Analyst ‘Reassesses’ iPad, Cuts Expectations in Half

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There seems to be a slight crack in the rather monolithic analyst pronouncements of support for the iPad. Needham has scaled back its endorsement of the new Apple device, telling investors it forecasts 2 million tablets sold in the year after the iPad launches, down from a previous 4 million.

The reversal came in a note entitled “Seeing is Believing” and follows its previous “Apple has Another Winner” analysis. Although the firm still believes “sales of the iPad will be substantial even in its first iteration,” the thumbs-up is labelled “cautiously optimistic.”

Soon after it’s introduction, the iPad was roundly praised by analysts who increased their sales expectations and lauded the device’s low pricing. The day after Apple CEO Steve Jobs unveiled the tablet, Piper Jaffray’s Gene Munster declared ‘measured enthusiasm’ for the device, doubling predicted first-year sales to 4 million and by 2011 accounting for 7.5 percent of Apple revenue.

Why the change of heart? Needham said it came after “watching a replay of Apple’s iPad introduction and reassessing the device’s potential.” Part of that reassessment appears to have included reservations voiced by some on the absence of multitasking, as well as missing support for Adobe’s Flash animations.

Other analysts don’t feel the lack of features will be a problem. Earlier this week, Deutsche Bank forecast “For most non-technical consumers, these features are not critical.” The analyst firm said the iPad could help Apple grab 7 percent of netbook sales in 2011. Apple had not entered the low-cost segment, an area that has depressed PC prices.

The analyst firm also believes much of the iPad’s sales will come from people switching from the iPod touch. “Our forecast assumes that over half of iPad sales come at the expense of the iPod touch,” the company said. On that point, Citigroup analyst Richard Gardner agreed. “The flip side is that the low price point together with overlapping features does increase the risk of cannibalization of iPod touch sales,” he said.

[Via WSJ]