But an open platform for experimentation is exactly what wearables will need to evolve out of the early stages.
• Phase three: Microsoft competes with an “anti-platform” platform. With Windows 8, Microsoft is pivoting away from .NET/Silverlight to the open Web protocols of HTML5 and Javascript. This shift will be a strength for Microsoft to build on, promoting a future OS for wearables as a more flexible, scalable platform for developers than iOS or Android.

Sarah Rotman Epps is a Senior Analyst serving consumer product strategy professionals at Forrester Research. Follow her on Twitter @srepps. To learn more about this research, visit the full wearables research report here.

But in the process, companies are making a lot of the same mistakes — from not researching ahead of time how workers can best use the devices, to underestimating the costs and the additional challenges tablets present for IT networks.

Here’s a rundown of five of the biggest mistakes, and what companies have learned from them.

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But Apple is still a consumer-focused personal computer company, and one trend I like to revisit is how Apple continues to grow its presence in business and professional settings.

Here’s a pretty good indicator: If you’re in the business of designing things like machines or buildings, there’s a chance you’re using software from Autodesk. Its latest mechanical design software, called Inventor Fusion, is used by mechanical engineers to design cars and planes and factory assembly lines. It’s heavy-duty software that’s currently available on Windows. A new trial version for the Mac has just recently come out is coming out soon.

While engineering software like this tended to be run on beefed-up Windows workstations during the last decade, the Mac has started to make serious inroads among engineers and designers, especially the younger ones, says Autodesk product manager Kevin Schneider. “The younger generation of engineers has grown up with computing expectations that are completely different,” he says. They used Macs at school, probably learned to edit photos and video in Photoshop and Final Cut Pro, so when they start using CAD and other software, naturally, they want it running on a Mac, too.

Autodesk makes four applications available on Apple’s App Store, and the results are pretty stunning. Those applications — Autocad LT, Autocad WS, Motion FX and Sketchbook Pro — have clocked up 2.2 million downloads via the App Store. That’s a lot for any software, and it’s a heck of a lot when you consider that these applications don’t come for free. Sketchbook Pro goes for $59.99; Autocad LT costs $899.99.

The number is even more impressive when you consider that Autodesk apps account for about 2 percent of total downloads on the App Store. Late last year, Apple announced that its store had broken the 100-million-download mark, generating 100,000 downloads a day, and making it the biggest software download site in the world.

It’s just another indication that the Mac is still making inroads against Windows in the workplace. A new Forrester Research survey of 3,350 IT decision makers finds that 46 percent of all firms in North America and Europe issued Macs to their employees in 2011; that figure was up by more than half since 2009.

Motive

As the saying goes, people are motivated by either greed or fear. I think for many big companies, it’s more the latter. And Microsoft has a lot to be scared about.

If you poke behind its $71 billion in revenue and 39 percent operating margins, 30 percent of the goldmine comes from multiyear volume licensing agreements, which Microsoft calls Enterprise Agreements (EAs). According to industry analyst firm Forrester Research, “these profitable agreements bring in the kind of regular revenue preferred by financial-market analysts that monitor Microsoft’s performance.”

What motivates a customer to sign up for an Enterprise Agreement instead of simply buying Microsoft products, like Office, off the shelf? Well, historically, Microsoft pitched EAs as a way to ensure you can cover your workforce with Microsoft products at a discounted price level.

With companies investing in post-PC devices like smartphones and tablets, and evaluating alternatives to Microsoft productivity solutions, such as Google Apps or Salesforce.com, CIOs are starting to wonder whether renewing their EA is still a top priority.

In response to this threat, Microsoft is now pushing its Software Assurance (SA) licensing model, which allows customers to upgrade to newer products and also use its cloud services. The reason for the possible shift, Forrester says, is that “the twin revolutions of client mobility and cloud servers will kill device-based licensing, which is Microsoft’s existing model.”

So if Microsoft doesn’t embrace the cloud in a big way, the EA gravy train could come to an end.

Means

Apple is cool. Facebook is friendly. And Google isn’t evil. Yet look across a sea of computers in a typical company, and you’ll still see Microsoft everywhere.

And I’m not just talking about Windows. Microsoft has two key assets that will help it win the enterprise cloud:

• Office: While the Web and Web-based apps are fabulous for consuming content and even collaborating around it, Microsoft Office is still the standard in productivity to create corporate content. Love or hate those PowerPoint presentations, but they are still how most companies run. And for flexible analysis, Excel is unmatched. Heck, the Macintosh Business Unit at Microsoft (which is primarily Office for Mac) is a $350 million business on its own.
• Outlook/Exchange: For many workers, Microsoft Outlook (with Microsoft Exchange Server on the backend) is the first thing they boot up to start their workday, and the program they remain in all day long. According to industry analyst firm Radicati, 301 million corporate mailboxes used Outlook in 2010. Indeed, some companies have switched from Microsoft Outlook/Exchange to Google Apps and back, because users are too addicted to the interface and functionality of Microsoft Outlook.

So Microsoft still owns two of the key ways “knowledge workers” work with knowledge.

Opportunity

Microsoft isn’t working from a standing start. It actually jumped into the cloud relatively early in 2008 with its Business Productivity Online Suite (BPOS), a hosted platform for collaboration. While BPOS suffered from many challenges, mainly because it was based on a platform that wasn’t designed for the cloud, Microsoft made it clear several years ago that they are “all in” as a company in the cloud.

This year, after many delays and much anticipation, Microsoft finally announced its first platform built for the cloud, Office 365. The new version of Exchange is finally on par with its on-premise alternative. Microsoft SharePoint Online is now flexible enough to meet many enterprise use cases. And Microsoft Lync Online, a real-time chat and videoconferencing system, could be a game changer for company productivity.

In parallel, Microsoft is working away on Windows 8, its big bet on the tablet revolution. With all of Microsoft’s failed past attempts at mobility and tablets, some level of cynicism is expected. But some believe Microsoft’s conviction is real. If Microsoft even gets it 80 percent right on tablets, they will likely win in enterprises that are used to the manageability of Windows, and will be attracted to the inevitably deeper Office integration.

Conclusion

Don’t get me wrong: The innovation in the cloud is coming from all over, mainly from start-ups. For many of these start-ups and other non-enterprise organizations, a non-Microsoft approach will likely be the winner. But for the millions of you working in corporate America, Microsoft is probably the one bringing the cloud to a desktop near you.

Nick Mehta is CEO of LiveOffice and has served in senior operating roles in the enterprise and consumer technology markets for much of his career. He spent more than five years at Symantec Corporation and Veritas Software Corporation (now Symantec), where he served as vice president and general manager of the Enterprise Vault information archiving and discovery software business.

Product strategists in the PC industry are gearing up for 2012 to be the year of the “ultrabook” — very thin, very light laptops, usually with solid-state drives (SSD), that compete with Apple’s MacBook Air — such as the Asus Zenbook and Lenovo U300s. We agree that ultrabooks’ lighter, thinner form will appeal to many consumers. Already, 21 percent of U.S. online consumers say they’re interested in owning one, according to a Forrester Research survey fielded in September. But we see the ultrabook as an evolution of the laptop rather than an entirely new form factor. So what is the next big thing in consumer computing?

The “next big thing” is likely to be many things — we anticipate accelerating form factor diversification beyond the desktops, laptops, netbooks, tablets and smartphones we have today, as we advance deeper into the Post-PC Era. Based on what we see in research and development labs, new products beginning to come to market and gaps in consumer computing experiences, we’ve identified these five form factors as the best candidates for what comes next:

• Wearables: Wearable devices, or “wearables” for short, are devices worn on or near the body that sense and relay information. Many wearables, like the heads-up display (HUD) contact lenses in development at the University of Washington, are years from marketability. But other wearables are already available as consumer products, for uses such as communication and health and fitness. An increasing number of wearables in the health-and-fitness space interact with Apple iOS devices, such as the Lark Technologies vibrating wristband that doubles as an alarm clock and a sleep sensor; and BodyMedia FIT Armbands, which have four sensors to track activity, sleep and calorie intake. WIMM Labs, a Foxconn-funded start-up in Los Altos, Calif., has designed multifunctional wearables, based on Google’s Android software, that it will license to other companies.
• Embedded devices: We define embedded devices as physical objects that incorporate computing processors and sensors, excluding those worn on the body, which we classify as wearables. Like wearables, embedded devices are diverse in form, ranging from devices such as Livescribe smartpens that fit into your pocket, to LG Thinq refrigerators that sit in your kitchen. Embedded devices may or may not have a display — Livescribe pens don’t; the LG Thinq appliances do. Today, embedded devices are widely used in industrial automation and automotives, and they have emerging consumer uses in home automation, entertainment and productivity.
• Surfaces: Surfaces are large interactive displays, which may incorporate multitouch, voice and gesture control, facial recognition, near field communication (NFC), quick response (QR) codes or other input/output mechanisms. Today, surfaces are found mostly in public places such as hotels (Microsoft Surface tables in Sheraton bars) and conferences and events (Obscura Digital’s custom multitouch video installations), as well as in education (interactive whiteboards) and news media (red state/blue state maps), but we see potential for additional uses, especially in retail and marketing. For example, retailers such as Victoria’s Secret have commissioned the design firm frog design to create interactive displays for their retail stores. In Seoul, South Korea, retailers use surfaces to extend their reach beyond their stores: Tesco Homeplus, the No. 2 grocery retailer in South Korea, built “virtual malls” in subway stations to reach more customers without building more stores. Commuters take pictures of QR codes under the groceries they want to buy, and the groceries are delivered to their homes.
• Flexible displays: Flexible displays are computing screens that can be rolled, folded or flexed. Flexible devices can take the form of personal devices, such as an e-reader, or larger surface displays, such as furniture or wallpaper. Flexible displays are likely the farthest from becoming commercialized products because of the lack of a defined use case or customer: Polymer Vision, a spinoff of Philips Electronics, promoted its flexible eBook Reader for years, but declared bankruptcy before bringing the device to market. HP has been developing printable Mylar displays that it imagines could be used for candy wrappers, armband computers for the military or living room wallpaper, but the displays are still several years from commercialization.
• Miniprojectors: Miniprojectors are small devices that project a larger image onto another surface or, in the case of holographic projection, into 3-D space. Miniprojectors can be combined with cameras that recognize gesture to become interactive, similar to the Microsoft Kinect for Xbox 360. Today, miniprojectors such as the Brookstone Pocket Projector are gaining in popularity as iPhone accessories. But they’re still niche products, as consumers must purchase them separately. Apple has already filed a patent to embed interactive projectors into its iPhones, iPads and Macs. Embedded miniprojectors would appeal primarily to information workers, but there could be broader consumer uses as well, such as impromptu photo slide shows or YouTube viewing in a group.

