Apple will sell 20 million iPads in 2011, predicts a new research note from Barclays Capital, as manufacturers such as Hewlett-Packard and Dell try to catch up in the burgeoning tablet PC space.
"We project that media tablets (which are not currently in our PC unit model)-the most significant of which being the Apple iPad-will sell at least 15 [million] units in 2010 growing to over 28 [million] in 2011," Ben Reitzes, an analyst with Barclays Capital, wrote in a July 7 research note. "We believe this category will have a negative impact on overall PC unit volumes, pushing out and even replacing some notebook sales."
In Reitzes' assessment, lower-priced notebooks become the biggest victims of the tablet category's surge: "We believe it is prudent to use 30-40 [percent] cannibalization rate of the low-end notebook market, which we believe was a similar rate seen when netbooks burst on the scene in 2008."
He also sees Apple as the initial winner in the category. "Apple's vertical integration with software, online services, apps and design give it unparalleled advantages in time to market and ease of use for customers," he wrote. "We believe HP must demonstrate to investors that its Palm deal gives them exposure-and that it can use its distribution and link with printers to help gain a foothold. We believe the tablet market presents challenges for Dell." Barclays Capital apparently estimates total iPad sales for 2011 at 20 million units.
That number certainly seems reasonable, considering that Apple managed to sell 3 million iPads within 80 days of the device's April release. The iPad is seen by some analysts as sparking renewed interest in the consumer tablet PC category, which had traditionally been small and moribund in comparison to that of traditional PCs.
HP confirmed in a July 1 statement that its newly-acquired Palm WebOS would serve as the operating system for the company's tablet PCs and other hardware products. It remains an open question, however, whether the manufacturer will also develop a tablet PC that uses a stripped-down version of Windows 7, as had been anticipated in the months leading up to the Palm acquisition. In any case, HP has made substantial noise about its intentions to challenge the iPad, including a series of videos hosted on its corporate blogs that portrayed a tablet PC prototype in action.
"HP knows it needs to be big in this category, given the iPad seems to be cannibalizing its notebook market after just 3 months of sales," Reitzes wrote in his research note. ""HP is opting to emulate Apple (albeit a bit late) and clearly sees synergies with Palm that could help drive sales of tablets and printers as well as smartphones." HP's scale and its sizable retail channel, he added, potentially make it a strong category competitor.
But Dell could have a harder road ahead: "We are not modeling any benefit from tablets, given Dell's lack of experience and success to date in consumer electronics categories." In addition, Dell may be required to make "a bigger move of its own" if HP's efforts with a Palm WebOS-powered tablet prove successful in the marketplace.
Other analysts have also suggested growth for the tablet PC market, with research firm IDC estimating that worldwide media tablet shipments would total 46 million units in 2014. "IDC expects consumer demand for media tablets to be strongly driven by the number and variety of compatible third-party apps for content and devices," analyst Susan Kevorkian wrote in a May 20 statement.