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1/19/2011
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Eric Zeman
Eric Zeman
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Apple Sells 15M iPads In 2010, Dismisses Competition

Apple's latest earnings report show that it sold more than 15 million iPads in 2010. Apple execs were sure to take a poke at the iPad's "bizarre" and "weak" competitors.

In its first 9 months of availability, 14.8 million people snapped up the iPad. To put that in perspective, the 7.33 million iPads Apple sold in the last quarter amounted to $4.6 billion in revenue -- more than Apple's MacBook business.

According to IDC's numbers, Apple owns 87% of the tablet market. All other vendors combined sold roughly 2.2 million tablets in 2010. Nearly half of those -- just over 1 million -- were Samsung's Galaxy Tab, which runs Google's Android operating system. To say that Apple's position dominates the landscape is a serious understatement.

Current Analysis analyst Avi Greengart said, "Apple has now sold nearly 15 million iPads, and while that's an extraordinary achievement, people have lost perspective on just how extraordinary it really is: a year ago, there was no consumer tablet market, and nearly all the tablets shown at CES in January 2010 were canceled. Going into CES 2011 the tablets were again out in force, but it remains to be seen how well they can replicate Apple’s model of not just using a mobile OS platform, but also tying into an existing market for media content, and encouraging developers to write tablet-specific apps. Apple already has an enormous lead in apps and I'm still waiting for someone to build a credible competitor to iTunes."

Apple's success in 2010 comes partly because it was one of the only tablets that was widely available for much of the year. Competitors have been slow to respond to the iPad, at their own expense. Samsung's Galaxy Tab reached some markets in October (six months after iPad's debut) and the U.S. in November. By the end of 2010, Samsung met its goal of 1 million units, but that pales in comparison to the iPad's success.

"The iPad numbers caught almost everyone by surprise," said Ovum's Jan Dawson. "For a brand new product in what's really a new category to sell this well in such a short period of time is pretty much unprecedented. Apple also secured for itself first mover advantage, which was important for two reasons: it was in the market for several months before any real competitors showed up, and it also defined the category, forcing everyone else to deal with both a very attractive device and a very aggressive price point, which no-one else has yet been able to match. There will be more competition in the coming months when the Playbook and the first Honeycomb Android devices launch, and we expect market share to even out significantly over time, but for the time being the iPad is going to dominate the space with everyone else fighting over the leftovers."

2011 will mark a significant change in the tablet market, and one that will likely have a negative impact on iPad sales. Dozens of tablet devices were announced at the Consumer Electronics Show in early January. At least two (Motorola Xoom and RIM PlayBook) will be serious iPad competitors. Both are set to hit the market by the end of the quarter. Price points and final feature sets haven't been announced for either device, but they'll closely match the iPad's specs, if not surpass them in some respects.

Despite the choice that these two tablets -- and the soon-to-be-announced webOS tablet from HP -- will bring to consumers and businesses alike, Apple isn't worried. During its recent quarterly earnings call, Apple COO Tim Cook had some harsh comments for Apple's tablet competitors.

"If you look at what's out there today, there's not much," he said. "There's the ones that use Windows, they're generally big and heavy and expensive. They have weak battery life, they require a keyboard or a stylus as an input device, customers are frankly just not interested in them. Then you have Android tablets, and the varieties that are out shipping today, their operating system wasn't designed for tablets. Google has said this, this isn't just Apple saying this. That means you have the size of a tablet that just isn't reasonable for what we call a 'real tablet experience.' That's just a scaled-up smartphone, which is a bizarre product category. If you do a side-by-side with an iPad, you'll pick an iPad."

RIM strongly disagrees. In December, co-CEO Jim Balsillie said, "I think there's going to be a strong appetite for web fidelity and tool familiarity," implying that the PlayBook's use of Adobe's AIR and Flash set it apart. "And I think there's going to be a rapid desire for high performance. I think we're way ahead on that. And I think CIO friendliness, we're way ahead on that. I think the PlayBook clearly sets the bar way higher on performance. I think the enterprise stuff, we're seriously extending. I think the BlackBerry is still number one in social collaboration. And I think with the PlayBook and that environment we're going to set the new standard on performance and tools, very powerful tools. And we're growing very, very fast."

RIM is believed to have ordered 1 million PlayBooks for its launch later this quarter. Obviously, RIM is bullish on the PlayBook's chances. Analysts, however, are lukewarm. Barclays Capital analyst Jeff Kvaal predicted last month that RIM will only sell 3 million PlayBooks by the end of 2011. Worse, Gleacher & Co. analyst Mark McKechnie pegs PlayBook sales through February 2012 at only 1.8 million units.

Apple's early lead clearly puts it in a favorable position heading into 2011. With the iPad 2 on deck to debut within the next few months, Apple's competitors need to come out of the gate running hard.

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