THE APPLE INVESTOR: The iPad Will Dominate Tablet Market Share For Next Four Years (AAPL)

The Apple Investor is a daily report from SAI. Sign up here to receive it by email.

---

AAPL Sliding In Weak Tech Tape 

The NASDAQ has eased off of its gains in early trading, but the broader market has built on its opening bounce. Shares of AAPL are off nearly 1% as the stock continues to slide into next week's earnings report. Upcoming catalysts for the stock include results of its second fiscal quarter on Wednesday, April 20 at 5:00 p.m ET; any update regarding Steve Jobs' healthy return; the WWDC starting June 6; monthly NPD data to gauge Mac / iPod businesses; iPad 2 sales updates;  iPhone sales updates, the push in China, as well as the launch of the iPhone 5 (whenever that may be); new revenue streams such as video, books / publishing and social (Ping); moving iTunes into the cloud; and the continued evolution and adoption of Apple TV. Shares of Apple trade at 13x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).

The iPad Will Dominate Through 2015 Says Gartner (Bloomberg)
The iPad will continue to dominate the market for tablet computers, controlling more than three-fifths of the market next year, according to technology research firm Gartner. Apple’s iOS platform, which powers its iPhone and iPad devices, will account for 69% of the market this year and 64% in 2012. Apple’s share will decline to 47% in 2015, according to the report today.

Tablets (Meaning The iPad) Are Stealing People Away From Other Devices (CNet)
Tablets may be starting to steal people away from their laptops, desktops, and even televisions, according to a survey of ~1,400 respondents released this week by Google's AdMob. The survey breaks down how people are using their tablets, which in most cases so far, means the iPad. Shopping online occupied the lowest percentage among specifically polled options, with only 42% of respondents confirming they used their tablets to buy from the internet.

Is Apple Spending Enough On Research And Development? (Seeking Alpha)
The company may become “the next Polaroid,” the camera/film company that lost its way as quick film processing and digital technology emerged to replace instant film. Apple’s research and development budget is a comparatively low percentage of revenues at 3%. Most tech houses, like Intel, Intel forever spend over 10% on R&D. With $60 billion in liquidity, the company could easily crank up research and development. What it's already spent has seemed to work out quite well so far.

Analyst Says Petabyte Buy Dovetails With Cloud-Based iTunes (Barron's)
Barclays Capital's Ben Reitzes commented on Apple's purchase of 12 petabytes worth of storage equipment from Isilon Systems (EMC). It prompted speculation regarding expected cloud-based services.  Reitzes says that such huge amounts of data "dovetail nicely" with a Cloud Tunes an online version of Apple's popular iTunes.

The iPhone 5 May Well Be On Track For A Summer Release (AppleInsider)
The iPhone 5 might not be delayed at all. The newest version of iPhone may well be on track for a June-July release, according to Analyst Brian White with Ticonderoga Securities. As rumors of a later-than-usual iPhone launch for 2011 persist, a new report reveals that the notoriously secretive Apple is being even more careful than usual when dealing with overseas suppliers. Read more at Business Insider.

Hiring Spree: Apple Hires Top Execs For Gaming Platform (AppleInsider)
Apple just poached two top industry PR execs to help further push iOS as a major gaming platform. Nick Grange, who departs his role at Activision as the studio's European PR director, will be focused on iPad hardware and former Nintendo UK head of communications Robert Saunders will leave his position at the end of April for a "newly created role at Apple". Apple's strategy appears to be paying off; smartphone gaming has risen to 44% of the mobile gaming market, while the number of games played on the Nintendo DS and Sony PSP has fallen by 13%.

Woz Said He Would Consider Coming Back To Apple If Asked (VentureBeat)
Apple co-founder Steve Wozniak said that he would consider returning to an active role at the company he helped start if asked. However that statement, which came out during an interview, comes with some strings attached, specifically about the openness of the company's products. It seems unlikely, since Apple could have asked him back a long time ago.

For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.

