'A little cannibalization' of Macs from Apple's iPad seen as 'a good thing'
While sales of the iPad are replacing Mac purchases for some customers, one new analysis concludes that's a good thing, as growth and market share opportunities for tablets provide more potential for Apple.
Gene Munster with Piper Jaffray believes that over the next 10 years, the total tablet market will exceed that of the PC market in terms of units. And as consumers shift their traditional PC setup to include tablets, Apple is positioned on the forefront of the emerging market with its industry leading iPad.
Munster believes that some cannibalization of the Mac from the iPad is unavoidable. And even Apple officials themselves have said on numerous occcasions that iPad sales are likely to have eaten up some sales of Macs.
But with Mac sales continuing to grow and outpace the rest of the PC market, Apple executives have shown little concern over so-called "cannibalization" of the Mac by the iPad.
"If this is cannibalization, it feels pretty good," Apple Chief Executive Tim Cook, then the company's chief operating officer, said during a quarterly conference call in January of 2011.
Combined iPad and Mac sales are currently around $62 billion. Assuming "aggressive cannibalization" of the Mac by the iPad in the years to come, Munster sees the combined segments doubling in sales to $119 billion by 2015.
In calendar year 2012, Munster expects Apple will sell 66 million iPads, representing roughly two-thirds of the total tablet market. But while about 100 million tablets will be sold this year, research firm IDC estimates that the PC market will still be considerably larger, with 371 million units sold in 2012.
However, Piper Jaffray sees the tide turning in the coming years, with the gap narrowing in 2015 when total tablet sales reach 301 million, compared to 484 million PC sales. Munster believes that tablet sales could overtake notebooks by 2015, and exceed total PC sales before 2020.
Munster acknowledged that some may find the shift from Macs, with an average selling price of $1,262, to the iPad, which has an average selling price of just $559, as a negative for the company. But he believes that in the greater scheme of the overall market, it's a positive transition for Apple.
"At 1% share of the incremental PC units in 2015, Apple would generate $311 million incremental revenue," Munster wrote in a note to investors, "but a 1% share of incremental tablet sales in 2015 would generate $394 million in revenue."
Piper Jaffray has maintained its "overweight" rating for AAPL stock, with a price target of $910.
Gene Munster with Piper Jaffray believes that over the next 10 years, the total tablet market will exceed that of the PC market in terms of units. And as consumers shift their traditional PC setup to include tablets, Apple is positioned on the forefront of the emerging market with its industry leading iPad.
Munster believes that some cannibalization of the Mac from the iPad is unavoidable. And even Apple officials themselves have said on numerous occcasions that iPad sales are likely to have eaten up some sales of Macs.
But with Mac sales continuing to grow and outpace the rest of the PC market, Apple executives have shown little concern over so-called "cannibalization" of the Mac by the iPad.
"If this is cannibalization, it feels pretty good," Apple Chief Executive Tim Cook, then the company's chief operating officer, said during a quarterly conference call in January of 2011.
Combined iPad and Mac sales are currently around $62 billion. Assuming "aggressive cannibalization" of the Mac by the iPad in the years to come, Munster sees the combined segments doubling in sales to $119 billion by 2015.
In calendar year 2012, Munster expects Apple will sell 66 million iPads, representing roughly two-thirds of the total tablet market. But while about 100 million tablets will be sold this year, research firm IDC estimates that the PC market will still be considerably larger, with 371 million units sold in 2012.
However, Piper Jaffray sees the tide turning in the coming years, with the gap narrowing in 2015 when total tablet sales reach 301 million, compared to 484 million PC sales. Munster believes that tablet sales could overtake notebooks by 2015, and exceed total PC sales before 2020.
Munster acknowledged that some may find the shift from Macs, with an average selling price of $1,262, to the iPad, which has an average selling price of just $559, as a negative for the company. But he believes that in the greater scheme of the overall market, it's a positive transition for Apple.
"At 1% share of the incremental PC units in 2015, Apple would generate $311 million incremental revenue," Munster wrote in a note to investors, "but a 1% share of incremental tablet sales in 2015 would generate $394 million in revenue."
Piper Jaffray has maintained its "overweight" rating for AAPL stock, with a price target of $910.
Comments
It's not that complicated:
1. Apple sells far more tablets than Macs, so even if the average selling price is lower, a growing tablet market works to Apple's advantage.
