Is Apple Telegraphing A Tablet Market as Large as PCs?

Rich Tehrani : Communications and Technology Blog - Tehrani.com
Rich Tehrani
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Is Apple Telegraphing A Tablet Market as Large as PCs?

I'm Predicting 500,000,000 tablets sold by 2015 (updated - an eagle-eyed reader noticed I left out 3 zeros for the various iPad estimates throughout!)


Through informal research I have seen iPad owners not giving up on their PCs – in fact they generally use both machines at different times for different purposes. For example, website surfing to sites which utilize Flash often requires a PC or laptop as they may not work on an iPad. Moreover, iPads and iPhones require PCs which they must plug into to receive software updates, etc. Many people find that they need to type large amounts at one time or another and they often choose a PC or laptop for this task – either not realizing they can purchase a keyboard for their iPad or just not caring.

Another important point I have noticed is iPads are being utilized by younger users more often than comparable laptops or PCs because they are so easy to operate and the App Store makes it a breeze to try new software. And another plus for tablets is they also act as a book replacement - as Rep. Jesse Jackson Jr. reminds us.

Usage patterns also dictate that a tablet can be used where computers cannot – for example more and more are showing up in restaurants to occupy the kids while the parents attempt to get some limited peace and quiet.

But on the heels of Apple’s blow-out quarter this week we get some insight as to what Apple is seeing with regards to iPad 2 sales. The first point is they are selling them as fast as they can make them. And Apple COO Tim Cook said that K-through-12 schools were ordering iPads on a one-to-one basis with their Mac purchases.

Of course this information could simply mean tablets are more appropriate for education than the PC and schools are realizing this and ordering them instead. But this would also imply less PCs are being ordered by educational institutions. But we aren’t hearing about school PC sales plummeting – and I infer from this that in the education market and perhaps throughout the consumer and enterprise space – there may be room for a one-to-one purchase of tablets and computers. Here at TMC for example, tablet purchases have yet to impact our PC or laptop purchases.

I realize the prevailing wisdom is the tablet is replacing the laptop and of course there will likely be a portion of the market which is satisfied with just the slimmer keyboard-less alternative. But I really sense the tablet is so flexible and so interactive in its design and nature that it becomes a tweener machine which you can play games on and use to soother the kids at meals and connect to email and social networks, on a screen you can easily read.

And if this is the case, tech spending will absolutely skyrocket beyond our wildest expectations. But it is tough to see the party lasting forever. After all, Moore’s Law will continue to make these machines more powerful and Android devices of varying levels performance and price will be flooding the market soon, meaning within five years, a second machine beyond the tablet may only be necessary for people who need massive amounts of storage or processing power. Then again, the cloud may soon eliminate the need for massive amounts of personal storage if it hasn't already.

Predictions in the tech space are often too early but correct in the long term. And it is logical to assume that over time, people will become more comfortable with external keyboards - they may even be given away free by a tablet-maker looking to eat into laptop share.

And if I am right – there is a huge opportunity for investors to profit from a trend which bucks some short-term conventional wisdom on tablet sales which Gartner pegs at 300,000,000 tablets by 2015. I would put the number closer to 500,000,000 and wouldn't be surprised if even this number is too low.

Disclosure: I have an investment in a financial instrument which benefits from Apple shares increasing in price.

See Also (press release) : Gartner Lowers PC Forecast as Consumers Diversify Computing Needs Across Devices



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