JP Morgan sees Apple further eating away at Windows PC market with sub-$1000 iOS notebook

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Apple is excluding itself from a $63 billion market opportunity, investment firm J.P. Morgan believes, by only partially competing in the sub-$1,000 portable computing market, which is why one analyst argues Apple should introduce a new notebook powered by a more full-featured version of iOS.

Analyst Rod Hall sees Apple adding a keyboard and mouse centric user interface to its iOS platform within the next 12 months, while also keeping the touch friendly functionality of the operating system. This new, more full-featured version of iOS, which he refers to as "iAnywhere," would cannibalize sales of the MacBook Air, but also traditional Windows PCs that thrive in the price range between $500 and $1,000, he said.

In his view, that price range for notebooks and tablets is a $63-billion-per-year opportunity that Apple "barely participates in." Currently Apple has one full-fledged notebook priced under $1,000 — the entry-level 11.6-inch MacBook Air — while the entire iPad Air lineup falls in that range.

Hall estimates that even with the dominant iPad, Apple still only accounts for about 20 percent of the portable computing market priced between $500 and $1,000. In contrast, Apple's MacBook Range accounts for about 40 percent of notebooks priced at over $1,000, he said.

An Apple tablet docking station concept discovered by AppleInsider in 2008.

The analyst believes it's a huge market opportunity for Apple, has about 55 percent of total notebook shipments in 2013 are estimated to come from that price range. That's equivalent to about 100 million of the 180 million total laptops that were shipped last year.

"While some iPad owners are replacing laptops with the device, we believe that most use the iPad as a supplemental device to either a laptop or desktop PC," Hall said. "If iAnywhere allowed these users to flexibly use an iPad as both a PC and a tablet, we believe that many would elect to own simply one device."

This week's estimates, detailed in a research note provided to AppleInsider, are not the first time J.P. Morgan has pushed the idea of a more full-featured version of iOS. The company's prediction of a new, converged operating system existing between OS X and iOS was first revealed in February, when Hall began promoting the "iAnywhere" concept.

In his view, many consumers would be willing to pay a "slight premium" over the cost of a regular iPad to gain more laptop-style functionality. If Apple were to launch iPad keyboard, touchpad or dock, he sees it adding 15 million units to the company's calendar 2015 sales, while "conservatively" adding another $100 to the price of an iPad.

"We calculate that an iAnywhere iPad bundle would run from $774 - $899 vs. a typical lower end laptop (total cost of ownership) of $714," Hall said. "In the past an iPad purchase would likely have been seen as incremental to the cost of a laptop — with iAnywhere it becomes the same purchase."

J.P. Morgan has maintained an "overweight" rating on AAPL stock with a price target of $585.


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