Apple to build 5 million iPads during first half of 2010 - report
Apple's orders to its Taiwanese manufacturing facilities call for the production of roughly 5 million iPads before the heart of summer rolls around, according to a new report which also praises the company for its iPhone, notebook and desktop secular growth trends.
Citing unnamed sources within the iPhone maker's supply chain, FBR Capital Markets analyst Craig Berger said in a report Tuesday that the company's initial iPad build ramp calls for 5 million units to be manufactured in the first half of 2010 alone, up slightly from earlier projections of 4 to 5 million units.
"We believe various news articles and competitor notes calling for a build delay were just false alarms and note Apple has already announced that Wi-Fi iPad models will be available in the U.S. on April 3 and models with Wi-Fi and 3G will be available in late April," he wrote. "While we do not yet have visibility into the specific chip suppliers, we think that many of the iPhone chip suppliers will also sell into the [iPad]."
Meanwhile, Berger said similar channel checks show Apple has recently increased orders for the production of iPods and Macs for the current calendar quarter while decreasing build orders for iPhones. More specifically, he said iPod orders have been hiked by 133%, notebook orders by 70%, desktop orders by 100%, while iPhone orders were cut by 20% "as Apple seeks to reduce channel inventory."
The analyst pointed out, however, that changes to build volumes and their sequential growth rates (as seen in the chart above) "are not highly correlated with Apple sales data in any one period due to inventory build ups and draw downs, the impacts of new product launches, and seasonal impacts." Instead, he follows the trends to determine whether the company is in need of more product (which would benefit its component suppliers), or less product (which would obviously have a negative impact on component suppliers).
Perhaps more telling are Berger's charts on Apple's four-quarter summation of production builds, which provides an alternative view on the growth of Apple's core hardware offerings by presenting a running sum of build orders for each product over the preceding twelve months, with the totals having been normalized for seasonality and inventory buildups and draw-downs.
"What we see is that iPhone growth has been nothing short of spectacular, iPods seem to be a more mature product past its peak as iPhone and iPad sales cannibalize iPod sales, Notebook growth continues to be quite robust, and Desktop growth continues, but at a much more modest pace," he explained.
Overall, Berger concluded that his latest round of checks are likely to prove positive for Apple's Mac chip suppliers (like Intel, Marvell, and Nvidia), while being slightly negative for its iPhone chip suppliers (like Broadcom). The analyst carries no rating on Apple but ranks Broadcom at Outperform and both Intel and Nvidia at Market Perform.
Citing unnamed sources within the iPhone maker's supply chain, FBR Capital Markets analyst Craig Berger said in a report Tuesday that the company's initial iPad build ramp calls for 5 million units to be manufactured in the first half of 2010 alone, up slightly from earlier projections of 4 to 5 million units.
"We believe various news articles and competitor notes calling for a build delay were just false alarms and note Apple has already announced that Wi-Fi iPad models will be available in the U.S. on April 3 and models with Wi-Fi and 3G will be available in late April," he wrote. "While we do not yet have visibility into the specific chip suppliers, we think that many of the iPhone chip suppliers will also sell into the [iPad]."
Meanwhile, Berger said similar channel checks show Apple has recently increased orders for the production of iPods and Macs for the current calendar quarter while decreasing build orders for iPhones. More specifically, he said iPod orders have been hiked by 133%, notebook orders by 70%, desktop orders by 100%, while iPhone orders were cut by 20% "as Apple seeks to reduce channel inventory."
The analyst pointed out, however, that changes to build volumes and their sequential growth rates (as seen in the chart above) "are not highly correlated with Apple sales data in any one period due to inventory build ups and draw downs, the impacts of new product launches, and seasonal impacts." Instead, he follows the trends to determine whether the company is in need of more product (which would benefit its component suppliers), or less product (which would obviously have a negative impact on component suppliers).
Perhaps more telling are Berger's charts on Apple's four-quarter summation of production builds, which provides an alternative view on the growth of Apple's core hardware offerings by presenting a running sum of build orders for each product over the preceding twelve months, with the totals having been normalized for seasonality and inventory buildups and draw-downs.
"What we see is that iPhone growth has been nothing short of spectacular, iPods seem to be a more mature product past its peak as iPhone and iPad sales cannibalize iPod sales, Notebook growth continues to be quite robust, and Desktop growth continues, but at a much more modest pace," he explained.
