14 DAY TRIAL // Needham's Charlie Wolf is raising his price target on AAPL from $450 to $540 in a note to clients issued last week noting that Apple has at least one product that is sure to remain a dominant force even in 2020.
According to a piece on Fortune, Wolf’s assumptions are based on the fact that iPad will be the main source of the halo effect that drives market share, alongside the iPhone.
The iPod is slowly stepping out of the picture. The reasoning here is that people who don’t own Mac but start adopting these products are more likely to eventually make the switch on the desktop front.
Wolf believes iPad sales to new users will continue to grow in the coming years. He forecasts the peak will be in 2016 when Apple will have sold nearly 54 million units.
He sees the tablet’s growth curve similar to that of the iPod, which continues to be the dominant ‘player’ in its own market.
He specifically notes that Apple will still be shipping nearly 140 million iPad units a year by 2020 which should translate into a 60% share of the tablet computer market.
For comparison, Fortune’s Philip Elmer-DeWitt throws in a Gartner estimate which has the iPad's market share falling to 47% by 2015, mostly because of ‘copycat’ tablets running Android and other OSes.
A quote from Wolf’s research note is also provided:
“We disagree with pundits who have predicted that the iPad will rapidly lose share to Android tablets. There are over 100,000 applications written for the iPad compared with a few hundred written for Android.”
“Unlike a smartphone, which is multidimensional, a tablet's a blank slate without applications. Its value lies in the consumption and to a lesser extent the creation of content, but only marginally in communications.”
“From a distribution perspective, then, the tablet is not naturally aligned with the carrier distribution network, which has been instrumental in the rapid growth of Android smartphone sales.”
“Carriers are likely to play a limited role in the distribution of tablets compared to the consumer electronics retail channel. Our view and revised forecast, then, assumes that the trajectory of the iPad's market share will more closely resemble the iPod's rather than the iPhone's."