It’s easy to read about computing wallpaper, or contact lenses with embedded heads-up displays, and think that these form factors have no bearing on what product strategists are doing today. But product strategists who see what’s coming can anticipate disruption — or even innovate and become disruptors themselves. As you think about what’s coming in 2012 and beyond, know that none of these devices will operate in isolation. The most successful products will work with other products — for example, wearables that talk to smartphones and TVs; surfaces that are activated by the presence of your smartphone. We’re living in a multidevice, multiconnection world, and the best experiences will be those that work across devices and platforms. In that sense, the next phase of the Post-PC Era doesn’t look so different from today.

Sarah Rotman Epps is a senior analyst at Forrester Research, serving consumer product strategy professionals. Follow her on Twitter at @srepps

Prime is so crucial to the Seattle-based company that it is willing to lose hundreds of millions of dollars a year on the program, by some analysts’ estimates. Until this year, Prime offered only quick shipping for $79 a year. But the online retailer has added services to Prime while keeping the price unchanged as a means of keeping customers loyal to Amazon’s more-profitable operations.

The cost of Prime underscores the willingness of Amazon Chief Executive Jeff Bezos to shell out money as he continues the company’s transition from an online retailer of paper books, to an Internet megamall that sells an array of products from various companies, to a seller of digital goods and even its own devices, such as the Kindle Fire tablet computer. Forrester Research estimated that about five million Fires, which begins shipping Tuesday, will be sold by the end of January. Amazon declined to reveal the Fire’s sales.

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New research was released today by Forrester on Groupon’s second day of trading on the public markets. In midday trading, the daily deals giant was down 17 cents, or less than a percentage point, to $25.94.

In the report, Forrester’s biggest dig on the space is that it has created “deal-hunting gremlins,” who are getting a discount on services they would normally be willing to pay full price for. Additionally, analyst Sucharita Mulpuru finds that the daily email model is expensive to scale and that consumers will ultimately unsubscribe as offers fill up their inboxes.

Other findings:

• 29 percent of subscribers of coupon and flash sales sites have unsubscribed because they don’t want to receive so many emails
• 49 percent don’t sign up because they don’t want to receive more email
• 83 percent receive emails from Groupon
• 41 percent receive emails from LivingSocial
• 26 percent of subscribers have purchased more than four offers.
• 36 percent have never made a purchase.

The survey was conducted from June 11 to 21 and had a total of 9,449 respondents.

(Image courtesy of Groupon’s Flickr page.)

For instance: Did you know that lots and lots and lots of people are pining away for a tablet that runs Windows?

Here’s a new survey out from Boston Consulting Group, which says 42 percent of U.S. consumers would like to buy a tablet that runs Microsoft’s operating system. That makes it the most desired OS by a significant margin, trailed by Apple’s iOS and Google’s Android.

So that’s a little odd, right? Because on the Internet, everyone loves Apple. And also, because there is no Windows tablet.*

But the BCG study isn’t an anomaly. Forrester conducted a poll earlier this year and got the same message, with an even starker gap between Microsoft and everyone else: “Only 9% of consumers considering buying a tablet actively prefer an Android tablet — compared with 16% who prefer iOS and 46% who prefer Windows.”

When I wrote about it back in August, I found this so puzzling that I got Forrester researcher Sarah Rotman Epps on the phone to confirm that this wasn’t some weird typo. Nope, she told me.

And it’s sort of common sense: “When we survey consumers, it becomes very clear that Windows is still a very popular brand,” she said. Apple has sold tens of millions of iPads, but Microsoft has sold more than 400 million Windows 7 devices. What that says to me is that there’s a huge opportunity that Microsoft has left untapped so far.

So, what do you think, Steve Ballmer? I know you folks will be preoccupied today with a slew of Xbox announcements. But maybe when you’re done, you can give the people what they want.

*I know, I know — there are Windows tablets. But there aren’t practical, consumer-focused iPad-like tablets running Windows on the market now. Though one day there might be. Okay?