Overall, Berger concluded that his latest round of checks are likely to prove positive for Apple's Mac chip suppliers (like Intel, Marvell, and Nvidia), while being slightly negative for its iPhone chip suppliers (like Broadcom). The analyst carries no rating on Apple but ranks Broadcom at Outperform and both Intel and Nvidia at Market Perform.
Comments
It's a start of a whole new platform.
I just wish Steve will allow the App Store apps to run on a Mac (dual compile, dual UI versions), there is no need to keep them isolated to iPods, iPads and iPhones now that they are going to have larger versions for the larger screen iPad.
People who only need the limited 1Ghz performance of a iPad will get that, those who need more will get a Mac. It's nice to be able to have the same app run on most all Apple devices anyway.
Apple lowered the price to develop for the Mac, same as a SDK for the iPad, so there is no excuse anymore.
Time to tie them all together.
You guys know what they say about analysts opinions. This one appears to be on the high side of the prediction curve, like the analysts predicting 11 million iPhones in Q4 2009. Channel checks are interesting data. Unfortunately, Apple can easily change their orders. They do this a lot to freeze their suppliers and component competitors too.
Exactly.
These predictions are worth the paper that this AI report is written on.
You guys know what they say about analysts opinions. This one appears to be on the high side of the prediction curve, like the analysts predicting 11 million iPhones in Q4 2009. Channel checks are interesting data. Unfortunately, Apple can easily change their orders. They do this a lot to freeze their suppliers and component competitors too.
Yeah, I'm a little skeptical on this report.
Andy Hargreaves (Pacific Crest Securities) is forecasting 3.3 million iPads this year (I assume fiscal). Brian Marshall (Broadpoint) just forecasted 4 million iPads for this *calendar* year. Those two guys have a great track record, unlike other analysts that AI has quoted in the past.
This 5 million figure seems to be a bit off. As an AAPL shareholder, I'm certainly not going to wail if they reach it, but I'm betting on Hargreaves and Marshall. Frankly, I'd be impressed by 4.5M iPads in CY10. Apple's margins are allegedly good on this device, show me the money.
Yeah, I'm a little skeptical on this report.
This 5 million figure seems to be a bit off. ...
Remember - they have to not only sell the products to the consumers, but also have 4-6 weeks channel inventory. So if they are selling 1/2 mn per month (about 4.5 for rest of 2010) then they need close to 1 mn in the channel.
However, given the fact that the few people who have seen an iPad are raving about it, and what happened in Norway, I am very bullish on this launch. I can see well over 5 mln before Jan 1.
If this article is accurate, I believe that 5 million is to high. 3 Million sounds more accurate. I don't believe apple will even sell 3 million the entire year. Of course I could be wrong.
I am predicting 5 to 10 million sold by end of 2010, globally. But hey, that's just my personal opinion. Just putting it out there.
Apple's orders to its Taiwanese manufacturing facilities call for the production of roughly 5 million iPads before the heart of summer rolls around, according to a new report which also praises the company for its iPhone, notebook and desktop secular growth trends
I wonder what religious growth trends would be like? We are talking about Apple after all...
I am predicting 5 to 10 million sold by end of 2010, globally. But hey, that's just my personal opinion. Just putting it out there.
That is an interesting take on it. It really is going to be something to see. I just don't see this having the same appeal as the iPhone or Touch, especially at the price hence I don't think it will sell as well. Again just my guess. I mean the iPhone still hasn't cracked the 10 million in a year mark. Unless I have my numbers wrong.
That is an interesting take on it. It really is going to be something to see. I just don't see this having the same appeal as the iPhone or Touch, especially at the price hence I don't think it will sell as well. Again just my guess. I mean the iPhone still hasn't cracked the 10 million in a year mark. Unless I have my numbers wrong.
Must have your numbers well wrong.
Release date\tOriginal: June 29, 2007
3G: July 11, 2008
3GS: June 19, 2009
Units sold\t42.48 million (as of Q1 2010)
2.5 years and 42 million sold. Somewhere in that period there must have been more than 10 million sold in a year.
They sold 8.7 million iPhones in Q4 2009 alone.
Must have your numbers well wrong.
Release date\tOriginal: June 29, 2007
3G: July 11, 2008
3GS: June 19, 2009
Units sold\t42.48 million (as of Q1 2010)
2.5 years and 42 million sold. Somewhere in that period there must have been more than 10 million sold in a year.
They sold 8.7 million iPhones in Q4 2009 alone.
Oh yeah, where is my head? What was I thinking? I knew that but somehow I confused myself with 10 million in a quarter, which they almost hve done.
