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Impact of tablets to drag PC unit growth down to 1%

post #1 of 24
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Riding on strong sales and adoption rates tablet cannibalization of the PC market has been greater than expected, causing analysts to lower PC unit growth expectations for the 2012 and 2013 calendar years to one percent.

Morgan Stanley released data from its latest AlphaWise global consumer survey on Thursday and found that tablet demand and PC cannibalization rates are higher than previously estimated.

PC unit growth is now expected to atrophy to one percent over the 2012 and 2013 calendar years. This new metric is a substantial decrease to the firm's most recent estimates that put growth for the sector at 2 percent and 5 percent for 2012 and 2013, respectively; a slightly more conservative forecast than IDC's 5 percent and 9.5 percent for the same period.

Analyst Katy Huberty expects the tablet market to grossly outperform the firm's most recent estimates and hit shipments of 133 million in 2012 and 216 million in 2013, a 40 percent and 89 percent increase to the previous forecast. Huberty notes that 41 percent of new tablet purchases will either replace or delay PC purchases, a 14 percent jump from what was expected.

Adding to the acceleration of tablet demand, which inversely affects PC sales, is a slow uptake of Windows computers as consumers await the Fall launch of Windows 8. With big-box retailers less likely to hold large inventories, PC unit growth is expected to decelerate for the next two quarters followed by a rebound by the end of 2012.

Tablets
Source: Morgan Stanley


While Apple may be a victim of its own success with the huge popularity of the iPad, the sheer number of tablets coming out of Cupertino will likely offset the cannibalization of Mac sales. Huberty sees AAPL earnings per share to rise in 2013 to $61.50 with a price target of $738.
post #2 of 24

"People don't want a big iPod touch."

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #3 of 24
Quote:
Originally Posted by Tallest Skil View Post

"People don't want a big iPod touch."


The title is misleading.  It's not a tablet market, it's an iPad market.

Queue the fandroids that will spin this to include junk Android tablets.

post #4 of 24

Saw this coming when Steve sat down in that easy-chair and demo'd the iPad in January 2010. 

 

Chairs flew in Redmond that day. OEMs glanced around in worry and confusion. Scott Forstall and Jony Ive almost spilled their chai lattés in laughter. 

post #5 of 24
Quote:
Originally Posted by sflocal View Post


The title is misleading.  It's not a tablet market, it's an iPad market.

That's absolutely not true.-no matter how often it is repeated. There is a tablet market - as evidenced by the fact that there are plenty of competitors, some of which have sold millions of units. Most estimates say that competitors currently have 30-40% of the market.


That said, two things to consider:

1. Huberty has possibly the worst record in her 'predictions' of Apple's results. She's never right.

2. Her numbers are highly questionable even at first glance. She is predicting that Apple will have only 52% of the market this year and 45% next year. That's far too low (unless she's counting everything under the sun including ereaders and gps systems).
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post #6 of 24
Quote:
Analyst Katy Huberty expects the tablet market to grossly outperform the firm's most recent estimates and hit shipments of 133 million in 2012...

 

If I were Balmer and realized that of the 133 million tablets sold this year, few, if any, will make Microsoft any money... I'd be throwing up in a wastebasket.

 

Two major explosions of products and Micrososft can only stand on the sidelines and holler, "Wait 'till next year."

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post #7 of 24
First, she is assuming an enormous deacceleration in Apple earnings to only hit $61.50 in FY2013. I think it is going to slow, but to below 30%?

Second, her target price assumes a PE of 12. I don't think I have ever seen it that low in the last four years. If you apply the current PE of 14 to her earnings estimate, you get a target stock price of $861. This is all trailing. Normally companies trade on earning projections looking forward

I'd like to see AI do more analysis of how the analysts perform over tiime. Who was close, who was way off. These stories all trickle in and it is a bit of noise with no post analysis

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post #8 of 24
Not surprising since most people use their computers to read emails, browse the web, and watch YouTube videos. All easily done with the iPad and more comfortably.
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post #9 of 24
Quote:
Originally Posted by sflocal View Post
The title is misleading.  It's not a tablet market, it's an iPad market.


Queue the fandroids that will spin this to include junk Android tablets.

 

Exactly.

