The UBS rationale is that the iPad is capturing demand for low-end notebook PC sales. However, the tablet market is poised to become more crowded as Cisco (NASDAQ:CSCO), Dell (NASDAQ:DELL), LG, Research in Motion (NASDAQ:RIMM), Samsung (OTC:SSNLF), and Toshiba (OTCPK:TOSBF) all develop tablet devices, which could slow iPad unit sales growth.
In comparison to UBS estimates, we currently estimate that Apple will sell about 15 million iPads in 2011. If UBS were right, there could be a 5% upside to our current $337 stock price estimate for Apple.
We estimate that iPad constitutes around 8% of the $337 Trefis price estimate for Apple’s stock. We expect Apple to sell about 10 million iPads in 2010 and 15 million in 2011. You can drag the trend-line in the chart below to create your own iPad sales forecast and see how it impacts Apple’s estimated share value.
Tablets can’t yet replace PCs
As mentioned above, we expect rival tablets to dampen iPad sales in coming years. Furthermore, another constraint is that the iPad’s features are still not compelling enough to cannibalize sales of more powerful PCs. The iPad is designed mostly for the consumption of content like websites, video and apps. For the foreseeable future, serious content creators will still need PCs.
In another article, we explained why the iPad is not impacting the sales of Apple’s Mac line of PCs.