I guess it is my pessimistic view coming through on how well the iPad wil do. I guess I just don't hve the confidence that the iPad will do that well. I see it doing well and trickling along, but not selling 5 million its first year. I just don't see the fanfare for the iPad like I saw for the iPhone. The iPhone sold just over 6 million units in its first 5 quarters. I don't think the iPad can pull that do that. Or maybe its my lack of confidence that Apple can pull off another winner. It seems all they do is win lately and it just won't stop. I am an Apple fan/supporter since the Apple II days but I have never seen Apple do this well for so long like this ever.
As others have noted, an initial effort to produce 5 million units in the first half of the year does not in any way shape or form mean that they intend to sell 10 million this year. Many of those 5 million will be sold in the second half of the year. And iPads produced in the second half of the year will be sold in the first half of 2011, and so on. So this 5 million number is more consistent with the idea that Apple will sell between 5 and 7 million iPads in 2010, not 10 million.
That technical reason aside, I think that there is a tendency to underestimate the likely success of this product due to the negativity of the tech geeks that we all see complaining about the iPad on the Internet. While there may be some uncertainty regarding the timeframe, this device has the potential to be incredibly popular. Consider a few markets:
1. Education
It might take a year or two to really take off, but I think this will be huge in the education market. A few reasons:
a. This device can replace every textbook a student has, and make the textbooks better. Can other devices do that? No. The Kindle is too limited in its display technology. Netbooks have the wrong form factor. Plus, the iPad appears to have built-in accessibility technology similar to what's on the Mac, which is an important consideration in education markets (kids with vision problems can use this far more easily than most other devices).
b. This device is secure, in more ways than one. Schools can exercise far more control over what gets installed on this device than with most other computer alternatives. And the lack of flash means kids can't view most porn. And of course, no viruses.
c. It's also a computer. By docking with a keyboard, students can also use this device for homework and reports. Heck, with the wi-fi, teachers could even distribute a test during class, have the kids complete the test on this device, and submit the test back to the teacher.
2. Business
In my office, I have bookcases filled with old reports, manuals, and books. I routinely have to print out documents to take with me to meetings, because undocking a laptop and dragging it around the office is too cumbersome. This is a device that I could easily take with me to meetings, and it would have very document I might need. I already find it useful to have my iPhone in meetings because I can look at the calendar and check e-mail. But an iPad would be awesome -- full access to every file that might be relevant to the meeting in a convenient form factor.
Plus there's the whole health care industry, in the field data collection, etc.
3. Personal
Games, video, photos. Kids, commuters, grandparents. Something for everyone.
But, you might ask, what about Android devices or Windows tablets? Why couldn't they do the same things at the iPad? Two reasons -- (1) completeness of the product and (2) Apple. Most competitors are likely to be half baked or unbalanced. They might get the form factor right, but they'll get the software and services wrong. But even if the product is fully baked, they won't have the marketing and brand power of Apple. People scoff at marketing and brand power, but it matters. Good marketing helps people understand what a product can do and why they should want it. Consumers may suspect (and I think quite rightly) that a company that cannot explain why you should buy their product might not really know or understand themselves why you should buy their product. Neither Microsoft or Google are particularly good at this, and their partners are terrible at it.
The bottom line is that the iPad is a product with very broad potential appeal, sold at a reasonable price, with a very solid marketing effort behind it. Tech-greek griping aside, this thing has the potential to be huge.
There is so much negativity coming from tech-geeks on the web, that it's easy to see how people might find this story difficult to believe. But I think there are several reasons to believe that it could be true....
Well, there's also the reason that most of these self described "tech-geeks" are simply idiots who have no idea what they are talking about.
I really like Apple, but I'm already tired of the Ipad.... frankly if I ever got one, I'd probably tire of it in a month or two after it looses its "new excitement" phase. And I'm tired of hearing about it all the time... It's just hype. What I really want is something useful that I'll use all day, like a new Macbook Pro. So Apple... please release it!
What's wrong with the 'old' Macbook Pro?
What's wrong with the 'old' Macbook Pro?
They use years' old technology. Unfortunately, they also cost as much as computers did years ago. They ain't worth it.
What's wrong with the 'old' Macbook Pro?
The MacBook Pro line is overdue for a refresh.
Teachers will love it, especially those who work with small groups. Business people will have a go at it; iWork looks great. Artists will love it; even the iPhone was used to create the cover art for a major magazine. The iPad will allow even better art. Students will like it, especially once textbooks are available for it; smaller, lighter rucksacks.
I think it will sell very well.