That discovery is making retailers focus on tablets ahead of the all-important holiday season, as the tough economic backdrop puts a premium on what the industry calls “conversion” — making sure the shoppers who show up actually buy something.

Tablets still account for only a small percentage of overall e-commerce, but they are punching above their weight. While the conversion rate — orders divided by total visits — is three percent for shoppers using a traditional PC, it is four or five percent for shoppers using tablets, says Sucharita Mulpuru, an analyst at Forrester Research.

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With the adoption of smartphones and tablets, many retailers are scrambling to understand what e-commerce looks like on the mobile device. As it evolves, increasingly it’s looking like the bigger opportunity might be on tablets — not the phone.

Today, Google released Google Catalogs, a free iPad app that enables shoppers to browse — in an electronic form –the familiar glossy print publications that come in the mail. It launched the app with dozens of the most popular catalogs, including Williams-Sonoma, Pottery Barn, Crate and Barrel, L.L. Bean, Lands’ End and others. An Android version is expected soon.

Google Catalogs product manager Abigail Holtz said Google has built other shopping experiences for the Web that are all about search, but this time it was looking to build something users would browse, like window-shopping in a mall.

“We asked how do we create the inspirational browse-shopping experience, and we thought about whether it makes sense on the Web, but the platform that it is most poised for it is the tablet,” Holtz said.

A Forrester Research report titled “Why Tablet Commerce May Soon Trump Mobile Commerce” found in a survey among retailers that on average 21 percent of their mobile traffic comes from tablets, with several reporting figures north of 50 percent.

Separately, we’ve reported that various retailers had expected revenues from all mobile devices to hit about 10 percent of overall sales by the end of the first quarter, and that later this year, that figure could inch even higher, as more tablets and smartphones get into the hands of more consumers.

Google Catalogs is a single application that provides access to dozens of catalogs. From the homepage, it provides a number of categories: Women’s fashion, jewelry, beauty, home, men’s fashion, kids and gifts. Once you drill into each one, you have the option of seeing dozens of specific catalog titles displayed with their most recent edition.

Because the pages are digital, you can zoom in to see products up close, tap on images of price tags to learn more about the item, or even search for the product in nearby stores. Some retailers have also integrated videos and other digital content.

For instance, in the Williams-Sonoma catalog, one of the listings is for a Cuisinart product that cooks and blends soup in one device that costs $365. The blender ad also links to a four-minute video of a woman demonstrating how to use the blender to make smoky lentil soup.

“It adds a richness to the shopping experience that is really engaging for consumers,” Holtz said. “As I’m flipping through, it’s different from a catalog. You can go deeper.”

From a product page, users can either find the item in a store or buy it on the retailer’s Web site. The app does not handle any of the payment processing, and Google does not charge any of its partners referral fees.

The app is very similar to two other catalogs also available in the iPad App Store. Menlo Park, Calif.-based Padopolis launched Catalog Spree in April and TheFind launched Catalogue in May. Both of the companies have some of the same catalogs as Google and are charging retailers affiliate fees for purchases made on their sites.

Holtz said Google doesn’t have plans to start charging, although it is a possibility in the future. There’s also a chance it could monetize the app in other ways, she said, but declined to be more specific.

Here lies the challenge of Research In Motion (RIM), maker of BlackBerry smartphones and now, the PlayBook tablet: To conquer the enterprise–which has historically been RIM’s stronghold because of its White House-level security and lack of competition–it needs to sell tablets to consumers.

This isn’t impossible. Apple has had remarkable success selling the iPad to consumers and businesses. In a Forrester survey of U.S. consumers conducted in January 2011, 34 percent of iPad owners reported using their device at work. With enhanced security and dedicated support (“business specialists” at Apple Stores), we’ll see more companies join Mercedes-Benz and GE in buying iPads directly for their employees. But Apple’s success has come precisely because it puts consumers first. A typical statement we hear from executives at firms considering buying tablets is, “We’d really like a tablet that integrates better with our back-end systems, but we’re going with iPads because we want employees to like them.” Businesses care about how workers feel about technology.

Contrary to popular belief, RIM is pretty successful selling its devices to consumers, too. BlackBerry smartphone shipments, subscribers, and revenues continue to rise quarter after quarter, even in mature North American markets. Most important, BlackBerry consumer customers (“BlackBerry Internet Service,” or BIS) now outnumber BlackBerry enterprise customers (“BlackBerry Enterprise Service,” or BES).

But the PlayBook is a complicated product to sell to consumers. For starters, the “BlackBerry Bridge” feature, which displays email and BlackBerry messenger content only when in Bluetooth-range of a BlackBerry smartphone, has security appeal for CIOs but is potentially confusing to consumers. Yes, you can still get Web-based email like Gmail on the device, but there’s no native email application like there is on the iPad—and email is the No. 1 activity consumers do on tablets today. Second, compared with the iPad the PlayBook has relatively few native apps designed for the platform; it supports Android apps but only those designed for Gingerbread, not Honeycomb (not that there are many of those, either). Apps don’t matter to all tablet shoppers, but they do matter to some: 23 percent of consumers considering buying a tablet rank “Number of available apps” in their top-three criteria; 19 percent say the same about Flash support, which the PlayBook browser will have.

