Alas, the iPad, iPhone and Mac marketshare success stories…
I read a lot of analyst notes every morning as I prepare for my day, and I have been for years, and every once in a while, you really makes you think. Such was the case last night as I sat down and read Bernstein’s most recent note on Apple, in which the analysts raise their forward earnings estimates by a buck to over $30 a share because:
“Despite the fact that iOS’s ecosystem lead may diminish over time, we believe that iPad’s market evolution and competitive positioning is more likely to resemble the iPod than the iPhone, and we have increased conviction that iPad will have sustained dominant market share (50%+) going forward.”
It’s not the number bump to the $30 per share that I’ve been modeling for you guys for a year or so now or the fact that the nice raise in forward estimates at Bernstein makes Apple’s stock yet more cheaper on a forward multiple than it was last week. But it’s the concept that the Apple’s market share in tablets will be more like it was for the iPod in the MP3 market than like it is like the iPhone in the cell phone market. Bernstein’s talking a sustainable 50% market share for Apple in the tablet market, but just to give you an idea of what would happen were Apple to attain as much dominance in the tablet market as it once attained in the MP3 market:
Yeah, we’re talking about 3 out of every four MP3 players were iPods at one point. If (and yes, it’s an “if”, unless you’re a permabear or luddite, it’s not a “BIG if”, but just an “if”) tablet sales go from 20 million in 2010 to 100 million 2012 to 250 million in 2015, we’re talking about Apple selling more than 200 million tablets in five years from this year.
And we’re talking about a business line that will see gross margins expand as volumes and expertise grow. And more importantly we’re talking about a total of a billion iPads being in circulation, using the iOS ecosystem with all its huge margin revenue generators like apps, subscriptions, music, video, and so on…think about trying to model what Apple’s earnings will be in 2015 with that kind of bottom line leverage in the pike.
Lest we discount Apple’s remarkable rise from 0% market share in the cell phone market to its current:
Alas, the iPad, iPhone and Mac marketshare success stories are just part of the story with Apple — it’s really all about that eco-system and the expanding margins and new business lines it will generate.
I have typed these words literally hundreds of times over the last eight years since I first started buying and telling my subscribers that I was loading up on Apple and Apple call options back in April 2003 at $7 a share, and I’ll type them again to finish today’s column — stick with Apple. I am.