2. Margins are probably higher on the iPad
3. Network effects are not as strong with tablets as with PCs, but they exist.
This looked strange at first since the PC market is far larger than the tablet market at this point (in dollars). But they're talking about CHANGES in sales for each market. Since the PC market is hardly growing at all and the tablet market is growing at double digit rates, the growth in the tablet market is much higher than the growth in the PC market (I think they've actually overstated PC market growth).
Proper use of the word "cannibalization" in a story on AI.
I'm impressed!
I am surprised of two things in this equation though: the lack of a server product, and the pushing of Exchange as an integral part of the enterprise solution. (Watched some of the iPad infomercial podcasts last night looking for some ideas...)
Cloud storage is ok for some things, but we are getting more likely to in-source our email and messaging soon-- the cost of free is becoming too high. (Google seems to have stopped innovating, and the next wave of video communication might miss them.)
I suspect on net, the iPad is a positive for Mac sales. Sure, there are some Mac users who might delay a laptop upgrade in order to buy an iPad instead. But there are a lot more buyers of iPads who don't own Macs (mathematically that has to be the case, given the sales volumes). I suspect a nontrivial fraction of those non-Mac iPad buyers will first delay a purchase of a Windows PC, and then later make their next computer purchase a Mac (perhaps an iMac, since the iPad handles mobile needs pretty well for many folks).
In this case cannabilization (sp?) is a good thing.
IMO, most average users really only need a computer-like device for about three or four basic needs: Internet, games, iLife-like applications, and digital media organization/storage. For me, it's 3 of those 4 and the predominant functions I use my laptop for are iTunes, photos and very light iLife stuff. Now that all of those are available for the ipad, theres very little need to really own a computer other than for storage/organization of your digital crap. The only time I use my laptop for Internet browsing is while working since I'm work from home or abroad. The rest of the time I'm on the iPad or phone.
So bring on the iHome Server iHub thingy!
If the iPad could properly archive music, movies, photos, etc. to a hard disk (with UI to retrieve archived data and move to another disk too), it would go a lot further to cannibalize Mac and PC sales. The lack of massive storage for media and data backup is preventing a lot of households from using iPads as their sole computing device.
Seems like a good task for Time Capsule.
But, seeing as how fast everything at apple has been over the last five years, they seemed to be putting current software improvement in the back burner in favor of completely new beta-esque software instead. Sigh...
Ha, the very thought of time capsule becoming a home server kind of kicks me now since I just got the extreme for the home office. Actually, the salesperson at my local apple store kind of talked me out of the time capsule, since I already have a 1TB hard drive at home, and the $200 extra I'd have to she'll out just for a hard drive.
Someone who loves their iPad will probably invest in an Apple desktop or laptop later on.
So yeah, this works out for Apple well.
Count me in for a Mac Mini in a few month. I hate my Windows PC at this point.
Great... Apple used to make computers for talented people - now toys for people that pretent to be talented - great that everything is just fine because they making lots of money.
Really should just open a new division called Apple Toys - the dumbing down of Apple by iOS continues.
Quote:
Originally Posted by agramonte
Great... Apple used to make computers for talented people - now toys for people that pretent to be talented - great that everything is just fine because they making lots of money.
Really should just open a new division called Apple Toys - the dumbing down of Apple by iOS continues.
Blah, blah, blah, when you get some new FUD rhetoric to spew, let us know.
I would suggest that you learn something about Apple products before whining about them.
http://www.apple.com/macmini/server/
The discussion is moot. Because it's inevitable.
Quote:
Originally Posted by agramonte
Great... Apple used to make computers for talented people - now toys for people that pretent to be talented - great that everything is just fine because they making lots of money.
Really should just open a new division called Apple Toys - the dumbing down of Apple by iOS continues.
And the industry is trying desperately to follow Apple in this. And those that are not, are either failing, have failed already, or just aren't profitable.
Get used to this. Apple has become the arbiter of the direction of consumer tech (and is many ways, tech in the "Pro" sphere as well, not that "Pros" aren't also consumers.)
So where is the XMac? A little cannibalization is good right? In my case it wouldn't even be cannibalization because I will never buy an iMac. If I ever get the mid range mid sized desktop computer that fits my needs then I will consider Apple's other products.
Quote:
Originally Posted by MacTac
So where is the XMac? A little cannibalization is good right? In my case it wouldn't even be cannibalization because I will never buy an iMac. If I ever get the mid range mid sized desktop computer that fits my needs then I will consider Apple's other products.
A what Mac?
You mean some ancient desktop paradigm for which there's barely any demand?
That was a pipe dream 4 years ago.