Whereas Apple owns its own channel–the Apple Store–to educate and sell the iPad to consumers, RIM will be relying on the Blue Shirts at Best Buy to sell its device, as well as its carrier partners and other local retailers (20,000 stores worldwide). It’s going to be a tough sell. While the PlayBook has dazzling performance and multitasking—for example, the ability to switch apps and keep a video or game running in the background—and solid hardware design, consumers will be comparing a first-generation PlayBook with a second-generation iPad. iPad will dominate tablet sales in 2011. But this is a marathon, not a sprint, and we see a path for RIM to gain market share in 2012. An improved version-two PlayBook must have native email, built-in security and more native apps for QNX, the RIM’s recently-acquired operating system for the PlayBook. To get there, RIM will need to port QNX to its smartphones to expand the platform’s reach and make it more appealing for developers.

Even so, the PlayBook’s appeal is likely limited to BlackBerry smartphone customers, and to win them over, RIM’s marketing execution needs to be flawless. With the recent departure of CMO Keith Pardy, RIM’s new leadership needs to step up and define and execute a vision for this product that puts consumers on par if not ahead of CIOs. Without that vision, RIM will have an expensive product failure on its hands.

Ted Schadler is a vice president and principal analyst and Sarah Rotman Epps is a senior analyst at Forrester Research.

In a new report out on Tuesday, analyst Sucharita Mulpuru forecasts online sales in the U.S. in November and December will increase 16 percent over last year, reaching $52 billion. Retail sales as a whole are likely to increase just 2.3 percent, according to the National Retail Federation.

Last month, eMarketer analyst Jeffrey Grau similarly forecast that holiday sales would increase 14 percent.

Why is e-commerce continuing to chip away at old-fashioned retail? Online shopping is still winning a few new converts, but those are few and far between, says Mulpuru. Rather, online retailers like Amazon.com are convincing existing customers to try out buying new things online–so people who might have started out just buying books online 10 years ago today have since also become ok with the idea of buying shoes or diapers online, too. “People become evangelized to the channel when they start shopping in a couple of categories,” says Mulpuru.

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The U.S. government next year will begin to dole out billions of dollars to health-care providers who adopt electronic medical records. Doctors also face a federal mandate to upgrade software as the U.S. switches to a new system of insurance billing codes.

For Indian companies with experience in software outsourcing, the flurry of health-related tech spending in the U.S. is “like another Y2K opportunity,” says Pradep Nair, head of the health-care practice at New Delhi’s HCL Technologies Ltd., referring to the turn-of-the-millennium computer glitch that provided work for Indian tech firms.

But cashing in on what Forrester Research expects to be a nearly $50 billion U.S. health-information market in the next two years won’t be straightforward for Indian companies. While they have had success handling outsourced work for pharmaceutical companies and insurers, Indian companies have struggled to win business from U.S. hospitals, which will do the bulk of new health-tech spending.

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A study of 1,200 e-reader owners by Marketing and Research Resources Inc. found that 40 percent said they now read more than they did with print books. Of those surveyed, 58 percent said they read about the same as before while two percent said they read less than before. And 55 percent of the respondents in the May study, paid for by e-reader maker Sony Corp., thought they’d use the device to read even more books in the future. The study looked at owners of three devices: Amazon.com Inc.’s (AMZN) Kindle, Apple Inc.’s (AAPL) iPad and the Sony (SNE) Reader.

While e-readers are still a niche product just beginning to spread beyond early adopters, these new reading experiences are a big departure from the direction U.S. reading habits have been heading. A 2007 study by the National Endowment for the Arts caused a furor when it reported Americans are spending less time reading books. About half of all Americans ages 18 to 24 read no books for pleasure, it found.

Some 11 million Americans are expected to own at least one digital reading gadget by the end of September, estimates Forrester Research. U.S. e-book sales grew 183 percent in the first half of this year compared with the year-earlier period, according to the Association of American Publishers.

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Forrester (FORR) analyst James McQuivey asserts in a blog post today that Google TV has a chance to succeed at redefining the consumer television experience in a way in which Apple (AAPL) TV, Roku, Vudu, Boxee and various other combatants have not been able to do.

“I have been amazed at how little people understand what’s really going on here,” he writes. “Google TV is a bigger deal than you think.” McQuivey asserts that TV matters “in a way that nothing else does,” driving $70 billion a year in advertising and a comparable amount in cable and satellite TV fees, plus another $25 billion in consumer electronics sales. He also points out that viewers watch TV on average 4.5 hours a day.

Google’s (GOOG) goal: to get a chunk of the giant pot of TV ad money.

