Neil Hughes
Analyst Brian Marshall with Broadpoint.AmTech issued a note to investors Tuesday forecasting the "sticky" nature of the iPad and content purchases for the new device. He believes content revenue will top 10 percent of total iPad hardware revenue by December of 2010, and a year later that number will nearly triple.
"We believe the iPad offers a rich media experience that will translate into a content-based recurring revenue stream over time," Marshall wrote.
If true, it would be a significant change for Apple, which had long maintained that both the App Store and iTunes do not create much profit for the Cupertino, Calif., company. In January, Apple Chief Financial Officer Peter Oppenheimer said the company runs "a bit over break even" for both the App Store and iTunes stores. Apple has said for some time that those businesses are not meant to be profit generators, but rather a means of attracting customers to the products they represent.
The analyst has also increased his forecast for iPad shipments in the 2010 calendar year to 4 million units, up from a previous prediction of 2.2 million. He said that "if the device lives up to its potential," he could see it shipping more than 7 million in this year alone, a number that skews higher than most Wall Street estimates.
Accordingly, Marshall has also raised his earnings per share estimates for 2010 by 6 percent, to $12.75. That's up from his previous prediction of $12, and above the Wall Street consensus of $12.14.
Marshall said he believes the general view of the iPad, particularly in the media, is overly pessimistic.
"We note the vast majority of the naysayers have not yet had the opportunity to use the iPad on a firsthand basis," he wrote. "As we stated in the past, we were hooked after the first 15 minutes of use. In our view, the true genius of the device is its media/content aspects (e.g. eBooks, newspapers/magazines, Apps/games, movies/TV episodes, etc.) which we believe will be recurring in nature."
Broadpoint.AmTech has increased its price target for AAPL stock to $280, from $264, and reiterated its "buy" rating. The iPad, which starts at $499, goes on sale in the U.S. April 3, while pre-orders begin on Friday.
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106 Comments
No real surprise. The cheap initial price was telling. This is a razor-and-blades strategy.
The 'Pad will be the bestest way to buy stuff from the iSore. Beyond that, it doesn't seem bestest to me in any other respect.
I think the iPad is going to be HUGE, HUGE, HUGE! (and for women a great mobile device as we already carry purses and such).
It's not a surprise that content will be one of the big driving forces behind the iPad's popularity. Who isn't amazed by the content presentation and intuitiveness of an iPad?
It's not a surprise that content will be one of the big driving forces behind the iPad's popularity. Who isn't amazed by the content presentation and intuitiveness of an iPad?
IMO, with respect to movies, the content presentation is horrible. The device uses the 20th century 3:4 aspect ratio, while most modern video fits better on 16:9. And the 'Pad will not display in HD.
Additionally, the lack of flash kills it as a 'web browser. So far today, I've watched two videos on news sites, the latest being an Al Jazeera piece on the mideast peace talks. With a 'Pad, that would not have been possible.
So for content consumption, IMO, the 'Pad is so deficient as to be unacceptable.
No real surprise. The cheap initial price was telling. This is a razor-and-blades strategy.
The 'Pad will be the bestest way to buy stuff from the iSore. Beyond that, it doesn't seem bestest to me in any other respect.
I couldn't disagree more. Contrary to the naysayers, I think this product has real potential. I like the form factor, I love the apps that have been demo'ed, and I'll buy one in an instant. I think the win is the simplicity, the idea of making an appliance ... something one can leave around the house and just grab when you need it. The form factor, not to mention the interface, of a traditional computer is far less accessible.
There are lots of things I'd like it to do, but for a first flurry into this space, I think this is good. I'd like web-cam, of course; I hate the thick bezel; and whilst I like finger driven input, it would also be cool to be able to use a pen for drawing and taking notes --- perhaps with character recognition. At present, my impression is that the resolution of the touch sensing technology will not make pen writing feasible. I think they said something like a 1000 sensors on the glass ... that's ok for fingers but not for pens.
I also really wanted MacOS X, but in the context of an appliance the iPhone OS may make most sense. I like the idea of killing off general access to the file systems, and instead sharing data implicitly across compatible applications using some form of tagging. I would also have liked multi-tasking to be made generally available, and I'm not sure I understand the rationale for limiting this.
So ... roll on the launch, I think its a great product.