Join the conversation about this story »

See Also:

• THE APPLE INVESTOR: Survival Of The Fittest – Apple Buying Up Component Supplies Ahead Of Competition
• Apple Working On E-Ink/Touchscreen Hybrid For iPads And iPhones
• Apple Is Being Even More Secretive Than Usual When It Comes To iPhone 5

THE APPLE INVESTOR: The iPad Will Dominate Tablet Market Share For Next Four Years (AAPL)

Backlink: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/bGiBuAvrwaw/the-apple-investor-apr-11-2011-4

Here's Why Apple's iPad Will Dominate The Tablet Market For Years (AAPL, GOOG, MSFT)

Apple's iPad is a huge consumer hit, with almost 15 million purchased in its first 9 months of sales.

And after analyzing the market, we believe Apple is likely to dominate the tablet industry for years to come.

While competition will intensify, the iPad will continue to be the best all-around product for consumers, and therefore Apple should maintain very high market share (50%-60%) for at least several years.

Click here to flip through the tablet players one-by-one to see how we think they'll do →

In the long-term, we don't think the tablet market will be as lopsided as the MP3 or PC markets, where a lone platform (iPod, Windows) annihilates everyone else. But we also don't think it will be as evenly distributed as the smartphone market, where no single platform has more than about one third of the market.

But, you may say, Google Android just kicked Apple's butt in smartphones! Why won't this happen in tablets?

The fundamental difference between the tablet market and the smartphone market is distribution.

Whereas smartphone distribution is dominated by wireless carriers, we expect carriers to play a relatively small role in tablet distribution. Tablet sales will be centered around electronics retail -- the Apple store, Best Buy, Walmart -- and big e-commerce, and not around carrier stores.

In mid-January, we asked Business Insider readers, "If you were going to buy a tablet, where would you buy it from?" Only 6% said they would buy from a carrier retail store or website. Meanwhile, 51% said they would buy it from an Apple retail store or Apple.com -- where they only sell iPads. Another 24% said they would buy from Best Buy, Walmart, other retail, or associated e-commerce.

(That is, in part, because we believe that most people will not want to sign 2-year wireless data contracts for tablets, and therefore won't care as much about carrier-subsidized pricing. So while carriers have taken it upon themselves to start supporting tablets like crazy, we don't think they will ultimately do much of the tablet selling.)

So let's walk through the typical tablet-buying routine.

If you go into the Apple store, you know what to expect -- big tables with iPads laid out to play with. Either you'll buy one or you won't.

In a Best Buy or Walmart, we assume you'll see a shelf with iPads and a few other tablets set up for demo. The iPad hardware and software will likely be nicer than the competition, and if the salesperson is trained, they'll be able to explain that Apple's apps and media ecosystem is still the best. (Apple should continue to have the best commercials and marketing, too.)

Then it will come down to price. 

We believe Apple will continue to price the iPad aggressively so it does not lose this market to cheap, inferior competitors.

It may not immediately be as profitable as some of Apple's other businesses, but we believe Apple knows how important the iPad is to its future, and how much of a head start it has. So we don't expect Apple to allow any company to significantly underprice it.

And by making smart supply chain decisions, like investing $4 billion in displays in advance, Apple should be able to keep its costs in line to support these pricing decisions -- offering not only a better product, but a better value than its competitors.

With these factors in mind, within a couple of years, we expect Apple to maintain the lion's share of the growing tablet market -- at least somewhere in the 50% to 60% range -- with Android next, and the rest splitting the difference, including RIM's PlayBook/QNX platform, Palm's WebOS, and whatever Microsoft eventually brings to the game.

Apple iPad

The iPad should continue to dominate the tablet market for years to come, with at least 50% market share.

Now, 10 months after the iPad first started selling, it still has no credible competition on the market. That should change soon, but we expect Apple to maintain its lead in hardware and software quality, media ecosystem, marketing and advertising, and pricing.

Apple also has the exclusive advantage of the Apple retail empire, which could be a key strategic asset in the tablet market, especially in the crucial U.S. market.

We expect Apple to launch the iPad 2 sometime this Spring. We anticipate Apple could sell 25 million iPads this year, up from almost 15 million last year.

Google Android

Google will likely be the second-place team in the tablet battle. Ultimately, it could command around 30% of the market. The main problem is that there is no simple reason to buy an Android tablet instead of an iPad. (We don't view Adobe Flash support as a good-enough reason.)

