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Up to 20% of iPad owners expected to upgrade
Mike Abramsky, a technology analyst for RBC Capital Markets, predicts up to 20% of the original iPad's buyers will upgrade to the iPad 2 over the next 12 months. But Abramsky suggests the number of customers upgrading to iPad 2 will be eclipsed by buyers new to the platform. With over 15 million units sold since launching last April, the original iPad is considered to be one of the most successful technology product launches in history. Abramsky, like many analysts, expects the iPad 2 to outperform its predecessor from day one. His predictions indicate Apple will sell at least 500,000 units of the iPad 2 this weekend and 28 million units before the end of 2011. These numbers suggest Apple will welcome at least 25 million new iPad customers in the coming months. Customers bought approximately 300,000 iPads on its first day of availability in April, 2010, and analysts are expecting almost twice as many to sell over the next few days.
iPad 2 success will burst the bubble for competing tablet manufacturers
Analyst Mark Moskowitz of J.P. Morgan Research predicts the success of the iPad 2 will cause oversupply problems for competing tablet manufacturers. Moskowitz claims manufacturers looking to compete with the iPad 2 have extremely ambitious build plans that will hurt them in the long run. According to his analysis, tablet makers could build up to 65.1 million tablets in 2011, a number which greatly exceeds his estimate of 47.9 million in unit sales. This enthusiasm to duplicate the iPad's success could lead to an oversupply in tablets and components used to build these tablets. In a worst case scenario, tablet makers may have an oversupply of 51%. Moskowitz claims the iPad 2 will continue to lead the tablet market in 2011, a sentiment echoed in other reports. The J.P. Morgan analyst views the Motorola Xoom and the upcoming HP Touchpad as potential competitors to the iPad, but claims consumers may be "underwhelmed" by the remaining tablet products slated to hit the shelves in 2011.
Analyst: Apple sold 1.1 million MacBook Airs in 2010
Analyst Ming-Chi Kuo of Concord Securities predicts that Apple sold an impressive 1.1 million MacBook Air units in the last few months of 2010. Kuo originally predicted sales of 700,000 units but bumped up his estimate after receiving new information from Asian supply chain sources. The second generation MacBook Air debuted in October 2010 in 11- and 13-inch models and is reportedly selling at a brisk rate. This boom in sales is casually evidenced by the growing number of MacBook Air models spotted in the wild. Its slim and sexy form factor, coupled with favorable reviews have only bolstered the popularity of this model. Apple has not released sales figures for the MacBook Air, but its Q1 2011 financial earnings report confirmed the Cupertino company sold 2.9 million notebooks during the 2010 holiday shopping season. This sales number includes MacBook, MacBook Pro and MacBook Air models. If Kuo's 1.1 million estimate is accurate, then over 40 percent of Apple notebook sales came from the MacBook Air. Kuo is not the only analyst to take note of the MacBook Air. Shortly after launch, Rodman & Renshaw analyst Ashok Kumar suggested the popularity of the MacBook Air may cannibalize iPad sales. We recently took our own look at the question of the MacBook Air versus iPad and came to the conclusion that the two devices target different audiences. The question is not whether the MacBook Air is superior to the iPad, but which device is best suited to your needs.
Apple's Tim Cook hints at cheaper iPhone, prepaid possibilities to come?
Apple COO Tim Cook got all buddy-buddy with Bernstein Research analyst Toni Sacconaghi this week, talking about Apple's business strategy -- nothing out of the ordinary there -- but this morning, that analyst decided to publicly paraphrase an intriguing part of the interview. Guess what? It sounds like a cheaper iPhone may indeed be in the cards: While Tim stopped short of explicitly stating that Apple would pursue a lower price iPhone, he did state that Apple was working hard to "figure out" the prepaid market and that Apple didn't want its products to be "just for the rich," but "for everyone"; he also stated that Apple "understood price is big factor in the prepaid market" and that the company was "not ceding any market." Cook noted that Apple executives – including himself – had spent "huge energy" in China, noting that it is "a classic prepaid market." He further noted that the handset distribution model was poorly constructed and that Apple would look to "innovate" and do "clever" things in addressing that market.As you can see, there aren't any statements of fact here, just some general strategy ideas, but if Apple indeed plans to put an iPhone in every pot, it would be helpful if it didn't have to rely on the carrier subsidy model.
