The iPad Turns 3
Mark is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
April 3 marked the 3rd anniversary of the introduction of Apple's (NASDAQ: AAPL) iPad tablet. It was the beginning of turning yet another market on its head by the iconic company.
Just as it did previously with the iPod in 2001 and the iPhone in 2007, devices which radically altered how we listen to our favorite songs and talk, text and surf on the go, Apple has transformed the low end of the mobile (and maybe all) computing industry too.
iPad rising, PC falling
The iPad has been good for Apple. It is estimated that the company has sold 120 million units so far, including four generations of the full-size model and the "mini" version, released just last year. Many analysts had projected, like they did for the iPhone three years before that, that consumers would not buy it in such droves.
The iPad might not be as good for the PC industry. Since its introduction sales of certain types of computers (including some of Apple's own Macs) have been slowing.
The number one PC maker, Dell, is in the process of going private. Several prominent investors, including the famous takeover king Carl Icahn, are bidding to buy the company. Dell's founder, Michael Dell, is actually part of one of the teams jockeying for control.
Maybe the move will shake up Dell. Its revenues, earnings (and market value) have been on a downward slope over the last few years, following the industry-wide trend.
Since the iPad was first sold, Apple's stock price has gained 80% although it is off 40% from the all-time high reached last September. Investors are concerned that earnings growth and margins will not approach levels seen in the past and have been selling off shares.
Master investor Warren Buffett cautioned about sounding an alarm on Apple yet. He said it was more important for the company to return value for its shareholders. Maybe a dividend increase or a stock buyback would be helpful? Both are rumored to be in the works this year.
The iPad accounts for about 45% of the tablet market, down from the peak of 65% reached in 2012. The nearest competitor, Samsung (NASDAQOTH: SSNLF), currently has maintained a steady 15% market share with its line of Galaxy Tabs and Notes over the last few years.
Samsung also is Apple's primary adversary in the smartphone business with a number one ranking in overall market share, although Apple is tops in the high end. Samsung is set to begin selling its latest model, the Galaxy S IV this month.
In a bid to address Samsung's overall dominance, Apple is rumored to be developing a lower priced version of the iPhone and may release it sometime this year.
Also in the works according to some analysts is a "smart watch," the iWatch, and some sort of Internet capable TV (the iTV?). Perhaps the new devices will help the company reverse course and return the stock to its previous lofty heights. Apple seems to need a little jolt.
Other companies offering tablets include Amazon.com (NASDAQ: AMZN) and Barnes & Noble, although they are relatively small players in the market.
Amazon actually beat Apple to the punch and released its first e-reader in 2007. The much lower priced Kindle didn't have all of the bells and whistles as the iPad did, though it was a boon to Amazon placing the company on the consumer product map. The company followed up with the more versatile Kindle Fire tablet in Sept. 2011. It was designed as a much lower priced alternative to Apple's product.
While the company doesn't provide exact sales figures, industry analysts estimate that Amazon has slightly more than 10% of the market right now. I guess consumers still like Apple products and Amazon is not the dominant player many projected it to become. It's probably because the iPad fits in nicely with the overall Apple ecosystem. It works seamlessly with other iOS-powered devices like the iPod, iPhone and Apple TV.
The Barnes & Noble Nook devices are barely making an impact in the industry with only 1% market share. The company is floundering and has been losing money. Will it follow in the footsteps of Borders, which went out of business a few years ago? Will a white knight ride in and save it? Barnes & Noble certainly needs something. The Nook is fading.
So as the iPad goes into its 4th year of existence will it continue to be a big seller and keep the computing industry upside down? Or will it be another flash in the pan? And will Apple release another game-changing product soon?
I'm going to put my money on Apple to continue to have success and keep the competition at bay.
Mark Morelli owns shares of Apple. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!