Just one-third of the way through 2010, we already know that the iPad is well on its way to being another
major hit for Apple with 1 million sold in four weeks (after three
weeks of preorders). The international launch was put back a month to
cope with US demand and tight supply. And Apple Stores have been
running out of the 3G models.
Now some of the countries in the international launch have sold
their initial allocation, and deliveries for new preorders have moved
into June. As IDC estimated only 1 million other tablets were sold in
all of 2009, the iPad has brought this market to life for the first
time, since 2001 when
Bill Gates said "within five years I predict it will be the most
popular form of PC sold in America."
All this while a limited range of apps were designed for the iPad
and when few developers had a chance to try their apps on it before the
launch. As the apps become richer and take more and more advantage of
the platform, how much will the sales accelerate?
When I wrote How Apple
Could Sell 100 Million OS X Machines in 2010 in mid-February, I
suggested 8 to 10 million before the end of the year. Now it looks as
though 2 to 3 million of those will be by quarter end, adding more than
$1.5 billion to revenue, which should be enough for Apple to overtake
Microsoft in revenue this quarter (see Apple Will Become Bigger than
Microsoft in 2010).
With most of the rest of the world still to get a launch date and
the market building towards an iPad Christmas, even 10 million could be
too low.
iPad Competition
The main competition looks as though it will be Android
or Chrome.
Even if HP manages to get out a WebOS tablet in time for the
Christmas sales season (thanks to its recent acquisition of Palm), it
won't have a large enough app
store to attract consumers.
Microsoft is in the same bind with Windows
Mobile Phone 7. It really needs to concentrate
100% on the corporate market, where it has plenty of allies in IT,
before it decides that Unix on mobiles is the future and Windows is for
legacy programs limited to the in-house network. Under current
management, however, Microsoft is unlikely to accept the loss of the
consumer tablet market, even though having a third place offering won't
make it any money and will probably lead to substantial losses.
iPad Cannibalization?
While the iPad is new, there is unlikely to be significant
cannibalization of other parts of Apple's range, unless buyers look on
it as a bigger and better iPod touch. People take time to feel
comfortable with a new platform and to see where it fits in their
lives.
A wide range of textbooks needs to be available for the iPad to take
over from the MacBook in
Apple's education market, especially for college-bound students. It
needs to become a primary computer, and it needs to have a track record
for reliability, so for the rest of the year it's early adopter days -
it's just that the early
adopters are those who love touch and don't love PCs as much.
Growing the Mac Market
With Macs, the main growth is on the desktop - the opposite of what
is happening in the Windows market. In the March quarter, desktops were
up 40%, while MacBooks, up 28%, barely kept up with overall portable
market growth. Part of the lower MacBook growth was undoubtedly due to
waiting for the new line to come out (in April for the MacBook Pro and
May for the consumer MacBook), and part to wanting to know if the iPad
was really a replacement. For at least some it is, but with the
refreshed MacBooks offering better value for money, figures should be
up anyway.
It's just a pity the MacBooks don't yet have the In-plane
Switching (IPS) screens available on the iMac and the iPad so that
buyers can see the difference when they look at content. Until they do,
the better battery life and build quality will attract some switchers,
but it's a less compelling offering than it could be. All Apple needs
to do, however, is keep the year-over-year growth rate at 33%, as it
has been for the last two quarters, and Mac sales will reach around 15
million this year.
The iPhone Market
The iPhone will largely determine how well Apple does this year.
Unless there are significant differences from the descriptions of
the prototype, the new iPhone should be the first powerful
smartphone to get through a day of heavy use without the need to
recharge. With an A4
processor running at 1 GHz (like the iPad), the processor
speed is up by two-thirds. The battery will gain from the advances for
iPad and the latest MacBook range, and it seems the screen has better
resolution.
With the improvements in iPhone OS 4 as well, the queues will be out
again for Day One.
In 2009, Apple sold 25 million iPhones. To reach 100 million OS X
machines in 2010, Apple needs to roughly double that. Last quarter,
sales were up 131%, but sales for this quarter depend on when the
iPhone A4 is released. iPhone sales typically slow down in the lead up
to a new release, and this effect will be stronger this year with many
of the details available and such an improved upgrade.
If the launch is at WWDC and it is available immediately, the third
record quarter in a row looks likely, especially if the new entry-level
model is based on the current 3GS.
The iPod Market Plateau
These days the focus has moved away from iPods. While their death is
still some way off, unit sales have seemingly plateaued at 50 to 55
million a year. Some of this is down to the state of the economy, but
the really strong growth for Apple is around the iPhone and the iPod
touch and the iPhone version of OS X. People like the idea of having a
good compact music player that can run apps too.
In Steve Jobs launch of iPad, he mentioned over 85 million iPhones +
iPod touches had been sold. and over 50 million of those were iPhones.
This suggests that roughly two iPod touches are sold for every three
iPhones. With 8.75 million iPhones sold in the March quarter, 5.8 to 6
million iPod touches should have sold too.
Certainly there was a strong increase to drive the average iPod
price to $171 - close to what Apple receives for the entry level
8 GB iPod touch.
In this quarter, however, many in the market are likely to want to
try the iPad before they decide what to buy. This is likely to depress
iPod touch sales for a while as people decide whether they want a
pocket size app player/games machine/etc., or if they want something
portable but larger to browse the Web, read books, etc. Some may find
that it's nicer to have both.
Even if sales drop back to around 5 million for this and the next
quarter and then double, as usual, for the Christmas quarter, 25 to 30
million iPod touches will be sold in 2010.
Competing with Microsoft
With a mix of 10 million iPads, 15 million Macs, 50 million iPhones,
and 25 million iPod touches, Apple can reach 100 million OS X
devices this year.
At long last Microsoft has a volume competitor in Apple, although
there is little overlap for now with Apple's main strength in mobile
computing. Sure, the Mac will continue to chip away at the PC market,
but at current rates of progress it will take another five years of
above-market growth to come close to 10% of the worldwide personal
computer market - but Apple's hardware margins mean it doesn't have to
dominate a market to make good profits.
While Apple has a good market share in smartphones (but not the
majority) in the US, it will be difficult for market regulators to
mount a successful antitrust action in response to Adobe's complaint,
or any similar one, while Apple builds OS X into the strongest
mobile platform.
In the short term the biggest losers will be Intel, AMD, and the x86
graphics chip vendors as Apple sells over 80 million iPhone OS devices
built on ARM chips this year. 