Rumor: iPhone 5 to land in September
In a research note, analyst Craig Berger of FBR Capital markets makes the bold claim that the iPhone 5 will not launch until September, a timing that overlaps with Apple's annual iPod refresh. Berger writes, "we think a September launch is more likely, off from Apple's traditional iPhone launch schedule, but giving the firm more time to enhance its next-generation instant communications on the phone." To back up this claim, Berger cites reports from Asian parts suppliers that are still ramping up their production of casings and touch panels for the iPhone 5. According to Berger, some chip vendors still have not received orders from Apple, and other component suppliers, such as those for the image sensor, have not been determined. Combined, these various reports paint a picture of a device that may not be ready for a large volume launch within four to five months. Keep in mind that this information is based upon one analyst's interpretation of information obtained from his market sources. While analysts are sometimes correct with their predictions, they are often wrong. A survey of earnings predictions shows that independent financial bloggers are often better than professional analysts at predicting Apple's quarterly financial earnings. To further cast doubt on this September launch, the Loop chimed in with its rebuttal that claims this rumor and the iPad rumor from earlier today are false. The take home message here is to regard this report with a grain of salt and assume the June iPhone 5 launch is a go until we receive additional evidence that suggests otherwise.
Analyst: iPhone mini could increase Apple's market reach by 6X, revenue 2.5X
Analyst Toni Sacconaghi of Bernstein Research predicts Apple could increase its addressable handset market by 6X in unit volume and 2.5X in revenue with the launch of a smaller, less expensive iPhone model, says Forbes. These projected numbers come from his analysis of handset market share and Apple's current market reach. Sacconaghi suggests Apple misses 60 percent of the handset market with its current strategy that limits distribution to select carriers and sells the iPhone at a relatively high price point. Sacconaghi predicts Apple could take two approaches with the cheap iPhone. In one scenario, Apple would produce the iPhone mini, a scaled-down version of the iPhone that would offer a less robust internet and App experience. The handset would be less data-intensive and would debut with a low-cost data plan that costs $15 or less per month. The other option would be to sell an "iPhone touch," which would be an iPhone without a data plan. This hypothetical beastie would have all the capabilities of the iPod touch plus voice calling, but no cellular data. 3G connectivity would be available but optional, a scenario that would let users rely on Wi-Fi for all their data needs. [It's not clear from the Forbes excerpt of the report if Sacconaghi is explicitly saying that hardware-wise, an "iPhone touch" is identical to an iPhone -- Apple would need to include all the 3G radio chips, antenna and corresponding battery power to handle 3G data if it's a customer-selectable option. --Ed.] Sacconaghi suggests that both of these handsets could debut with retail prices close to or less than $149. if Apple could capture even 5 percent of its missed market share with a cheap iPhone, the Cupertino company could see a minimum annual profit boost of $4.50 a share. [Another bit of confusion here; it's not at all clear that Toni S. is considering the unsubsidized price of the current iPhone, which starts at $599 and goes up from there. How we get from that price down to $149 without the full support of a carrier subsidy -- harder to justify without a revenue-rich data plan attached to the phone contract -- is not really clear. --Ed.] While Sacconaghi expects Apple will make this move to a less expensive model, he believes the chance of a summer launch is low. The analyst points out that Apple's iPhone 4 supply is still constrained, and the manufacturer would not want to steal the thunder from the launch of the iPhone 5 expected in June. If Apple were to pursue this low-cost option for the iPhone, perhaps a fall launch tied into its annual iPod refresh might be a more realistic possibility. Thoughts anyone?
