APPLE’S IPAD may take a year to turn into a “breakout” product with mass-market appeal as consumers wait for the price to drop below $499 (€357) and for more publishers to get on board, according to investment bank Piper Jaffray.
“It needs to be $300 to $400,” said Gene Munster, a Piper Jaffray analyst.
“It’s an amazing device, but investors should have measured enthusiasm about how long it takes for something like this to gain traction.”
Apple chief executive Steve Jobs said the gadget would include new software called iBooks for displaying electronic books, setting up a challenge to dedicated e-book readers from Sony and Amazon, which offers its Kindle starting at $259.
Mr Munster said he expected Apple to sell three million to four million iPads in the first year. It may sell as many as eight million in 2011, which would add $4.6 billion to revenue, almost equivalent to Apple’s current iPod business. Some of those gains would probably come at the expense of Apple’s 3.5-inch iPod Touch player.
Mr Munster has recommended buying Apple stock since 2004. The shares have soared more than 12-fold in that period.
David Bailey of Goldman Sachs predicted sales of as many as six million iPads this year, adding $3.9 billion in revenue and 99 cents a share in profit.
“Apple’s announcement highlights what we think is the company’s multi-year lead in mobile devices,” Mr Bailey said in a report.
“That said, we expect the near-term impact on the stock to be muted as investor sentiment had been bullish ahead of the event.”
Apple has already signed agreements with five publishers, including Penguin and HarperCollins, and intends to form alliances with others that will be able to sell their titles through the company’s new iBook store, Mr Jobs said.
Pricing for iBook titles has not yet been disclosed.
Apple fell $6.66 to $201.22 yesterday morning in Nasdaq stock-market trading. The shares, which more than doubled last year, climbed to a record $215.04 earlier this month on speculation that the tablet was coming.
The iPad’s potential lies in what content partners do with the device, because the tablet’s technology is not that “big a deal” and the pricing is “not terribly exciting”, said Todd Dagres, a general partner at venture firm Spark Capital in Boston.
He said there was an opportunity for Apple to come up with “some innovative packaging and subscription models for content, so that when you wake up in the morning, there’s content sitting there on your tablet”. – (Bloomberg)