 

Also, we had "cue" used incorrectly a few days ago and now we have "queue" used incorrectly.

 

It's a karma thing. It all balances out. lol.gif

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #10 of 24

If these projections are partially correct regarding iPad growth, then all computer makers that aren't Apple will have a huge slump in all of their sales. Don't most people who use iOS devices really like them? If they do, then when it is time for them to buy a new computer, they will probably check out Apple instead of HP, Dell, and the others.

 

Of course this is assuming that they will even want to buy another computer that isn't a tablet. As iOS and iPads and iPhones processors get better and faster, many people probably will realize they don't even want another non-tablet computing device. Is anybody here thinking that they just don't need another computer and will stick with iPads from now on?
 

post #11 of 24

I don't think most people are seriously willing to give up their sole household computer for a tablet right now.

 

However, it is clear that many people consider the iPad a viable replacement for a second, third, or fourth computer.

 

My home computer is a Mac mini (Mid 2010 model). It replaced a MacBook 13" (Late 2006 model, Core 2 Duo). Being a longtime iPod touch user, I realized that I could get most of what I needed to get done without a notebook computer. I never really expected that to happen, I had been using various Apple notebooks since 2002. At least for the foreseeable future, I won't need a notebook computer. My iPad is quite sufficient for what I do away from home.

 

A computer still has functionality and power that a tablet doesn't have, but the percentage of those tasks is dropping steadily. I know I spend far fewer hours using my Mac today than two years ago. My trusty MacBook mostly sits on a shelf gathering dust. I think I've taken my MacBook out of the house 3-4 times in the past 1.5 years since I've owned an iPad.

 

My guess is that I'll upgrade my Mac once my current two-year old system is no longer supported by the latest version of OS X so maybe I'll be on a five-year Mac buying cycle and purchasing in 2015. I'll probably buy the cheapest Mac mini, cram it full of RAM, and make sure the boot drive is an SSD.

 

I'd rather upgrade my iPad every other year though. I'm currently using an iPad 2, skipped the third-generation tablet, probably alternate years for iPad and iPhone purchases.

post #12 of 24
Quote:
Originally Posted by cvaldes1831 View Post

I don't think most people are seriously willing to give up their sole household computer for a tablet right now.

 

However, it is clear that many people consider the iPad a viable replacement for a second, third, or fourth computer.

 

My home computer is a Mac mini (Mid 2010 model). It replaced a MacBook 13" (Late 2006 model, Core 2 Duo). Being a longtime iPod touch user, I realized that I could get most of what I needed to get done without a notebook computer. I never really expected that to happen, I had been using various Apple notebooks since 2002. At least for the foreseeable future, I won't need a notebook computer. My iPad is quite sufficient for what I do away from home.

 

A computer still has functionality and power that a tablet doesn't have, but the percentage of those tasks is dropping steadily. I know I spend far fewer hours using my Mac today than two years ago. My trusty MacBook mostly sits on a shelf gathering dust. I think I've taken my MacBook out of the house 3-4 times in the past 1.5 years since I've owned an iPad.

 

My guess is that I'll upgrade my Mac once my current two-year old system is no longer supported by the latest version of OS X so maybe I'll be on a five-year Mac buying cycle and purchasing in 2015. I'll probably buy the cheapest Mac mini, cram it full of RAM, and make sure the boot drive is an SSD.

 

I'd rather upgrade my iPad every other year though. I'm currently using an iPad 2, skipped the third-generation tablet, probably alternate years for iPad and iPhone purchases.


+1 Massively. I too exchanged a MacBook (2008) for a Mac Mini (2010) and an iPad2/iPhone4S. I expect to change iPads every 2 years and iPhones every year - got burned using a 3GS instead of a 4 for 15 months. I have 2 mini's (1 is an HTPC) and don't see changing them until the old one (2006 1.83 CD) dies.

 

To be fair, I have a work Thinkpad T420 i5 to do my work on which sometime covers personal tasks but if I didn't need it for work, I wouldn't miss it.

post #13 of 24

Goooooooddddtttaaahhh.