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This is a large acquisition for SAP (SAP) and one that will give it quite a bit more fire power in its battles with nemesis Oracle (ORCL). As Forrester Research’s (FORR) Paul Hamerman told Bloomberg earlier today, “The deal makes sense because SAP is betting heavily on in-memory computing and mobile applications as the future of computing and Sybase brings to the table a capability for high-speed in-memory databases and a mobile application platform.”

Here’s the announcement:

SAP to Acquire Sybase

Strategic Move to Accelerate the Reach of SAP® Solutions across Mobile Platforms,

Help Companies Manage and Analyze Business Information and Processes on Any Device

WALLDORF, Germany and Dublin, California, USA — May 12, 2010 — SAP (NYSE: SAP) and Sybase, Inc., Dublin, California (USA) (NYSE: SY) today announced that SAP’s subsidiary, SAP America, Inc., has signed a definitive merger agreement to acquire Sybase, Inc., in a transaction that will bring the two information technology (IT) leaders together to enable companies to become better-run “unwired enterprises.” As a result of this transaction, customers will be able to better harness today’s explosion of data and deliver information and insight in real time to business consumers wherever they work so they can make faster, more informed decisions. Companies will benefit from greater productivity, speed and agility to help their businesses grow. Under the terms and conditions of the merger agreement, SAP America, Inc., will make an all cash tender offer for all of the outstanding shares of Sybase common stock at $65.00 per share, representing an enterprise value of approximately $5.8 billion.

The per share purchase price represents a 44% premium over the three-month average stock price of Sybase. The transaction will be funded from SAP’s cash on hand and a €2.75 billion loan facility arranged and underwritten by Barclays Capital and Deutsche Bank.

The Sybase board of directors has unanimously approved the transaction. The closing of the tender offer is conditioned on the tender of a majority of the outstanding shares of Sybase’s common stock on a fully diluted basis and clearance by the relevant antitrust authorities.

SAP and Sybase to Benefit from Synergies

Both SAP and Sybase will benefit from synergies across product lines and markets. SAP will accelerate the reach of its solutions across mobile platforms and drive forward the realization of its in-memory computing vision. This will drive higher user adoption of SAP software and unlock significant business value out of existing customer investments. In addition, Sybase’s innovative mobile platform can connect all applications and data (SAP and non-SAP) and enable them on mobile devices. SAP, Sybase and their customers will be able to tap into Sybase’s messaging network to reach 4 billion mobile subscribers through 850+ operator relationships worldwide and engage their consumers via alerts, transactions and promotions on their mobile devices.

For Sybase, SAP in-memory technology will provide the opportunity for dramatic performance improvements to its analytic processing capabilities. Sybase will also be able to bring its complex event processing and analytics expertise, which was built in the financial sector, to customers in other industries, markets and product areas in which SAP has a complementary, strong presence. Finally, Sybase’s core database business will be enhanced by SAP in-memory technology to deliver integrated transactional and analytical capabilities. At the same time, SAP reinforced its dedication to customer choice by stating that it will continue its commitment to supporting leading database vendors.

The synergies between the two companies will also expand opportunities for the SAP and Sybase ecosystems. Software and implementation partners can capture new opportunities by innovating on Sybase’s market-leading mobile platform, which will make it easier to create, deliver and securely manage mobile enterprise applications across major device types.

SAP and Sybase Stronger Together

“With this transaction, SAP will dramatically expand its addressable market by making available its market-leading solutions to hundreds of millions of mobile users, combining the world’s best business software with the world’s most powerful mobile infrastructure platform,” said Bill McDermott, co-CEO of SAP and member of the SAP Executive Board. “This is a game-changing transaction for SAP and Sybase customers, who will be better able to connect their employees with key functionality and information from anywhere and make it easier for companies to make faster, more informed business decisions in real time. With SAP’s customer-centric approach, we are resolute in our commitment to support Sybase customers to be best-run businesses.”

SAP said it will continue to support each organization’s product road map while enhancing products to help customers derive additional value from existing investments. It also stated that both companies’ development organizations would remain intact, with the opportunity to cross-collaborate to increase innovation for customers.

Headquartered in Dublin, California, Sybase delivers a range of solutions to ensure that customer information is securely managed and mobilized to the point of action, including enterprise and mobile databases, middleware, synchronization, encryption and device management software, and mobile messaging services.

“Mobile devices are becoming the preferred interaction point with business applications, whether the user is a factory supervisor, a retail manager or an entrepreneur in a developing nation,” said Jim Hagemann Snabe, co-CEO of SAP and member of the SAP Executive Board. “The combination of SAP and Sybase will give users the option of running their operations from leading mobile devices and will unleash the full power of mobility, including messaging interoperability, content delivery and mobile commerce services, across all companies and roles and in any location. In addition, innovation around Sybase’s established database business will pave the way for ‘real’ real-time analytics and finally remove the decade-old barrier between business applications and business intelligence.”

Sybase to Operate Stand-Alone

The two companies announced that Sybase will operate as a standalone unit under the name “Sybase, an SAP Company.” Sybase’s management team will continue to run the business. The SAP Executive Board plans to propose to the Supervisory Board to appoint the Chairman and CEO of Sybase to SAP’s Executive Board.

