John Paczkowski

Recent Posts by John Paczkowski

Initial iPad Demand Greater Than Initial iPhone Demand

Given the years of speculation and hype that led up to its announcement, it’s not at all surprising that there is significant pent-up demand for Apple’s iPad. But that it exceeds demand estimates for the original iPhone, as a new survey from RBC/ChangeWave suggests, is a bit unexpected. The iPad is, after all, an entirely new device category between the laptop computer and the smartphone. And unlike the iPhone, its market is unproven.

Still, RBC/ChangeWave found that 13 percent of the 3,200 respondents who participated in its iPad survey were either somewhat or very likely to purchase the device, compared with the nine percent who gave the same reply for the original iPhone in a similar survey conducted prior to its launch (see chart below; click on charts to enlarge). Said RBC analyst Mike Abramsky: “While we do not expect feverish initial launch lines like iPhone, the data portends well for healthy initial iPad uptake.”

The reason? The iPad’s unexpectedly low price point. Starting at $499, it is significantly below the $999 price expected. “Only 8 percent (of respondents) appear unwilling to pay Apple’s indicated iPad prices,” Abramsky notes. “That’s below the 28 percent who balked at initial iPhone pricing. Interest appears strongest with both Entry-Level and Tech-Savvy Buyers; 19 percent of declared iPad buyers indicated interest in the $499 16GB WiFi-only iPad, and 19 percent in the $829 64GB 3G iPad.”

Top planned uses for the device among both groups of buyers: Surfing the Internet (68 percent), checking e-mail (44 percent), and reading e-books (37 percent).

Evidently, Apple (AAPL) has managed to hit the pricing sweet spot at both the high and low ends of the market, which, as Abramsky observes, bodes well for its chances for success. “This data, while preliminary, suggests iPad may have greater potential than expected, to expand Apple’s addressable PC, iPod markets and to capture a segment of the home PC market (est. 35M+ units/yr),” he writes.

Abramsky’s estimate for iPad sales in CY 2010: Five million units, for revenue of $2.4 billion and earnings per share of 33 cents.

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