iTunes stays on top of growing internet movie business in 2010, but 2011 could be very different
While much of the news lately has surrounded subscription internet movie and TV services the video on-demand market was up nearly 40% last year and is expected to keep growing. According to stats from IHS Screen Digest, video revenue for the Apple iTunes store grew 60 percent last year, but saw its overall market share shrink from 74.4 to 64.5 percent. This is mostly explained as a side affect of the Kinect driving up Microsoft Xbox 360 sales at the end of last year and introducing its Zune store to a new market of families looking for digital entertainment. The up and comer to watch for 2011 appears to be the Wal-mart/Vudu combo, currently fourth in line behind Sony but poised to grow by showing up on more devices and increasing its promotional efforts. Of course, as NewTeeVee points out, the ultimate wild card in all of this is the launch of Ultraviolet buy-once/watch-anywhere DRM later this year (without support from Apple or Disney) and the effect it could have by causing consumers to see digital downloads as a viable option instead of the fragmented mess they are now -- good luck with that. [Thanks, Aaron]
60% of iPad 2 models to be 3G versions
Contrary to an early claim from AT&T's CEO Randall Stephenson that the iPad would be a "Wi-Fi driven product" and that "there's not going to be a lot of people out there looking for another subscription," AppleInsider is reporting that over 60 percent of the first production run of the iPad 2 will be 3G models. In speaking to analyst Ming-Chi Kuo, they learned that at least 62 percent of the 5 million iPad 2 devices Apple is preparing prior to sale will be 3G units, with 46 percent set aside for GSM/UMTS networks and 16 percent for CDMA/EVDO networks. When the iPad was released back in April 2010, the Wi-Fi version was available for three weeks before the Wi-Fi+3G version, so a lot of Wi-Fi-only iPads were sold at first. But in just the first 28 days of sales, Apple sold a combined 1 million units and went on to sell almost 15 million iPads in all of 2010. Recent analyst reports peg sales of the iPad at 48 million in 2011, meaning that almost 30 million of them should be 3G devices. Currently, AT&T offers 3G data plans at US$14.99 for 250 MB or $25 for 2 GB, while Verizon offers 1 GB for $20, 3 GB for $35, 5 GB for $50, or $80 for 10 GB.
Analyst: Apple to expand the iPhone to new carriers, boost sales in Asia
Toni Sacconaghi of Sanford Bernstein said the Apple iPhone is enjoying wide-spread acceptance in Asia that is "on par with the U.S. in some cases." Recent figures from IDC suggest that 12% of all cell phones sold in Japan are iPhones and South Korea's KT confirmed earlier this week that it has sold two million iPhones since launching the handset in late 2009. Apple addressed this growing market during its recent earnings conference call and confirmed that sales in the Asia and Japan have doubled year over year. Sacconaghi projected that Apple will take advantage of this momentum and expand to additional carriers in the Asian region. Currently, the iPhone is sold exclusively by China Unicom in China, Softbank in Japan and KT in South Korea. Future carriers may include China Telecom, Japan's KDDI and LG Telecom in South Korea. Combined, the three carriers have a subscriber base of 75 million and could help Apple sell an additional seven to eight million iPhones in 2011. Interestingly enough, Sacconaghi did not include China Mobile in his list of potential future providers. China Mobile recently stated it was working with Apple on a TD-LTE version of the popular smartphone. Though these predictions are encouraging, they may not pan out as Apple recently said that production of the iPhone 4 is still constrained when compared to global demand.
Canalys report: iPad sales drive Apple PC growth 241 percent in Q4 2010
The iPad is an in-betweener device - it's too big to be a smartphone, and it's not quite a PC. It can be a conundrum for analysts looking to pick apart Apple's quarterly and yearly earnings as there is no established category for the device. Some analysts have chosen to separate the iPad into its own category ("media tablets"), and others prefer to take a different approach and group the iPad with PC sales. This latter category leads to some headline-grabbing reports similar to the one just released by Canalys. The market analysis firm proclaimed that Apple is now the #3 PC vendor in the world, trailing only HP and Acer. The climb to the third spot was propelled by Mac personal computing sales, which skyrocketed 241 percent in Q4 2010. Much of the growth in this category is due to sales of the iPad. This analysis is guaranteed to spark some discussion as rival firms IDG and Gartner separate out the iPad into a distinct category. Once you remove the iPad from the PC sales equation, Apple barely makes it into the #5 slot. [Via Engadget]
iPad high resolution display rumored for third generation
According to IDC research manager Tom Mainelli, the iPad 3 and not the iPad 2 will be the lucky recipient of a high-resolution display. Previous rumors have repeatedly suggested that the iPad 2 will sport a high-resolution "Retina" display. Most of these rumors came from Asian sources and were cautiously repeated with skepticism that Apple could pack a Retina Display into the iPad 2 and keep the price competitive. Mainelli bucks this trend by asserting that it is production and not cost that is the limiting factor for a 10-inch high-resolution display. The technology exists and is reasonably priced, but there are no production facilities capable of producing a Retina Display at the volume Apple will need for the iPad 2. Apple sold over 7 million iPads in its last quarter, and these numbers are expected to skyrocket in the upcoming year. Rather than experience lagging sales due to component shortages. Apple may have opted to push off the high-resolution display and manufacture the iPad 2 with a standard resolution display. Apple is reportedly prepping manufacturers for the iPad 3, giving them time to ramp up their display production capabilities for the third generation tablet. If this analysis by Mainelli pans out and the iPad 2 does ship with a standard display, will you be disappointed? Disappointed to the point that you bypass the iPad 2 and wait for the iPad 3? Let us know in the comments.
iPad holiday sales estimates are all over the place
There is little doubt that Apple was intent on selling a lot of iPads this holiday season. The Cupertino company widened its retail distribution channels by making the iPad available at wireless carriers like Verizon and AT&T and big box retailers like Walmart, Best Buy and Target. Seemingly everywhere you went, there was an iPad for sale. The big question that will be officially answered in Apple's Q1 financial statement is whether this increased retail footprint lead to increased sales of Apple's tablet device. While we wait for the official numbers to be revealed, Fortune turned to analysts and asked them to estimate Apple's holiday sales figures. These iPad holiday figures were all over the place, with some analysts, like Daniel Ernst of Hudson Square, predicting sales as low as 5 million and others, like Bill Shope of Goldman Sachs, estimating as high as 7.54 million units sold. The average number predicted by analysts landed at 6.53 million, which is higher than the 4.19 million sold in Q4 2010. This wide range may be the result of last quarter's faux pas. Analysts may be a bit gun shy at predicting high numbers for this holiday quarter as their Q4 predictions of 5-6 million overshot last quarter's numbers by 1-2 million. Interested parties will have to wait for Apple to confirm the final sales numbers when it releases its Q1 2011 earnings report on January 18, 2011.
RIM: BlackBerry PlayBook battery life is still being optimized, won't cause delays
If you've been keeping an ear to the techie ground, you'll probably have heard some analyst chatter suggesting RIM's BlackBerry PlayBook may be delayed due to issues relating to its supposedly poor battery life. That scuttlebutt has now turned out to be mostly unfounded, with RIM clarifying the situation through a communiqué sent to Erictric: "Any testing or observation of battery life to date by anyone outside of RIM would have been performed using pre-beta units that were built without power management implemented. RIM is on track with its schedule to optimize the BlackBerry PlayBook's battery life and looks forward to providing customers with a professional grade tablet that offers superior performance with comparable battery life." To be sure, it's not an outright denial that there may be PlayBooks floating about with disappointing battery performance, but the immaturity of the software on them is clearly such as to invalidate any conclusions drawn. Perhaps more important than the imprecise discussion of battery longevity (what does "comparable" even mean in this context?) is the note that the company is still on track to complete its software optimizations and deliver its first tablet on schedule. Guess we can all quit worrying now.
Samsung nabs Tegra 2 for Galaxy Tab 2, Google makes Tegra the Honeycomb reference platform?
It sounds like all of NVIDIA's wrangling and cajoling finally paid off, if a couple of analysts are to be believed -- both say the company's dual-core Tegra 2 chipset is racking up wins in the tablet space. We've seen it seemingly raise the bar for smartphone silicon in the LG Star and tease us in slate after slate, but Citigroup's Glen Yeung says that Samsung has "placed a sizeable order with Nvidia for Tegra 2 chips in the first half of 2011, geared for both tablets and smartphones," and BMO Capital Markets analyst Ambrish Srivastava anticipates the next Galaxy Tab will be one of the devices that use it. If that sounds obvious, remember that Samsung was supposed to be producing a dual-core chip of its own. What could cause companies to embrace Tegra 2, if that's indeed what's happening? Any number of reasons, to be sure, but Glen Yeung also says that Google has made Tegra the reference design for Honeycomb, aka Android 3.0, and so Tegra 2 may sound like a fast track to victory in the budding tablet space. Here's hoping it's a good choice for consumers, too.
