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

Posted:
in iPad edited January 2014
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.
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Comments

  • Reply 1 of 23
    tallest skiltallest skil Posts: 43,399member


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

  • Reply 2 of 23
    sflocalsflocal Posts: 4,495member

    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.

  • Reply 3 of 23
    quadra 610quadra 610 Posts: 6,743member


    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. 

  • Reply 4 of 23
    jragostajragosta Posts: 10,473member
    sflocal wrote: »

    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).
  • Reply 5 of 23

    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."

  • Reply 6 of 23
    red oakred oak Posts: 640member
    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
  • Reply 7 of 23
    dasanman69dasanman69 Posts: 12,976member
    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.
  • Reply 8 of 23
    tallest skiltallest skil Posts: 43,399member

    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. image

  • Reply 9 of 23
    smallwheelssmallwheels Posts: 584member


    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?

     

  • Reply 10 of 23
    cvaldes1831cvaldes1831 Posts: 1,832member


    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.

  • Reply 11 of 23
    capnbobcapnbob Posts: 386member

    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.

  • Reply 12 of 23
    tylerk36tylerk36 Posts: 1,037member


    Goooooooddddtttaaahhh.

  • Reply 13 of 23
    slurpyslurpy Posts: 5,115member


    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. 

  • Reply 14 of 23
    capnbobcapnbob Posts: 386member

    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.

  • Reply 15 of 23

    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.

  • Reply 16 of 23
    maccherrymaccherry Posts: 924member


    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.

  • Reply 17 of 23
    slurpyslurpy Posts: 5,115member

    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

  • Reply 18 of 23
    mauszmausz Posts: 243member

    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.

  • Reply 19 of 23
    eriamjheriamjh Posts: 1,113member
    [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. [/Quote]

    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.
  • Reply 20 of 23
    jragostajragosta Posts: 10,473member
    capnbob wrote: »

    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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