updated 01:35 pm EST, Wed February 3, 2010
To come at expense of iPod touch?
Apple will likely sell 2 million iPads in FY 2010, with another 6 million coming in 2011, says Needham & Co. analyst Charlie Wolf. The firm has completed its first assessment of the tablet's potential, which is said to founded on several assumptions. Because of a $500 base price, the iPad is expected to attract a "non-trivial" number of the 75 million iPhone and iPod touch owners in existence, as well as more buyers in the form of netbook shoppers, schools and hospitals.
More than half of projected iPad sales may come at the expense of the Touch, Wolf argues. A 9.7-inch screen is said to be a big draw, especially for gamers, and a 16GB iPad is believed to be close enough in value to the price of a 32 or 64GB Touch. There's a "relatively low price barrier" in moving to an iPad, Wolf claims.
The main catalysts for iPad sales are, however, predicted to be different than those for the iPod and iPhone. The iPod first exploded in sales mainly because of Windows support and the iTunes Store, while the iPhone gained ground when third-party apps became available. The iPad's advantage will be video and e-books, Wolf proposes, once the print and video industries develop specialized content. Video sales have traditionally lagged well behind music at the iTunes Store.
Needham is holding to a $235 stock target, with FY10 and FY11 EPS estimates of $12.85 and $15.25.