Neil Hughes
Gene Munster with Piper Jaffray believes that Apple's rumored smaller iPad would be priced at $299 with 16 gigabytes of storage, given the company's $199 8-gigabyte iPod touch, and its $399 16-gigabyte iPad 2. Sandwiched right in the middle of those two existing products, he sees a smaller iPad cannibalizing 10 percent of existing iPad sales, but also taking away 30 percent of total Android tablet sales in the December quarter.
"We believe this implies that Apple could sell 4-6 million smaller iPads in the December quarter, assuming a holiday launch," Munster wrote in a note to investors on Monday. "If the launch occurs in (the fourth quarter), we believe the smaller iPad would add about 1% to revenue and (earnings per share) in December."
Munster had previously assumed that Apple would launch a so-called "iPad mini" in the first quarter of calendar 2013. That would be in line with the timeframe Apple has used to update its existing 9.7-inch iPad thus far.
But recent reports from The Wall Street Journal and Bloomberg have indicated that Apple is planning to launch a smaller iPad by the end of the year. The device is expected to feature a 7.85-inch display with a resolution of 1,024 by 768 pixels, using the same display technology as the iPhone 3GS.
Munster expects that Apple will introduce its smaller iPad at the same event that it will unveil its next-generation iPhone. He also expects that Apple will refresh its Apple TV set-top box, which he admitted "could make for a crowded event."
He believes that the launch of a smaller, cheaper iPad will eliminate two of the biggest features for Android tablet makers in price and size. He expects that going forward Apple will maintain a majority share of the tablet market, and may even increase its presence over the next four years.
Last week, analyst Brian White of Topeka Capital Markets issued a note that was even more bullish on the prospect of a smaller iPad. White said he believes that a new, cheaper iPad could prove to have an even larger market opportunity for Apple than the current iPad, given growth trends in developing countries like China and prospective sales to the education market.
William Gallagher
Mike Wuerthele
Malcolm Owen
Andrew O'Hara
103 Comments
Well, Munster was right about iPad 1 sales ;-)
(yes that was a joke because he was waaaay off)
If Apple builds it, the buyers will come! But it is amazing how this has taken a life of its own now. It started off with whispered rumors, then built up to supply chain leaks and annonymous informants, then to specification speculations.
Now we have sales forecasts for a thing that, for all intents and purposes, is not even vapor-ware. It is just rumor-ware for now.
This holiday season should be very interesting. Even if the rumors are wrong, there is till the new iPhone that I am eager to see.
$299? or $199?
If a Retina Display... I can see $299. if a iPhone 3GS display, I can't see the market buying it for more than $199 (and the iPod Touch moves to $149).
But it is an 8" device, so maybe people will go with 'bigger must be better')
Assuming 30% margin after all expenses... that's 0.5Billion in a quarter at $299 - at 1% earnings, that means Gene is expecting $50billion in Earnings the December quarter. That's 300% growth over last Dec 31st quarter. That seems high ( I would guess 100% growth would be 'in line'). Maybe he's putting CapEx in that quarter as well (cost of the assembly line), and that will pull down the quarter (I would think that would have come in the prior quarter).
But, not bad for an entry quarter.
The $199 touch is from 2010! Hard to guess a price based on a 2 year old device. I would guess they will just kill the touch and make the iPad mini (or call it a touch)- either way, I'm getting it. And 8gb is plenty to keep the cost down- $199 is still easily doable and profitable- but $249 or $299 still seems reasonable. Refresh to apple tv box? Did he miss the month of May? What could they possibly do? Maybe a new OS... But a new box? I highly doubt it.
Release it for $199 and call it The New iPod Touch. This breathes new life into the iPod line and diminishes the perceived role of the Nexus 7 and Kindle Fire to being iPod Touch competitors. Then Apple can just fight it out with the Microsoft Surface, since they'll be the only "real" iPad competitor at the 10" size. Kids (the biggest market for the current iPod Touch) will be delighted to have a larger form factor and more capability.