“This transaction better positions SAP and Sybase to bring remarkable benefits of mobility and real-time information to our customers’ existing technology investments,” said Vishal Sikka, Chief Technology Officer and member of the SAP executive board in charge of Technology and Innovation. “SAP’s in-memory computing technology is already revolutionizing business analytics and will bring a paradigm shift to enterprise data management for all applications. The in-memory team within SAP will continue its current mission to innovate in-memory technology and these innovations will enable both SAP and Sybase to bring unprecedented value to their customers.”

“This combination is a transformative event in the software industry,” said John Chen, CEO of Sybase, Inc. “SAP’s in-memory technology in combination with Sybase’s database technology will revolutionize how transactional and analytic applications are built, benefiting all businesses. Further, by combining the market leader in enterprise applications with the market leader in enterprise mobility, companies around the world will be able to run their business from many devices. This will drive a new wave of enterprise productivity. The combined SAP/Sybase will be able to provide a software offering that enables companies to transform their businesses in an increasingly data-, consumer- and mobile-centric world.”

Transaction Expected to Be Accretive to SAP’s Earnings per Share on a non-IFRS Basis in 2010 and Beyond

The transaction is expected to close during the third quarter of 2010 and will be immediately accretive to SAP’s earnings per share on a non-IFRS adjusted basis. SAP expects the combination to deliver synergies through both revenue enhancement and the realization of cost efficiencies. Additional details regarding specific product, go-to-market and other integration details will be provided after the transaction is complete.

Tender Offer Details and Disclosure Information

SAP America’s wholly owned subsidiary, Sheffield Acquisition Corp.will promptly commence a tender offer under US securities law for all outstanding shares of Sybase common stock.

The completion of the tender offer and acceptance of Sybase’s shares is conditioned on the tender of a majority of the outstanding shares of Sybase’s common stock on a fully diluted basis and the satisfaction of regulatory and other customary conditions. Approval of the transaction by SAP’s stockholders is not required and the transaction is not subject to a financing condition.

Financial Analyst and Media Conference Call

SAP and Sybase senior management will host two conference calls for financial analysts and media to discuss the transaction:

On Wednesday, May 12th, at 11:30 pm CET / 5:30 pm Eastern (Dial in numbers: +49 6958 999 0797 (Germany), +44 20 8515 2302 (UK), +1 480 629-9692 (US), Conference ID: 4301600; Replay numbers: +44 20 7154 2833 (UK), +1 303 590-3030 (US), Access code: 4301600)

On Thursday, May 13th at 8:00 am CET / 2:00 am Eastern (Dial in numbers: +49 69 58 999 0797 (Germany), +44 20 8515 2302 (UK), +1 480 629-9692 (US), Conference ID: 4301586; Replay numbers: +44 20 7154 2833 (UK), +1 303 590-3030 (US), Access code: 4301586)

The calls will be webcast at www.sap.com/investor.

“If you’re considering upgrading Office with Office, we’d encourage you to consider an alternative: upgrading Office with Google Docs,” Glotzbach advised.

“If you choose this path,” he explained, “upgrade means what it’s supposed to mean: effortless, affordable, and delivering a remarkable increase in employee productivity. This is a refreshing alternative to the expensive and laborious upgrades to which IT professionals have become accustomed.”

Fascinating counsel, coming from a company that just a few years ago was insisting that it had no plans whatsoever to compete with Microsoft’s (MSFT) core PC software business, even as it rolled out the pieces of its own hosted desktop productivity suite.

In any event, much as Google (GOOG) claims its efforts are a match for Office, particularly Office 2010, which allows people to edit and collaborate on documents and presentations on the Web, market research says they aren’t perceived that way. And in all likelihood, Microsoft’s 94 percent share of the productivity software market (Gartner) will remain unshaken for some time to come.

To wit, a survey from Forrester Research (FORR) released on the eve of the Office 2010 launch shows quite clearly that Microsoft has little to worry about from Google Apps. Of the 115 North American and European enterprise and SMB decision makers the research house contacted, 81 percent said they use Office 2007, while four percent said they use Google’s productivity offerings. And one third said they plan to upgrade to Office 2010 in the next year.

Why?

Microsoft Office is familiar, and, in many cases, an upgrade to Office 2010 was included in their licenses (click on chart below to enlarge).

So while Google Docs might represent, as the search sovereign argues, “a real alternative for companies: a chance to get the collaboration features you need today and end the endless cycle of ‘upgrades,’” the market doesn’t yet much care. Yet. And that’s all that really matters.

Says Forrester: “The alternatives to Microsoft Office today do not meet the needs of the enterprises Forrester surveyed. Common end user barriers to adoption of alternatives include lack of required functionality, third-party integration requirements, user acceptance, lack of seamless interoperability with Office, and legacy content support needs. These gaps will be bridged in the coming years as Google, OpenOffice.org, and others mature.”

