Apple iPad Sales to Soar, Limited by Lack of Flash, Analysts Say

iSuppli expects Apple to see sales of 7.1 million iPads in 2010, the research company reported April 2, calling its estimate conservative.
By 2011-with new applications and a lower price expected-sales figures should more than double to 14.4 million and nearly triple by 2012, to sales of 20.1 million units.
Driving these expectations, iSuppli wrote, are the iPad’s multitouch capability, compelling applications and basically all the other good stuff that’s led to Apple’s successes so far.
“The iPad represents an intriguing mix of two devices that have struggled to gain traction for years: Internet appliances and tablet PCs,” iSuppli analyst Rhoda Alexander said in a statement.
“In a sharp departure from past tablet implementations, it appears that Apple has both minimized and maximized the capabilities of the devices, limiting it as a creation device but compensating for this shortcoming by offering a wealth of easily consumable applications,” Alexander continued. “The device’s initial limitations are likely to be overlooked if Apple provides enough content to keep users engaged within the product limitations.”
The iPad’s most obvious limitation is its incompatibility with Flash, which Apple CEO Steve Jobs has called a buggy battery drainer, preferring to work with other, less popular technologies instead. While Jobs has convinced many popular Websites to follow his lead, his decision to leave Flash off the iPad will have consequences, iSuppli said.
“Until Apple addresses this issue one way or another, its decision not to support Flash … will have a limiting effect on the iPad’s sales potential,” iSuppli analyst Francis Sideco said in a statement. “This is because one of the key use cases of the device, as marketed by Apple, relates to Web browsing or consumption of online content. Absent Flash, iPad uses will not be able to enjoy Flash-driven content, which is used in a considerable [number] of Websites, as well as Web-based games and video.”
But despite critics’ negative reactions to the iPad’s lack of Flash, the report said, “Apple has a track record of defying great odds and successfully navigating previously unchartered waters.”
Analysis company Broadpoint AmTech additionally predicted in a March 9 research note to investors that under ideal circumstances the iPad could reach sales of 7 million units by the end of 2010. Under more conservative circumstances, the Broadpoint AmTech predicted that Apple would sell 4 million iPad units-up from its earlier guess of 2.2 million units.
In an April 1 research note, the company was again immensely positive about the iPad, encouraging investors to break out their wallets for both Apple stock and iPad content.
Broadpoint AmTech pointed out that iPad owners will be able to spend money on magazines, including Conde Nast’s Wired, GQ, Vanity Fair and Glamour and Hearst’s Esquire and Men’s Health; textbooks from McGraw-Hill, Kaplan and others; and newspapers, including the New York Times, the Financial Times and the Wall Street Journal.
And, of course, there will be more than 150,000 applications and games-with reportedly 1,000 iPad-specific applications-more than 8,500 movies, 55,000 television episodes, and more than 12 million songs and 10,000 music videos. In short, there’s some money to be made, and Broadpoint AmTech’s recommendation is: Buy.
With Apple stock currently at approximately $235, Broadpoint AmTech put the price target at $280.
“Apple remains the best technology company on the planet, with numerous catalysts on the horizon … We currently see no real business model issues,” wrote Broadpoint AmTech analyst Brian Marshall.
iSuppli sees the iPad as a boon to the App Store, as well. iSuppli said in its report, “Hosting tens of thousands of applications-with a current average selling price of $3.13 per application-and boasting more than 1 billion downloads since its launch in 2008, the App Store is a phenomenal cash cow for Apple.”