Tablet Shipments Will Surge to 210 Million in 2013

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Digitimes Research reported today that they expect 210 million tablet computers to be sold in 2013, surpassing the annual sales of notebooks. Of this figure, 140 million units will be “branded” tablets, and the rest “white box,” or generic, tablets. They note that this means that overall tablet sales will top sales of laptops.

This is good news for Apple (NASDAQ: AAPL) , Samsung, Google (NASDAQ: GOOG), Microsoft, and Research in Motion (NASDAQ: BBRY).

Apple is expected to retain 55.6% of the 140 million branded tablets, which is down from over 60% this year. That comes to a total of approximately 78 million units. Apple reported over 58 million units in fiscal year 2012, so this would be a 34% increase, although we will have to adjust for the differing time frame.

<table> <tbody> <tr> <td> <p>CQ1</p> </td> <td> <p>12</p> </td> </tr> <tr> <td> <p>CQ2</p> </td> <td> <p>17</p> </td> </tr> <tr> <td> <p>CQ3</p> </td> <td> <p>14</p> </td> </tr> <tr> <td> <p>CQ4 (estimate)</p> </td> <td> <p>23</p> </td> </tr> <tr> <td> <p>Total</p> </td> <td> <p><strong>66</strong></p> </td> </tr> </tbody> </table>

(Estimate from Phone Arena report on Morgan Stanley estimate [11/15/2012] )

This would mean only an 18% increase year over year – a rather conservative estimate. The question is if the new iPad mini will increase that percentage. It is only logical that the new mini would be taking share from established 7-inch tablets, increasing Apple’s overall share. Morgan Stanley estimates 19 million iPads in the March 2013 quarter alone, a 58% increase over this year. If that ratio should hold throughout the year, then Apple would see total sales of almost 105 million iPads – almost 75% of Digitimes’ 140 million branded figure.

Everyone But Apple

The report notes: “In 2013, Google is expected to maintain its momentum from the Nexus series products and become the second largest tablet brand vendor worldwide with shipments of 19 million units.” Meanwhile, reviews appear to be mixed on the new Surface tablet, so we will still have to wait to see if it flies or not.

The big news for RIMM is the upcoming release of the BlackBerry 10 OS, along with two new phones. Researching this on the web, it seems that both phones have some unique features that will help to differentiate it. The question is, as with the Microsoft entries, will the performance match the hype?

Conclusion

The tablet market is wide open. 2 years ago Apple leapt into a category of stodgy, unappealing products and revolutionized it completely. The iPad remains the gold standard of the the market. But new entries will challenge this lead ,and eventually it will need to share with others.

I have argued elsewhere that Android is dead, and the success of BB10 and (perhaps more so) WinMob 8 will be determining factors for the Google operating system's demise. The quality of the overall experience with these two products will in turn affect their success.

Whatever happens, tablets are on the rise, and investors should keep an eye on all of the competitors in this industry.

==== Understanding Apple series

You may love Apple and their products, or hate them to the core, but you cannot deny that Apple now has the highest market cap of any company, their products are trend setters, and currently they are trading at rather low multiples, especially regarding forward earnings.

Warren Buffet has the maxim: “Invest in what you know!” So, for those who want a unique perspective on Apple’s success, I have a series of articles Understanding Apple. I hope you will find them helpful and provocative.

Let me know what you think!

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