Eric Savitz is a savvy guy. He writes for Barron’s and other publications, and shows up with articulate opinions on television. He also digs for news beyond the obvious. His latest finding reflects a growing admission by stock analysts that the iPad, indeed, might be a hit. Maybe.
Wedge Partners analyst Brian Blair says he now expects the company to produce about more than 10 million iPads in calendar 2010, up from a previous forecast of around 7 million units.
Apple is on pace to sell over 12-million Macs this year. Since the iPad didn’t start shipping until April, at some point during the year, it could outsell the Mac. How is that possible?
It’s All About The Numbers
Apple’s historic rise from the ashes of near-obscurity to rival Microsoft as the country’s most valuable technology company has been accomplished the old fashioned way.
They earned it.
That contrasts sharply to Microsoft’s ill gotten gains via long term monopoly abuse. Simply put, Apple survived because customers loved their main product—the Mac. Apple prospered because the company was able to diversify the product line.
First, Apple bet the farm on OS X, Xcode, Cocoa and an eventual switch to Intel chips for the Mac. Apple took a risk with the iPod—panned by critics as overly expensive—loved by customers immediately. Yet another gamble that paid off was the iTunes Store, which dominates online music sales.
The tens of millions of iPod customers (both Mac and Windows PC users) loved their diminutive portable media player so much that the iPod halo effect was born. Customers bought their iPods in Apple Stores—right next to the Macs that didn’t crash, didn’t have viruses, was easier to use than Windows, and came with great software.
Apple protected the iPod and iTunes revenue streams with another successful gamble. The iPhone, which set a new standard for smart phones—essentially an easier to use Mac in the pocket. The latest gamble is the iPad, which fits snuggly between Mac or PC and smart phone, and may change how people in the future view computing.
The iPad is easier to use than a Mac, highly capable for most users, still requires a Mac or PC to connect to and sync, and is the hottest selling technology gadget ever. In just two months.
More iPads Than Macs? How?
How can the iPad sell more units in the first year than the Mac, which has been around since 1984 and yet is also selling at record numbers?
Some analysts suggest the numbers will stack up this way:
- June quarter: 2 million units produced, 1.75 million sold.
- September quarter: 4 million built, 3.75 million sold.
- December quarter: 4.5 million built, 4.25 million sold.
The iPad could begin to outsell the Mac in the September quarter. Even the iPhone didn’t sell that quickly.
It also suggests Apple could sell close to 10 million iPads in calendar 2010. With sales that high, it would suggest the iPad is going to steal some business from netbooks and notebooks.
The implication there is that the iPad could cannibalize a portion of Mac sales. For many Mac and Windows PC owners who struggle with the complexity of their powerful computers, they may well ask, “Why buy a notebook (or netbook) when an iPad will do just fine?”
That’s plausible, of course. But don’t forget that, for now, the iPad still requires a Mac or PC to operate and synchronize. Macs are not going to die so quickly. At least, not yet.
The iPad Halo Effect
The Mac’s resurgence can be attributed, at least in part, to the iPod halo effect which brought tens of millions of new and happy customers into Apple stores. The natural byproduct of that growing customer base was record Mac sales, even in a very rough economy, now in its second year.
As the economy rebounds, Apple stands to benefit with increased sales across all product lines, including the Mac. And, to keep the Mac gravy train moving forward for a few more years, the iPad halo effect will drive more sales.
The iPad may very well outsell the Mac within the next year, but Mac sales will continue to grow to record levels—thanks to the iPad.