John Paczkowski

Recent Posts by John Paczkowski

IPad Will Rule Tablet Market for Years, Says Goldman

Acer Chairman J.T. Wang once predicted that Apple’s share of the tablet market would plummet as new rivals emerged, tumbling from nearly 100 percent to 20-30 percent.

Not going to happen any time soon, says Goldman Sachs (unless Gianfranco Lanci somehow gets a job at Apple).

Apple will own the tablet market for at least the next two years–perhaps longer if no true rivals emerge from the sad cavalcade of iPad contenders we’ve seen to date. Worst case scenario, the research house expects Apple to hold at least 54 percent of the tablet market in 2011 and 2012. And if non-iPad tablets sell below expectations, the company could claim as much as 74 percent market share in 2011 and 71 percent market share in 2012.

Notably, Goldman believes the latter scenario to be more likely at this point. And the implications of that are pretty interesting, to say the least. Stuck in the mid-single digits in PC market share for years, Apple is poised to ride the success of the iPad to some big gains this year and next. It may even hit double digits.

“If we include tablets in our PC unit forecast, then our estimates suggest Apple’s combined iPad and Mac market share would reach 12 percent in 2011,” says Goldman. “This represents an incremental $8.7 billion in iPad gross profits for Apple, or more than the $6.0 billion in profits we expect the company to generate from the Mac business. Based on the current market share breakdown in the PC market, this could presumably make Apple one of the largest vendors in the combined PC and tablet market.”

That’s a profound reshuffling of the industry. And while it’s been suggested that it’s temporary, Goldman theorizes that it could become permanent if the tablet’s cannibalization of the traditional PC market continues. Says Goldman, “There has been ample evidence that the iPad began to immediately cannibalize Wintel notebook and netbook units upon its launch. Indeed, PC unit growth has been sub-seasonal since the iPad’s debut and annual unit growth has deteriorated substantially. The most recent IDC data suggests that this continued into the first quarter of 2011, with PC units declining 3.2 percent year-over-year and 13 percent sequentially.”

Apple reports earnings after market close this afternoon.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik