iPad Adoption Rate Fastest Ever, Passing DVD Player

CNBC Fast Money ^ | Monday, 4 Oct 2010 | 3:19 PM ET | By: John Melloy

[Swordmaker]

Apple’s [AAPL  278.64    -3.88  (-1.37%)   ] iPad sold three million units in the first 80 days after its April release and its current sales rate is about 4.5 million units per quarter, according to Bernstein Research. This sales rate is blowing past the one million units the iPhone sold in its first quarter and the 350,000 units sold in the first year by the DVD player, the most quickly adopted non-phone electronic product.

“The iPad did not seem destined to be a runaway product success straight out of the box,” said Colin McGranahan, retail analyst at Bernstein Research, in a note. “By any account, the iPad is a runaway success of unprecedented proportion.”

APPLE INC(AAPL) 278.64     -3.88  (-1.37%%) NASDAQ

At this current rate, the iPad will pass gaming hardware and the cellular phone to become the 4th biggest consumer electronics category with estimated sales of more than $9 billion in the U.S. next year, according to Bernstein. TVs, smart phones and notebook PCs are the current three largest categories.

“This is much bigger than I thought it would be,” said Pete Najarian, co-founder of TradeMonster.com and a ‘Fast Money’ trader. “It’s really a total media device and there’s not much a PC can do that you can’t do on an iPad.”

To be fair to the DVD, they were a bulky, pricey change from video recorders that had become a staple of most American homes. It took five years for the DVD to reach the unit sales pace that the iPad reached in just its first quarter, according to Bernstein. The iPad had the advantage of being the extension of Apple’s ever-expanding ecosystem of iPhones, iPod touches and Macs that are marked by ease of use and a familiar style.

Bernstein’s McGranahan covers Best Buy [BBY  40.25    -0.51  (-1.25%)   ], the first major retailer to sell the iPad. His analysis found that not only are the iPads cannibalizing the netbook/notebook category in stores, but could also be hurting sales of TVs and digital cameras.

“It is the rare American household that would spend $600-plus dollars on an iPad and buy a TV or a PC or a digital camera in the same month, or the same quarter, or maybe even the same year,” said McGranahan.

The cannibalization of computers by tablets is one of the reasons Goldman Sachs downgraded Microsoft [MSFT  23.91    -0.47  (-1.93%)   ], sending the shares to the worst performance of any Dow Jones Average [.DJIA  10751.27    -78.41  (-0.72%)   ] member today.

“The company needs a credible iPad answer in the near term to allay concerns that tablet proliferation necessarily cannibalizes Windows sales,” wrote Goldman analyst Sarah Friar in a note. “To compete with Apple, and Google [GOOG  522.35    -3.27  (-0.62%)   ] through Android and Chrome, Microsoft would likely benefit from collaborating with hardware manufacturers on an instant-on, always connected device that has longer-than-PC- battery life and a vibrant ecosystem of applications.”

Apple has been the rare company that keeps the “first mover” advantage. As tablets from Microsoft and Research-In-Motion soon flood the market, and Apple’s market capitalization approaches Exxon Mobil, the company’s going to need the next big extension of that ecosystem. Apple TV is on sale now.

With reporting by Erica Berman.

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.

[Swordmaker]

iPad sales growth and product adoption exceeds adoption of DVD Players introduction! PING!

Please!
No Flame Wars!
Discuss technical issues, software, and hardware.
Don't attack people!

Don't respond to the Anti-Apple Thread Trolls!
PLEASE IGNORE THEM!!!

 

Apple iPad sales growth Ping!

If you want on or off the Mac Ping List, Freepmail me.

[Citizen of the Savage Nation]

Love my iPad. The one thing it can’t do that I hope gets fixed is render websites with flash/embedded video...I may be asking too much but it really needs to do better in that regard. Otherwise, it’s near perfect.

[napscoordinator]

Anti-Apple? There should be noone on Earth who is anti-Apple. They are one of the best companies around. I love my Apple notebook, Ipod and will be getting an Ipad soon. Everyone I know that has one loves it.

[Pontiac]

“It is the rare American household that would spend $600-plus dollars on an iPad and buy a TV or a PC or a digital camera in the same month, or the same quarter, or maybe even the same year,” said McGranahan.

Yep, wish I could afford one.

[balch3]

and I still can’t figure out what people are doing with these things. It looks to me like an oversized smartphone or an underpowered laptop without a keyboard.

[Spktyr]

Out of curiosity, and I don’t mean to be insulting, but did you also not ‘get’ the iPod when it first came out? Did you think it was like an overpriced Walkman or underpowered MP3 player?

I didn’t think it would go anywhere either, until a friend gave me one for Christmas. Then I figured it out.

[balch3]

I thought it was a cool gadget, but not anything I had a need for. I still don’t own one.

[RegulatorCountry]

Sounds like somebody’s been lurking. FR’s faster than Fast Money, lol.

[dawn53]

I had never used an Apple product but my husband bought me an iPad for our anniversary. I’m in love with the device.