The wildcard for Android is pricing. If, for whatever reason, Android tablet makers can eventually offer VERY GOOD tablets at prices FAR below Apple's, then Android has a chance to dominate. But this will be a real challenge, as we believe Apple is making smart supply chain decisions so as not to get undercut.

While Android has attracted many of the top mobile phone makers to use it as the basis of their tablets -- Samsung, Motorola, LG, HTC, Toshiba, etc. -- Android simply is not as good as Apple's iOS platform. Even the new 3.0 "Honeycomb" version.

If a tablet buyer plays with an Android tablet for a few minutes and an iPad for a few minutes, we would expect most to choose the iPad. There is simply no reason not to.

Moreover, while Android's massive success in smartphones has come as a result of HUGE support from many of the world's top mobile carriers, we don't expect carriers to play an important distribution role for tablets. So, many of the announcements you see today -- the T-Mobile G-Slate! -- may ultimately prove meaningless.

(Sure, there are some devout Android "open!" supporters, and some people who hate Apple. These people will be natural Android customers. But we don't think the majority of consumers care about this at all.)

RIM BlackBerry PlayBook / QNX

RIM insists it has a tablet that will be competitive with the iPad, and that QNX is the future of tablet operating systems.

We're not sold yet. RIM has displayed very little competence developing software or platforms since the iPhone launched in 2007, and there's little reason to believe that it will suddenly leapfrog Apple and Google in enough areas to matter.

There is a chance that some of RIM's enterprise customers will dabble with the PlayBook, as well as some of RIM's most devoted BlackBerry customers. (Especially if it runs Android apps, as rumored. It will have to run them well, though; not just poorly.)

But we have a very hard time seeing RIM capturing more than 10% to 15% of the tablet market.

View more at Business Insider

Here's Why Apple's iPad Will Dominate The Tablet Market For Years (AAPL, GOOG, MSFT)

Backlink: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/p36QMx043vk/tablets-2011-2

The Monopolies That Dominate the Internet

Tim Wu has a piece up at the Wall Street Journal pointing out that the free-market, open Internet — "competition in its purest form" — has evolved to be dominated by monopolies. Wu argues that this is nothing new, and that each wave of information technology in the US has followed a similar pattern. "Today's Internet borders will probably change eventually, especially as new markets appear. But it's hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies? Could it even be that demand, of all things, is actually winnowing the online free market — that Americans, so diverse and individualistic, actually love these monopolies? ... Info-monopolies tend to be good-to-great in the short term and bad-to-terrible in the long term."

Here's How Amazon Took The Lead In The Billion Dollar EBook Market -- And Why We Think They'll Dominate (AMZN)

The most interesting thing about last night's report that the ebook market will reach $1 billion this year wasn't so much that number -- through it's impressive, especially considering the growth rate -- but that Amazon has a full 50% marketshare there thanks to its Kindle platform.

When Apple announced the iPad with its iBookstore many people thought the inferior Kindle would be toast, but by letting people read Kindle books on any device, Amazon has preserved, and even arguably gained, marketshare. Today, most of the people who read books on iPad do it on the Kindle app.

The ebook market is a battle of the titans. It's Amazon versus Apple versus Barnes & Noble versus Sony. It also crucially involves all the big publishers, who are scared of going digital but know they must embrace it lest they go the way of the music industry, and so have been taking two steps forward and one step back.

But Amazon played beautifully every step of the game. And now, in a market that is growing very big, very fast, and probably has strong network effects, it has an early lead which makes us think it will end up dominating it. In fact, we think Amazon's marketshare will end up closer to 90%.

Here's how it happened and why we think Amazon can't be stopped.

Join the conversation about this story »

See Also:

• Nook Fanboys Agree: The Skeptics Are Idiots
• Who Says Folks Don't Read Anymore? EBook Market Reaches $1 BILLION
• Hey, Amazon, Tell Us The Kindle Numbers -- Or Shut Up About Them!

Post originale: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/aAjPCo8YMQg/amazon-billion-dollar-ebook-market-amzn-2010-11