Apple Tablet Likely to Generate $2.8 Billion Revenue In First Year

News | Wednesday January 20 2010 6:12 AM | Comments (0) Tags: , , , , , , ,

For the study, Mike says his firm considered three price points and then predicted the corresponding number of units that are likely to be sold at each of the prices. According to this, if Cupertino chooses to sell the device on the higher side at close to $800, they are likely to sell 1 million units. On the other hand, if the device is priced cheap at $500 for the mass market, the study says the company could then expect to sell 10 million units inside the first year.
Abramsky underlines the base case, where the device could be priced close to $600, as the most likely scenario. He says that at this price, Apple could sell 5 million units of the
. Assuming a 30% gross margin for hardware would mean a revenue of $2.8 billion at the end of the first year.
Commenting on the long term, Abramsky predicts Apple to nearly double its sale numbers in two years time. Considering that the device would launch in newer markets during this time frame, that looks very likely. However, a cannibalization of 2%-5% is expected for the Mac market. But Abramsky denies any long term impact on Mac's popularity saying:
“Although the tablet would not offer the breadth of features or raw performance of traditional laptops, it would deliver an optimal experience for buyers looking for user-friendly, media-centric computing at entry-level price points. The tablet may cannibalize some Mac and iPod touch buyers, but the lack of Mac OS X compatibility (and emulated Windows) reduces the appeal of the tablet as a Mac replacement for Apple 's traditional premium Mac buyers.”
As the study notes, the number of units sold basically boils down to the Tablet's selling price. It is here that
will prove vital. An attractive subsidy will decide how many tablets Apple can expect to sell. What do you think? Is a 5 million target possible at a $600 selling price? Tell us what your view.

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