Needham’s Call on iPad’s Quarter: Hold on to Your Socks
In a research note to clients today, Needham analyst Charlie Wolf raised his estimate for iPad sales for the three months ended June from 13.5 million units to 20 million. That’s more than double the 9.25 million iPads Apple sold in the same quarter a year ago. Wolf’s is the most bullish iPad sales forecast I’ve seen to date, and if Apple manages to hit it, it will be a new record, far exceeding the 15 million iPads the company sold during the first quarter of 2012.
So what made Wolf raise his forecast by 6.5 million units? Two things: First, his initial estimate was simply too low. Second: Accelerating iPad adoption in the enterprise and education markets.
“The increase in our estimate of iPad shipments from 13.5 million to 20.0 million units is based … on anecdotal evidence … that the device is invading businesses in ways that could not have been predicted when Apple introduced the iPad in April 2010,” Wolf explains. “It’s also based on the historical trajectory of iPad sales. When iPad 2 was introduced in March 2011, sales increased 97% in the following (June) quarter. Our forecast of 20 million iPad sales in June implies a 70% sequential increase from March. While this number appears aggressive, it must be remembered that Apple has continued to sell iPad 2 at the lower price of $399. A study by Consumer Intelligence Research Partners found that since the introduction of the new iPad in March, iPad 2 has composed 41% of all iPad purchases.”
A nosebleeder of a forecast, to be sure. But according to Wolf, it’s entirely plausible, and there’s plenty of evidence to support it. “The iPad is invading the business market at a much faster pace than the iPhone,” he said. “In our view, it’s only a matter of time before iPad shipments exceed iPhone shipments.”
Apple is scheduled to report third-quarter earnings on Tuesday, July 24.