iPhone could be the financial survivor in Android and Windows Phone 7 war
Needham & Company analyst Charlie Wolf believes that the iPhone could emerge as the big survivor as Android and Windows Phone 7 battle it out in a race to the bottom. Wolf expects that Google and Microsoft will be battling aggressively to keep phone makers building devices with their respective software platforms and those manufacturers will probably slash prices in an attempt to get market share. The result is expected to be significantly decreased margins for everyone but Apple. This could mean a scenario similar to the computer market where commodity Windows computers hold the vast majority of the market, Apple uses its highly polished products to stay far and away the most profitable computer maker. In a new research note to investors, Wolf declared that the launch of Microsoft's new phone OS has been successful despite what appears to be very slow sales after less than two months on the market. According to Wolf there were 135,000 active users of the Windows Phone 7 Facebook app, which he sees an indicator of sales in the absence of actual numbers from Microsoft. Wolf expects the Windows numbers to grow as a result of Microsoft spending a substantial amount of its $500 million phone marketing budget on keeping phone manufacturers and developers in the fold. While Android is roaring along with 300,000 activations a day right now, it is expected to take a hit if and when the iPhone arrives on Verizon's network. However, what Wolf doesn't really address is how AT&T will respond to losing Apple exclusivity. It's possible that it will put more of a push behind rival systems, helping them to increase their share at the expense of some profitability for the manufacturers and OS developers.
55 people think the iPad is more valuable than the Galaxy Tab (updated)
If you read tech news today, expect to see a story making the rounds concerning a "consumer poll" rating the iPad versus the Galaxy Tab. According to the report, an "overwhelming majority" of consumers prefer Apple's tablet over its nearest Android competitor -- a whopping 85 percent of those queried felt the iPad had a higher perceived value than the Tab. Sounds shocking, right? Except there's one small problem. The "survey" (and really, you have to use the term loosely here) consisted of 65 people. Let's just say that again: 65 respondents. That's problem number one. Problem number two is that the survey was conducted by Piper Jaffray analyst Gene Munster, who is not only using a bizarre and somewhat useless metric like "perceived value" to judge these devices, but is also known for wildly miscalculating sales numbers and expectations for Apple products. In fact, Gene Munster should probably be close to the top of the most wanted list for irresponsible analysts. Some of his famous misses? Take the wildly speculative report that Apple would sell 5.6m iPads in 2010 (a baseless prediction which he quickly reassessed to more reasonable digits... the day after the device's launch), or the prediction that Apple would build its own search engine (so far so good!), and of course, Gene's news that Apple will have an HDTV on the market by 2011. Did we mention the $1,000 AAPL stock price call? No? Okay. So this latest report, in which Gene apparently just polled the families living on his block, seems beyond disingenuous. The margin of error on a group of 65 people is so high that it makes the results of the iPad vs. Galaxy Tab study all but meaningless, and further demonstrates the insidious, dangerous power of some analysts and their fantasy football stock manipulations. The moral of the story? Next time you see the names Gene and Munster in the same sentence, don't just take the news with a grain of salt -- use the whole shaker. Update: Piper Jaffray analyst Andrew Murphy (one of the other researchers on this report) got in touch and gave us some background on the sourcing and methodology for finding respondents. In his words: The respondents were chosen randomly on their way in/out of a large national retail chain. After spending time with each device, they were asked which they'd prefer and what a reasonable price for each would be. It's worth noting that that information is found nowhere in the report itself, nor is any other detail provided (type of store, geographic location, age / socioeconomic background, etc.), though this charming section is included: Research Disclosures Piper Jaffray was making a market in the securities of Apple, Inc. at the time this research report was published. Piper Jaffray will buy and sell Apple, Inc. securities on a principal basis.
