Source: Flickr user iLounge
Most analysts and prognosticators had reservations about the iPad’s potential earlier this year, but since then, most, if not all, have become believers. With iPad’s strong numbers in the first three quarters of 2010 (4.2 million shipped last quarter alone), forecasters have had to resharpen their pencils, as pretty much everyone underestimated total shipments (including myself, who projected 6.1 million iPads total in 2010).
Looking forward to 2011, many forecasters have bumped up their numbers, and the consensus from Wall Street ranges anywhere from 18 to 24 million iPads out the door next year. But one analyst in particular, Brian Blair, is more bullish than most; he predicted this week that Apple will ship between 45 and 48 million iPads in 2011.
Some would say that’s not bullish, but just plain starry-eyed, even with Apple as the company in question. For his part, Blair points to the release of the iPad 2, which he sees as a catalyst for significant growth. But a 48 million unit market in 2011 would require some extraordinary shifts and macro-events to happen. In other words, Apple needs much more than just the next-generation device to meet a figure like that.
So, what exactly would it take? Let’s take a look.
The near-elimination of netbooks. At this point, most (including Microsoft) would agree that tablets sales are cannabilizing netbooks. While the estimated impact is up for debate, there is no doubt 45 million iPads would essentially mean a cataclysmic 2011 for netbooks.
Consider this chart:
This is what a world would look like with only minimal impact on the netbook market from the iPad. The chart above shows how the total category for sub-notebook PCs is going to explode from roughly 50 million to close to 100 million (considering other tablets such as Android). To me, this seems practically impossible.
A more realistic chart in a 48 million iPad world would look like this:
More realistic, but still not likely. While such a drop is possible -and I do think that netbooks will continue to be cannabilized in a significant way - I have a hard time believing the entire category will be wiped out by tablets, which would be almost required for such a large iPad number.
Lower priced iPad. A lower-priced iPad would be necessary to reach 48 million, in part because $500 is a high entry-price for many. Over the past few months, there has been alot of debate over whether Apple would introduce a smaller — and presumably cheaper — iPad with a seven-inch screen. A $300 or $400 iPad would have, in my opinion, a huge impact on demand.
Extremely positive macroeconomic environment. It perhaps goes without saying, but consumer sentiment and discretionary income need to be on the rise for a relatively new category — like tablets — to see this type of market expansion.
Other tablets to bust in 2011. And by other tablets I mean Android. There is no doubt Apple has the first-mover advantage, but there are alot of tablet makers, such as Samsung and LG, aligning behind Android. If 48 million iPads are purchased, I can’t envision a big year for alternatives.
Surprises. If there was ever a company that lived off of market-shaking product developments, it’s Apple. I think to sell 48 million iPads, it will need something beyond a better screen, front-facing camera and faster processor. What could this be? I’m not that imaginative, but personally I’d love more media slots and think free Facetime video chat over 3G (though admittedly that’s out of Apple’s control) would be great.
Can Apple reach such statospheric heights? As a forecaster, I would hesitate to completely rule the possibility out, particularly because Apple has a history of exceeding expectations. However, to reach nearly 50 million unit shipments in just it’s second year of life would require the stars aligning to a degree that even the charmed company like Apple would find difficult to achieve.