AAPL’s iSlate Predictions

03Jan10

Recently, there has been much speculation about Apple’s upcoming table PC or “iSlate” device.  Sales estimate ranges for the device have been greatly varied, with one ex-google executive offering a bold predication of first year sales in excess of 10M units link. On the financial sell side, analysts are slightly more grounded – with estimates coming in closer to 2M units in the first year link

First year sales performance of consumer technologies is incredibly varied.   Prices can be high as production ramps up and markets may simply not be  mature enough to support mass adoption.  The original iPod, without question  stood alone in the market place–a technological marvel.   However,  at the time digital music players represented a completely new market and naturally  consumers needed time to firstly build both an understanding and confidence in the benefits of digital music players and secondly determining the specific value proposition of Apple’s device.  Remarkably, Apple sold only 376,000 ipods in its first full year of availability (2002), it wasn’t until 2 years later (2004) that sales exceeded 2M units.

Contrast this with the iPhone, which entered a much more mature market, one in which the majority of consumers not only owned wireless phones but also had either hands on experience or knowledge of the benefits of so called Smart Phones.  The iPhone’s bundled applications, tight integration with itunes, and finally the underlying form factor remain unmatched to this day.  Consequently, it was easy for consumers to understand their specific benefits of the iPhone.   An aspect that also contributed to the success of the iPhone was that consumers in the wireless (North American) market enjoy the option of a heavily subsidized handset upgrade every 2-3 years, this subsidy effectively  eliminating the high price of early adoption.  The Apple iPhone reached 11.4M units in just its first full year of sales (2008).

With respect to the iSlate, tablets in some shape of form have been available for well over a decade, however mass market consumers are largely unfamiliar with tablet technologies.   Unquestionably, Apple will need to mobilize considerable resources in developing and building this entirely new market.  To their benefit, there do exist strong parallels between the iphone interface experience and the upcoming tablet.  Since tablets do not serve as replacements for general purpose computing applications,  the iSlate will likely include some variant of the iPhone OS rather than Apple’s OSX operating system.  What we likely end up with is a Supersized iPhone hybrid  device.  Too bulky to be a complete replacement for the iphone or ipod and not robust enough to replace a notebook or netbook, but potentially ideal for consuming itunes delivered digital content such as books, magazines, and videos.

Personally, I expect the device to be sold unsubsidized through traditional Apple Mac channels (Apple Store, Best Buy, etc) and not through traditional wireless channels since I don’t see the device providing much upside to carriers (since the device would be complimentary to existing wireless devices and not a direct replacement).  This implies pricing will be on the order of $800-$1000.    Given the price point, the iSlate will initially appeal to technology early adopters, ebook consumers, and of course Apple fans.  Consequently, I would predict first year sales of this rather niche iSlate to be in the range of 1.5M to 2.5M, with a bias towards the low end.  Certainly not enough to have a material short term impact on AAPL’s performance and share price.

For comparative interest, first and second year sales for devices collect from various internet sources.

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Tags: AAPL, Apple, forecast, islate