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post #14 of 24

It's somewhat sad that Steve Jobs never really got to see his predictions truly come to pass. His foresight was still being mocked, derided, and laughed off as ridiculous the last couple years of his life. Another year and at least he would have truly felt vindicated that he was correct. 

post #15 of 24
Quote:
Originally Posted by jragosta View Post


That's absolutely not true.-no matter how often it is repeated. There is a tablet market - as evidenced by the fact that there are plenty of competitors, some of which have sold millions of units. Most estimates say that competitors currently have 30-40% of the market.
That said, two things to consider:
1. Huberty has possibly the worst record in her 'predictions' of Apple's results. She's never right.
2. Her numbers are highly questionable even at first glance. She is predicting that Apple will have only 52% of the market this year and 45% next year. That's far too low (unless she's counting everything under the sun including ereaders and gps systems).


I agree on Huberty's record, though it appears to be improving as she realizes betting against Apple is a fool's game.

 

However, I believe that the glib statement is essentially true. The overall tablet market is about 60% iPads, 20% color e-Readers (Kindle Fire/Nook Tablet, etc.), 10% Craplets, 10% iPad equivalent Android (G-Tabs, XyBoards, Transformers). That market is undoubtedly an iPad market if you deduct the e-Readers (which anyone should). I would also deduct craplets but that's your choice. Android iPad competitors are not selling in multi-millions and show no signs of doing so. The wildcard is WinRT but I have no faith that a platform with such poor app/software support can make a dent any time soon. The fluctuations in e-readers shouldn't cloud the real tablet dynamics. If Apple releases a 7.85" iPad mini (which I think they should), the nature of the market will no longer be in question.

post #16 of 24
Quote:
Originally Posted by Slurpy View Post

It's somewhat sad that Steve Jobs never really got to see his predictions truly come to pass. His foresight was still being mocked, derided, and laughed off as ridiculous the last couple years of his life. Another year and at least he would have truly felt vindicated that he was correct. 

 

He didn't often give a shit about others' opinions. Plus, he re-animated his company from near-bankruptcy and made it the largest publicly traded company on the planet. But I still agree. You can never have too much vindication.

post #17 of 24

The day of the bloated pc is on its way out. It has been a hell of a ride but the end is near.

The iPad does all the basic sh** the average person needs without  any viruses.

post #18 of 24
Quote:
Originally Posted by PotatoLeekSoup View Post

 

He didn't often give a shit about others' opinions. Plus, he re-animated his company from near-bankruptcy and made it the largest publicly traded company on the planet. But I still agree. You can never have too much vindication.

 

I think he did give a shit to a certain extent, as he admitted to Walt Mossberg that he got 'extremely depressed' the eve of the iPad reveal, when reading all the emails he received bashing the device. He reportedly felt miserable for a while following that, until it was clear the iPad was a success. 

 

http://www.appleinsider.com/articles/11/10/21/steve_jobs_was_annoyed_and_depressed_over_initial_reaction_to_ipad_launch.html

post #19 of 24
Quote:
Originally Posted by maccherry View Post

The day of the bloated pc is on its way out. It has been a hell of a ride but the end is near.

The iPad does all the basic sh** the average person needs without  any viruses.

 

Note : The growth is down to 1%, so no decline, not even stable, still growing, but only by 1%... still going from 366 to 371mln

 

This happens a lot in stock market values as well when they are reporting a decline in profit growth. Sounds like its really going bad for that company, but read the sentence again : Still making profit, still a larger profit than last year, only the extrapolated increase in profit was lower.

post #20 of 24
Quote:
While Apple may be a victim of its own success with the huge popularity of the iPad, the sheer number of tablets coming out of Cupertino will likely offset the cannibalization of Mac sales.

Apple is not a victim of anything. Mac sales are up. iPad sales are rocketing. Profits are insane.

Steve said never be afraid to cannibalize one's own products. That's because a great new product can take off like the iPad while macs just grow (or shrink) at a slower pace.
post #21 of 24
Quote:
Originally Posted by Capnbob View Post


I agree on Huberty's record, though it appears to be improving as she realizes betting against Apple is a fool's game.

