Analysts, Public Warm Up To The iPad

By Joseph Palenchar On Apr 19 2010 - 4:01am

CUPERTINO, CALIF. — Apple unveiled the iPad in January to tepid response from analysts and enthusiasts, but public opinion warmed up in time for the Easter-weekend launch.

Although first-day sales of more than 300,000 fell below many analysts’ expectations, analysts and marketers nonetheless remained bullish about the device’s long-term prospects and the device’s favorable impact on the tablet-PC market, the e-reader market and the home-automation industry. The home-automation industry has already begun using the iPad to control home systems wirelessly.

The improved opinions come despite the iPad’s lack of a video camera, USB ports, expandable memory and support for Flash, the most widely used video format on the Web.

Though some analysts forecast firstday sales of 500,000 to 700,000, fi rst-day sales were nonetheless impressive, said Stephen Baker, NPD Group’s industry analysis VP. “Oneday sales of 300,000 units through such limited distribution as just Apple stores and Web site as well as certain Best Buy [locations] is a true testament to the power of publicity and marketing, combined with a consumer’s trust in a company that has a track record for delivering great products that meet up with the hype,” he said.

An NPD survey “clearly showed that early adopters and Apple enthusiasts would be the primary first buyers, and the news reports around the country seem to indicate that is what happened. However with 300,000 units of sales, it is clear that the early adopter market, at least for Apple, is growing to such a size that enormous launch results, such as these, are not out of line with market potential.”

First-day sales included deliveries of pre-ordered iPads to consumers, sales through Apple’s stores, and deliveries to non-retail and retail channel partners such as Best Buy and home-automation supplier Savant, which is reselling the iPad to its dealers with an app to control its integrated home-systems controller.

On April 14 Apple reported it had shipped 500,000 iPads during the device’s first week of availability and that demand had outstripped supply to the point where it would have to delay the international launch for one month to late May. The company does not expect to catch up with demand for several weeks. Adding to the supply strain is the high number of preorders for the 3G version that will hit stores at the end of April, Apple said.

The number of apps on the iPad app store grew to 3,500, 3.5 million apps had been downloaded by consumers, and more than 600,000 iBooks had been downloaded, Apple CEO Steve Jobs said. He also said Apple is making iPads as fast as it can to restock Best Buy stores that had run out by that time.

For his part, MobileTrax analyst J. Gerry Purdy said, “The iPad generation is now upon us.” The iPad and other devices will “create a ‘three-mobile-device’ paradigm where we’ll have a notebook to create and do serious typing and research; a smartphone to do calling, messaging and snippets of interaction; and … a tablet that will be our carry-around to use all during the day at different times and for different activities.”

Consumers will use the iPad, he said, during existing activities such as watching TV, but they’ll also allocate time away from other activities for dedicated use. “And, because it’s so convenient and available all the time, it will get more spur-of-the-moment use than a notebook,” he said.

Some analysts also point out that although initial iPad sales might not have lived up to some of the hype, sales tracked the initial sales of the first-generation iPhone, which went on to set the bar for smartphones.

The iPad’s momentum will extend beyond sales of the device itself to stimulate the tablet-PC market as well as provide stiff competition in the e-reader market, analysts said.

Worldwide forecasts for 2010 iPad shipments range from 2.5 million from Kaufman Brothers, 3 million from Forrester Research, 5.5 million from Piper Jaffray and 7.1 million from iSuppli. The latter also forecasts a doubling of unit sales in 2011 to 14.4 million and 2012 sales of 20.1 million, but iSuppli contended shipments could go even higher if Apple soon adds Adobe Flash Web-video support.

This year’s sales “will be driven by early adopters and others attracted to the iPad’s unique touch-screen-based user interface,” iSuppli said, but in 2011 and 2012, iPad sales will be driven by such factors as new applications, improved functionality and declining prices. Nonetheless, the iPad won’t reach its full potential without Flash support, iSuppli contended, because one of the device’s key use cases is Web browsing.

“Until Apple addresses this issue one way or another, its decision not to support Flash — communicated earlier on by Apple CEO Steve Jobs — will have a limiting effect on the iPad’s sales potential,” said analyst Francis Sideco. “Absent Flash, iPad users will not be able to enjoy Flash-driven content, which is used in a considerable amount of Web sites as well as Web-based games and videos.”

Given the lack of Flash support, “consumers could end up being disappointed if what they expect to be a great browsing experience from ‘a magical and revolutionary product’ … turns out to be less than extraordinary,” iSuppli added.

Apple’s decision to leave Flash out might be related to the company’s focus on selling apps for device. “With so much Flash content available for free, Apple may be excluding support for the software in order to encourage users to pay for any content they use on the platform,” iSuppli surmised. — Additional reporting by Doug Olenick


§ In the U.S., the iPad is currently available as Wi-Fi-only models at a suggested $499 for the 16GB version, $599 for the 32GB version and $699 for 64GB. Wi-Fi + 3G models will be available in late April at a suggested $629 for 16GB, $729 for 32GB and $829 for 64GB.

§ Apple also announced that purchasers of the Wi-Fi-enabled iPads downloaded more than a million apps from Apple’s App Store and more than 250,000 e-books from its iBookstore during the first day of availability.

§ More than 3,000 apps were available for sale for the device’s debut, including a Kindle App for iPad from Amazon.