In a research note to clients covered by AppleInsider, Mr. Whitmore wrote, “We remain skeptical whether the likes of (HP), Dell, Motorola, Samsung and RIMM etc can close the competitive gap on iPad 2. Specifically, iPad challengers must either undercut on price (negative margin implications) and/or offer a superior user experience.”
He added, “In aggregate, we believe iPad will remain dominant with 70% market share. Our tablet unit estimate remains below Consensus due to our concerns that non-iPad tablets will underwhelm.”
He is so bullish on the iPad, he believes tablets (as defined by Apple’s device) are eating into the traditional PC market, and that tablets are “cannibalizing” netbook sales. Based on his checks with overseas suppliers, Mr. Whitmore believes that 30% or more of tablet users are using the devices as notebook replacements.
As such, he cut his PC growth estimates for 2011 (excluding tablets) from 9% year-over-year to 4%. Including tablets, he sees the PC market growing 12% year-over-year, down from 15%.
Looking forward to 2012, he is projecting tablet shipments of 70 million units, an increase from 60 million units.
The analyst bumped his price target for AAPL to US$450, and he reduced his price target on Dell to $18 and HP to $40.
AAPL closed lower Tuesday, ending the day at $338.89, down $2.30 (-0.67%), on strong volume of 17.2 million shares trading hands. DELL ended the day higher at $14.43, up $0.180 (+1.26%), on moderately strong volume of 22.1 million shares. HPQ closed lower at $40.29, down $0.05 (-0.12%), on moderate Volume of 16.1 million shares.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.