JPMorgan: iPad 2 Could ‘Burst Bubble’ of Rival Tablet Hopefuls


Photo by Jeff Kubina -
Photo by Jeff Kubina -

Although Apple’s next-generation iPad 2 won’t be released until Mar. 11, experts are already warning rival tablet makers more than half of their devices could be left unsold. Recalling images of the Internet bubble of 2000, one analyst predicts an “increasing risk of a bubble burst” for iPad competitors during the second half of 2011.

Improvements announced in the iPad 2 “make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan,” JP Morgan Research analyst Mark Moskowitz told investors Wednesday.

Indeed, although about 55.1 million tablets are expected to be made in 2011, Moskowitz forecasts just 47.9 million of the devices will be sold, resulting in up to 51 percent of tablets left on the shelf. By contrast, Apple is expected to see a near 100 percent jump in annual sales of 29 million iPads this year.

“Based on our research inputs, tablet makers eager to emulate Apple’s meteoric start are trying to secure components with inflated build plans,” Moskowitz writes. Of particular worry are glass displays and processors, although NAND Flash memory could also be affected by the ambitious production.

As for consumers tempted to wait on buying an iPad 2 in order to see what alternatives – such as an Android-based tablet – have to offer, “the competitive offerings appear to be light on attraction”, leaving buyers “underwhelmed,” according to Moskowitz. He singled-out Motorola’s Xoom and HP’s TouchPad as rival tablets with potential traction in the market.

Amid Wall Street talk of the iPad’s “evolutionary” upgrades to the initial tablet, Moskowitz says an earlier JP Morgan forecast that Apple could own 68 percent of the market “may be conservative.”