JPMorgan iPad distribution confirmed, says Bloomberg
According to an email obtained by Bloomberg, JPMorgan Chase & Co will be handing out free iPads to all associates in its global investment banking division (that's investment bankers for you and me). In a pilot program to last until May 2011, the bankers will trial the device to see how well it fares as an additional mobile tool as well as being allowed to take advantage of the device for personal use. "We believe there are real benefits in our working environment that can be realized using this device - as well as the personal productivity and enjoyment that come as part of the package," said two New York-based JPMorgan managing directors in the email. The news comes as the BlackBerry trend at Wall Street seems to be shifting more and more towards the iPhone and the iPad. It's no secret the Apple is pushing hard to expand from its well-established consumer market into the corporate world. Bloomberg reports that banks including Morgan Stanley and Credit Suisse Group AG have recently revealed apps built for the iPad, and that Citi Group and Bank of America are considering the iPhone as an option for their employees. According to Brian Marshal, an analyst at Gleacher & Co, "Apple represents a clear and present danger for RIM going forward. For the first time you have a viable alternative to secure mobile communications and by and large we see people moving away from the BlackBerry platform in droves in favor of the iPhone and the iPad." BlackBerry's PlayBook, which is being touted as a real competitor to the iPad, is due out next year. RIM has got some serious catching up to do considering Apple's head start into the tablet-computing world. However, the question is, though the PlayBook seems to fare better against the first generation iPad, will it be able to compete as well with the iPad 2 (rumored for release early next year)? And whether Wall Street's BlackBerry faithful can hold out until next year for the the PlayBook's release?
AAPL could hit $410 according to R.W. Baird analyst
If only this blogger had held onto that Apple stock that was bought for about $8 while dabbling in the market in the late-1990s. Instead the profits from selling it at $27 a share were put into such wise investments as Webvan. The only good thing about my dot com bubble investing period is that only a small chunk of money was set aside to play with and no more was added. On the other hand if I had just had more patience and stayed in Apple, I'd have a very nice chunk of change with it now trading at over $317 per share and likely to go much higher. According to a recent Associated Press article, William V. Power, an analyst with R.W. Baird is projecting that AAPL shares will be trading at as much as $410 before long and he is not alone. Numerous analysts have projected $400+ for Apple and the average of 38 different projections is $370.50. The key to that continued growth according to Power is the iPhone which currently only commands about three percent of global mobile phone sales. As smartphones grab an ever larger stake of the handset market, Apple and its prime competitors, Android and Windows Phone 7 are all likely to see big gains in the next few years and that will certainly help Apple's bottom line and stock price.
Microsoft acknowledges iPad's effect on netbook market
Just in case you haven't heard, the iPad is having a rather large impact on the computing world around us. And if you don't believe the numerous analysts, business adopters and retailers, then perhaps Microsoft's own Gavriella Schuster, general manager for Windows product management, will sway you. In response to Nick Eaton from the Seattle PI, speaking to Schuster about the success of the iPad and other pending tablet devices threatening Windows' hold on the netbook market, Schuster said (referring to her pink netbook in front of her), "These [netbooks] are definitely getting cannibalized. These are really a second device. But they are getting cannibalized." We know that Windows dominates on the netbook scene. It's a huge market for Microsoft (according to Nick Eaton, over 90% of netbooks ship with Windows installed). So, for Schuster to openly admit that the netbook market is being cannibalized by the iPad further illustrates how it is changing the way we use computers today. [via ComputerWorld]
Analyst: Apple to sell 100 million iPhones, 48 million iPads in 2011
If Wedge Partners analyst Brian Blair is right, 2011 is going to be the year an avalanche of iPhones and iPads sweep the globe. Blair released a forecast on Tuesday predicting that Apple will sell 100 million iPhones in 2011. He's basing those numbers on the fact that Apple thinks it will have a 100% increase in YOY iPhone sales in 2011. Since Apple produced 48-50 million iPhones in 2010, that means a production run and supposed sell-through rate of 100 million iPhones in 2011. "While this number can change and adjust downward or upward based on demand," Blair said, "we believe it is incredibly bullish that Apple feels it is possible that they could see nearly 100% year over year growth for iPhone in 2011 as this would mean that exiting 2011, Apple would have approximately 10% share in the global handset market." Blair also believes that Apple will sell 48 million iPads in 2011. His prediction is based on supply chain checks that Apple plans to produce 45-38 million iPads in 2011 (up from 13.5 million in 2010). Blair believes that the second generation iPad -- which he speculates will have a FaceTime camera and thinner, unibody form function -- will drive the explosive iPad growth.
