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Apple’s iPad Continues to Lead Its Rivals

Companies / Tech Stocks Oct 25, 2010 - 08:27 AM GMT

By: Investment_U


Best Financial Markets Analysis ArticleTony Daltorio writes: Apple (Nasdaq: AAPL) reported sales of only 4.2 million units in its most recent quarter. That disappointed some investors, who then took it out on the stock.

But they forgot that iPad sales still look decent for an item only unveiled in January and introduced in April.

Analysts still see Apple selling 13 to 16 million iPads this year. And keep in mind that the company’s highly successful iPhone sold less than 6 million units in its first full year.

Apple marketed the iPad as a consumer entertainment device. Yet the product’s success has largely come from companies and corporate users.

iPad Connects With Corporations

Apple doesn’t break out corporate sales from its overall sales numbers. But a global survey of 118 chief technology officers conducted by CLSA in August showed that 12% of companies had already deployed iPads or tablets, and 36% were thinking about it.

To managing director Stephen Fox, that “suggests that the iPad is garnering a higher degree of interest from enterprises than we should have expected.”

That’s because Steve Jobs put a lot of effort into making it business friendly. It supports virtual private networks, remote deletion of data in the event of theft or loss, and over-the-air syncing to enforce company-wide distribution of new software policies.

That has led some restaurants to replace paper menus with interactive iPads. And Mercedes Benz wants its U.S. dealerships to have iPads handy for customers to fill out loan forms in the showroom… thus increasing chances of completed sales.

Apple’s Big Lead Over Competitors

Despite pesky speculation about upcoming rivals, the iPad has little competition. Samsung’s Galaxy Tab, a seven-inch tablet set to sell in November, is its only real contender.

Hewlett-Packard (NYSE: HPQ) has nothing until next year. And Research in Motion (Nasdaq: RIMM) won’t introduce its seven-inch BlackBerry PlayBook until early 2011.

Even then, Apple could keep its hold on the market through upgrades. Expected add-ons next year include front and back cameras for video conferencing.

Doug Reid at investment bank Stifel Nikolaus expects the iPad to have an 82% market share of the 19.2 million tablets he forecasts shipping this year.

He points to the end of shipment delays and a “window of de-facto market exclusivity.” And he also thinks it likely that rivals will try – unsuccessfully – to integrate their hardware with relatively unproven operating systems like Android.

After all, Google‘s (Nasdaq: GOOG) Android operating system was originally made for smartphones. So tablets using it don’t automatically display content at high resolutions.

Notably, Samsung has managed to work around that for its Galaxy tablet. But LG chose to wait instead until Android releases a more tablet-friendly version next year.

As for using Microsoft (Nasdaq: MSFT) Windows 7? Since it remains problematic without a mouse and keyboard, many prospective tablet makers are ignoring it altogether.

iPad’s Future vs. PC’s Demise…

iPad sales figures from Apple’s latest earnings report do point out one thing though…

In spite of the fuss surrounding it, the entirely new tablet PC market is far from settled. Microsoft and Intel (NASDAQ: INTC), which rely heavily on PCs, have maintained that the devices will help grow that larger market into a bigger pie.

ARM Holdings ADR (Nasdaq: ARMH) CEO Warren East thinks differently though. His firm’s chip designs are the blueprint for the iPad’s processor. And he sees the end of the PC within the next five years, ushering in “a new era of computing based on smartphones and tablets.”

With that said, the PC looks safe… for now. Christian Heidarson, principal analyst at technology research and advisory firm Gartner, forecasts tablet competition shrinking that market by just 8% this year.

But “from 2013 onwards, the impact will be significantly more pronounced… we will see tablets with the same capabilities as netbooks retailing for $300 instead of $600.”

If he’s right, Apple shareholders can celebrate something more than just the iPhone. Because if the iPad counts as a PC, Apple has gone from fourth to first place in U.S. computer sales in just six months.

The only question left is whether Apple’s stock price already reflects all that good news. And based on the sell-off after its “disappointing” iPad sales, I’d say the answer is no.

Good investing,


Tony Daltorio

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