Analyst: iPad Likely to Drive Recurring Sales for Apple, Publishers

| Apple Stock Watch

Apple's iPad will hit store shelves on April 3, and Broadpoint AmTech analyst Brian Marshall thinks it will become a great recurring sales platform for publishers, broadcasters and app developers.

"In our view, the true genius of the device is its media/content aspects (e.g. eBooks, newspapers and magazines, apps and games, movies and TV episodes, etc.) which we believe will be recurring in nature," Mr. Marshall said. "In fact, we estimate iPad-related recurring revenue from content purchases will approach about 30 percent of total iPad hardware revenue in calendar year 2011."

Apple introduced the iPad in January and will begin taking pre-orders on March 12. The iPad is a tablet device that runs the iPhone OS and includes a 9.7-inch multitouch display. It supports movie and music playback, includes an ebook reader, supports most iPhone apps, and connects to the Internet via Wi-Fi or 3G wireless data connections.

Mr. Marshall is confident enough in the iPad's ability to excite customers that he raised his sales estimate for calendar year 2010 from 2.2 million units up to 4 million. He added "Largely as a result of our iPad unit increase, as well as higher Mac estimates), we are increasing our calendar year 2010 estimates to US$57,913 million and $12.75, versus our old numbers of $55,738 million and $12.00 and the Street's $55,759 million and $12.14."

Mr. Marshall maintaining his "Buy" rating for Apple's stock and is raising his target price from $264 up to $280. Apple is currently trading at $222.83, up 3.75 (1.71%).

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2 Comments

Robert Scott Lawrence

That’s certainly a very bullish analysis given the terrible state of the economy—I know I’m not buying my kids $899 iPads anytime soon. Aside from the admittedly large group of first responders who buy anything new Apple comes out with, why on earth do the analysts really think this is a sustainable price, particularly after Apple announced that profit margins on the iPhone were over 40%? The already strapped consumer is getting gouged again by the same company that ironically tries to portray Microsoft as the big bad wolf, and should be up in arms rather than applauding. Here’s hoping a smart competitor leaps into the fray with a 1/2 price alternative.

Dean Lewis

There are competitors on the way, and most of them are either still not giving an estimate on price or will be priced right around the entry level iPad price or more. So, until Apple recoups its R&D costs, iPad pricing will likely stay as it is. Then, just as has happened with the iPod Touch and iPhone, versions will drop in price and new features introduced at the upper end. It’s been working well for Apple for years, and I don’t see them changing what is successful for them any time soon despite the grumbling from people who claim they want something cheaper but never buy anything anyway. (As someone who works in retail, I deal with a lot of people who grumble about prices but wonder why so many perks like the free coffee or the rental credits and such disappear—nothing is cheap or free.)

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