However, I believe that the glib statement is essentially true. The overall tablet market is about 60% iPads, 20% color e-Readers (Kindle Fire/Nook Tablet, etc.), 10% Craplets, 10% iPad equivalent Android (G-Tabs, XyBoards, Transformers). That market is undoubtedly an iPad market if you deduct the e-Readers (which anyone should). I would also deduct craplets but that's your choice. Android iPad competitors are not selling in multi-millions and show no signs of doing so. The wildcard is WinRT but I have no faith that a platform with such poor app/software support can make a dent any time soon. The fluctuations in e-readers shouldn't cloud the real tablet dynamics. If Apple releases a 7.85" iPad mini (which I think they should), the nature of the market will no longer be in question.

Fortunately, the market isn't defined by you. And you most certainly don't get to exclude "craplets" or "iPad equivalent" tablets.

While it's certainly fair to say that Apple doesn't compete in some parts of the market, the market definition should be defined in some generic way rather than your arbitrary way. For example, "devices which are built as a single flat unit which can operate with no attached keyboard or monitor and which are capable of running non-embedded software" or something like that.

When you start with a reasonable definition of tablets, at least some eReaders (such as the Fire) fit the definition.

Furthermore, even if your numbers were true, it's still a market independent of the iPad. You don't define a market by one of the products in the market - even if it's dominant.
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post #22 of 24
Quote:
Originally Posted by jragosta View Post


Fortunately, the market isn't defined by you. And you most certainly don't get to exclude "craplets" or "iPad equivalent" tablets.
While it's certainly fair to say that Apple doesn't compete in some parts of the market, the market definition should be defined in some generic way rather than your arbitrary way. For example, "devices which are built as a single flat unit which can operate with no attached keyboard or monitor and which are capable of running non-embedded software" or something like that.
When you start with a reasonable definition of tablets, at least some eReaders (such as the Fire) fit the definition.
Furthermore, even if your numbers were true, it's still a market independent of the iPad. You don't define a market by one of the products in the market - even if it's dominant.

 

Color e-readers are, by design, devices of limited utility engineered to a price point.  No one buys a Nook, for instance, expecting to run some version of photo editing software, or as an adjunct to music production, or to have access to any kind of office productivity suite.  

 

There's this odd way that "the tablet market" gets defined downward to conform to the original, uninformed prejudice against the iPad-- that "tablets" are media consumption devices, and any machine that can do a credible job of surfing the net, looking at pictures and videos and running email is on equal footing with any other machine that can do those things, no matter how much more the latter device is capable of.

 

I grant you it's a bit of a gray area, in that lesser devices are theoretically capable of at least some some additional functionality, were anyone particularly interested in even trying.  But it's obvious that Apple intends an entirely different market for the iPad than Amazon intends for the Fire, so why shouldn't we make that distinction?  To put it another way, do you imagine that Amazon is planning on writing first party apps along the lines of Keynote or GarageBand or Pages or iPhoto?  Do you think color e-reader developers will have any interest in providing much more than hooks to social networking and games?  And if a device is that constrained in practice, even allowing for some vague potential, isn't it in fact a different kind of device?

 

Even the lowliest PC can run the majority of available software, if only slowly.  These "iPad competitors" don't even have access to a lot of what makes the iPad an increasingly viable PC replacement, which is the whole point.

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post #23 of 24
Quote:
Originally Posted by Tallest Skil View Post

 

Exactly.

 

Also, we had "cue" used incorrectly a few days ago and now we have "queue" used incorrectly.

 

It's a karma thing. It all balances out. lol.gif

Well I thought he meant line them up, so queue looks like it's used correctly that way.  And if they are all lined up we can topple them like dominos.

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post #24 of 24
Quote:
Originally Posted by mausz View Post

 

Note : The growth is down to 1%, so no decline, not even stable, still growing, but only by 1%... still going from 366 to 371mln

 

This happens a lot in stock market values as well when they are reporting a decline in profit growth. Sounds like its really going bad for that company, but read the sentence again : Still making profit, still a larger profit than last year, only the extrapolated increase in profit was lower.

The all depends on what you use as a baseline.   1% growth when population growth and worldwide economic output is growing at several times that rate can be interpreted as a contraction of influence in the overall market.

 

For some situations it just doesn't matter, for others it is the bellweather of a local maximum to be followed by a long decline, and in fewer yet it can mean bottoming out and poised for an increase.

 

When looking at the overall PC market, which really means the Windows market, it looks a lot more like the local max than anything else.

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