Apple May Sell 10 Million iPads in 2010 After All

Apple’s May 31 announcement that it sold more than 2 million iPads in the less than 60 days since the tablet’s April 3 launch likely surprised even those who had been boosters of the device.
The 10 million iPads by year’s end that Apple has been rumored to expect to ship – according to a Dec. 28, 2009, blog post by a former Google China executive – once struck many as overly ambitious. It’s a form factor that Microsoft swung and struck out with years earlier and that, more to the current market, was missing a cellular radio and Adobe’s Flash technology. In light of the 2 million figure, however, it seems Apple just may come close to, if not connect with, its target.
In a March 9 research note, Broadpoint AmTech analyst Brian Marshall raised his estimate for the iPad’s 2010 sales from 2.2 million units to 4 million. Saying that he found the media’s view of the device to be “overly pessimistic,” Marshall fudged his estimate still higher, adding that, “If the device lives up to its potential, we believe actual unit shipments could approach 7 million-plus units [in 2010].”
In a June 1 note, however, Marshall adjusted the firm’s estimate higher still, to 2.5 million units in June 2010, 10 million in calendar year 2010, and 17 million in 2011.
“Amazingly, in its first quarter of introduction, we believe the iPad family will easily exceed 10 percent of Apple’s total revenue for the June ’10 quarter (approximately $1.6 billion of $14.6 billion),” Marshall wrote. “Recall it took the iPhone two quarters to achieve the same feat.”
Analyst Ken Hyers, with Technology Business Research, admits he was also a bit surprised to see the iPad reach two million so soon.
“I think the success of the iPad, or rather the degree of its success, is quite remarkable,” Hyers told eWEEK. “For being a niche product that is neither smartphone nor laptop, it has found a much wider market than I had expected, particularly given the current economic environment and consumers’ spending patterns.”
Given this, Hyers still says the iPad’s success was a foregone conclusion, with the bigger questions being how big a success it would be and how rapidly it would sell.
In the iPad’s initial weeks, Apple saw such a strong response in the United States, that it was forced to delay the iPad’s international launch. On May 28, however, it began shipping in the United Kingdom, and now ships to just more than a half-dozen other countries as well. Analyst Roger Kay, with Endpoint Technologies, pointed out that while in the past the United States accounted for approximately half of electronics sales, that figure is now closer to a third, as international sales have risen.
“If you believe that, and you believe that demand in the rest of the world is as strong as it was in the U.S. – which is probably a pretty good assumption – you could say that in the next two months Apple could sell 4 million [iPads abroad], which puts you at 6 million, and you’re only still at August,” Kay told eWEEK.
Explaining that there are a number of factors at play, including how quickly Apple can create enough iPads to meet demand, and whether consumers will tire of waiting before the backlog is addressed, Kay added that sales between 6 million and 8 million for the year “wouldn’t be at all surprising.”
As for competitors such as Hewlett-Packard, Dell and Sony biting into Apple’s market share, Kay said the most likely contender for some of that share is Google’s Android operating system.
“There’s probably a market for something that’s not quite as elegant as [the iPad] but is a lot cheaper,” Kay said, while adding that Apple’s real magic is its touch technology – which Google, despite having a great OS, isn’t likely to beat, no matter who it finds to partner with on the hardware side.
TBR’s Hyers also sees Google as Apple’s primary competition in the space.
“I suspect that competitive products, particularly ones running the Google Android and Chrome OSes will eventually outsell the iPad, though that won’t happen in 2010,” he said, adding that Apple has a “rabid” fan base, willing to buy products that are simple and elegant, despite what Apple chooses to leave out of them.
“There will be a lot of copy-cat tablets out there, but the Android ecosystem has so many manufacturers, with each innovating in different directions, as well as a vibrant application developer ecosystem, that the most creative developments in tablets will eventually be on the Android side,” Hyers continued. “I think that as with PCs, and then with the smartphone, and eventually tablets, we see Apple define and redefine the market and leap out to an early lead, but its own desire to exert so much control over the ecosystem eventual stifles it and a more open parallel ecosystems led by others eventually dominates.”
According to Kay, now that Apple has shown the rest of the industry what a tablet can be, and they’ve all consequently set to work, Apple will necessarily give up market share in time, but only a minority share.
“Apple has pole position in this new race,” he said, “and they’re likely to hold it for a long time.”