I work from home, and so he bought me the wireless keyboard (the online keyboard is okay, but they need to do something so you don’t have to switch back and forth between the numbers and letter) and mouse thinking I might not like the touch technology. I haven’t used the keyboard or mouse. I’m now officially addicted to the touch screen.

Now I will say that I don’t do most of my work on the iPad, I’ll use my Dell laptop or PC, but that’s mostly because I have the software I need for work on those computers and don’t feel like making the switch.

But for everything else, I use the iPad. I browse FR and other sites on it, I watch movies on it (the picture quality off Netflix is amazing), I read on it (hundreds of free iBooks), I play “mind” games (which is a daily thing w/me...don’t want to let the brain get lazy), I play games (Angry Birds is just fun), I use it as a babysitting aid when babysitting for my nieces kids (virtual paperdolls keeps them busy for hours)........and then there are the apps, unbelievable what info I can get and use from any number of apps. And best of all, it’s available at the touch of your finger. If the printing is too small for these old eyes...I simply spread my fingers on the screen and I see larger print.

Really an amazing little device.

[comps4spice]

I have had an iPad for 6 weeks now. It was a gift.

I am known as being the tech and gadget guru at home and at work, but did not plan on buying one.

The iPad is a transformational device. It unleashes what you want to do slowly and subtly.

That “i’ in iPad stands for “intimate” — it feels like a personal computer. More so than a pc.

[Wooly]

I still wonder where Apples stock price will be in a couple of years. It seems to me that Apple has put itself in a position where it can be manipulated by the other companies (Mobile carriers) it needs for continued sales.
I recently read an article that discussed the growth of Android versus the iPhone. In the article it stated that one reason fro the growth was the fact that it was more profitable for the carrier to push an Android phone over the iPhone. And when you consider that the goal of the carriers is to have a smart phone in the hands of every subscriber, the profitability and variety of the Android phones will be the phone that is pushed. I can even see a time when both the iPhone or even a Windows 7 phone is a special order or not even carried as an option.
Now before anybody states that the iPhone will always be offered, since some people want it, it is the best, or some other reason, think of when was the last time that ATT, Sprint, Verizon, or t-Mobile gave a damn about the desires of their customers and more or less took the attitude of take what we offer or go somewhere else.
This would be really damaging to Apple, which owes much of its’ recent success to mobile hardware. It would force them to further trim their pricing or to offer the iPhone in a completely unlocked version (this was really a success for the Google Nexus One).
I also think that if the touch pads take off (too soon to tell) that you will also see the carriers offer these devices, and I can almost guarantee you that they will be running Android.
But this is just my opinion.

[Vendome]

Seems like everyone but me has one of these things and they love em.

[dawn53]

I’m betting on Apple, mainly because they are the innovators...the other companies are the followers. So IMO, they’ll keep innovating, putting out new technology, and will succeed in that way. (btw, hubby has an Android phone and isn’t fond of it. His work dictated the kind of phone he use...he has his own reasons for disliking it, but just this morning we had a discussion about why that kind of phone-iPhone included-presents a real IT security risk.)

[Marie Antoinette]

I have gadget lust. *sigh* You know it’s bad when you start reading their finance terms page...

[Mr. Blonde]

In the event that Apple sold the iPhone unlocked it would have a few huge advantages over the Nexus One. First, people are very familiar with the iPhone already and know to a certain extent what they are getting. And two, with the Apple retail stores, people can actually get a hands on experience with them. People had to buy the Nexus One unseen.

I’m not sure why Android phones would be more profitable for the carriers than an iPhone. The crapware they can load on them? I imagine people would pay more to not have that stuff on their phones.

[dawn53]

Well I didn’t buy mine, hubby got it for me for my anniversary...I’m not much for jewelry or clothes, LOL. So I’m not sure what it costs, but I imagine, if it’s like most technology, the cost will come down.

[Chipper]

The backlash would be too much for them to handle I believe. I, for one, would say screw the carrier and tell everyone who calls me "You can reach me on Skype when I am on a Wi-Fi carrier, otherwise leave a message and I'll call you when I get to one". I'll pay the $500 for the Iphone without the carrier if need be. I'd rather FaceTime call anyway:-)

Back to the iPad. I can see me getting one around 3rd or 4th Generation. If I hadn't gotten my MacBook Pro maybe it would have been sooner.

[Swordmaker]

I recently read an article that discussed the growth of Android versus the iPhone. In the article it stated that one reason fro the growth was the fact that it was more profitable for the carrier to push an Android phone over the iPhone.

I sincerely doubt that. The vast majority of the Android phones being moved are being sold under BOGO offers, Buy One, Get One free plans, subsidized by the carriers. The carriers BUY those phones from the manufacturers at their regular wholesale price and sell them below cost to the customers. Those they sell at a below wholesale retail price, they recoup a little of that subsidized cost, and maybe subsidize only 75%, but those they give away, they subsidize at 100%. . . amortizing the subsidy on both with subscription fees over the life of the contract. When you factor the BOGO sales in to the mix, with Apple's prohibition of them, iPhone sales are MORE profitable per unit to the carriers than any subsidized BOGO sale phone.

[SunkenCiv]

Oh no! Apple’s doooooooommmmmmedddd! ;’)