The report on Windows 7 users could be good news for Microsoft as it tries to improve customer satisfaction after problems with Windows 7’s predecessor, Vista. But Forrester points out that Microsoft still has “hurdles to leap” in getting people to upgrade.

Windows launched in October of last year and showed strong early sales. The survey used in both Forrester reports was conducted in December and gives a further indication that consumers see Windows 7 as an improvement. More than 80 percent of early adopters rated their satisfaction with the operating system as a 4 or 5 on five-point scale, compared with less than 75 percent for Windows systems overall.

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The ranks of these networkers, dubbed “conversationalists” in a report released today by Forrester Research, have grown in the past couple of years. They’re mostly women, and they aren’t only young people–70 percent of the adults in this category are 30 and older. (The report looked only at people 18 and over, so the youngest users aren’t included.)

Although Twitter might seem to be the most likely outlet for these conversationalists, Forrester’s surveys “indicate that there are actually even more people conversing this way through Facebook.”

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When Yahoo launched its massive advertising campaign–featuring the tagline, “It’s Y!ou”–earlier this fall with splashy events in New York and slick marketing rollouts all over the U.S., not everyone at the Internet portal loved it.

“It’s not M!e,” joked a longtime Yahoo (YHOO) exec to BoomTown in an email, one of many like it that I got from inside the company, all of which worried about whether the motto and ad effort had enough punch and point to get Yahoo back on track.

And, outside the company, several too-early reports purported to show that the $100 million campaign to revitalize the Yahoo brand was not working because it had not increased audience–although both Forrester Research (FORR) and Nielsen penned counterarguments.

In any case, none of the noise seems to have bothered the Silicon Valley-based Yahoo, whose execs say they are thrilled with the results so far. Thus, Yahoo is staying on message as it moves into the latest phase of the multiyear effort.

That includes adding to the overall brand promise more specific “product proof points” that focus on Yahoo’s “hero products,” such as search, email, homepage, mobile and more.

Yahoo’s new lead creative team at Goodby, Silverstein & Partners has been working on the next direction, which will roll out after the new year and stress “relevance.”

The next push will include even more online advertising, as well as more outdoor branding. But it will also add guerrilla marketing, such as live demos at analog locations, from Internet cafes in Malaysia to senior citizen centers here in the U.S.

What’s not changing at all is the main brand declaration, as the message rolls out to more countries in the months ahead.

“We are committed to ‘It’s You,’ and it is a foundational element that will remain intact,” said Penny Baldwin, SVP of Yahoo’s global integrated marketing and brand management, in an interview with me. “Now we are going to be demonstrating and tuning the experience.”

Added Baldwin, who arrived at the company this summer: “The first chapter has been to root the brand position…since the image and stance was muddied in the past. Now, we are going to clarify our position.”

And that position is that Yahoo execs believe feedback from sales, consumers, employees and advertisers to the campaign has been largely positive and will goose its business.

More to the point, said Baldwin, the effort has started to show some results, especially in international markets such as India and the U.K, where the brand campaign first launched.

“Our main message has been to say that we have more of what you want and less of what you don’t want and showing relevance is working,” said Baldwin. “We are simply give it more meaning and more evidence, so consumers will spend more time with us.”

Baldwin points to several different and more recent polls, including from comScore (SCOR) and Nielsen, that do indeed show increases in Yahoo homepage engagement of three to five percent from September to October.

A Yahoo spokesman said that the company’s goal has been mostly to “increase engagement with U.S. audience (where we saw positive results in page views, time spent) rather than on unique visitors, which will take longer as we already have about 80 percent penetration.”

In less mature markets, the spokesman noted, both traffic and engagement are the goals.

As for any grumpy employees, the spokesman said a recent internal Yahoo survey showed that about 80 percent of employees responded favorably or very favorably to the brand, and another 13 percent were neutral.

(Apparently, that was the 13 percent who all emailed me!)

Most important, he said, Yahoo was sticking to its guns because it has seen “statistically significant lifts in ‘brand familiarity’ and ‘future brand usage.’”

That’s a fancy way of saying people are noticing the ads, which would be hard not to, since they are everywhere (including on this Web site).

And there will be more where that came from, said Baldwin, as the company leans further into its initial efforts at making consumers think again about Yahoo.

“This is a brand transformation issue,” said Baldwin flatly.

While e-reading devices were once considered a hobby for early adopters, Justin Timberlake is now pitching one on prime-time TV commercials for Sony Corp. (SNE). Meanwhile, Amazon.com Inc.’s (AMZN) Kindle e-reading device has become its top-selling product of any kind. Forrester Research (FORR) estimates 900,000 e-readers will sell in the U.S. in November and December.

But e-reader buyers may be sinking cash into a technology that could become obsolete. While the shiny glass-and-metal reading gadgets offer some whiz-bang features like wirelessly downloading thousands of books, many also restrict the book-reading experience in ways that trusty paperbacks haven’t, such as limiting lending to a friend. E-reader technology is changing fast, and manufacturers are aiming to address the devices’ drawbacks.

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