A JP Morgan report released yesterday suggests that the supply chain for the IPad has seen a reduction in orders from the company of about 25%.
No confirmation has been made by Apple though and, despite speculation about slowing growth and competition (still a possibility) this would still mean the supply chain having to deliver more than the 10-12 million units that analysts have worked into their forecasts (www.dailymail.co.uk: Tablet overdose? Apple set to cut iPad orders by 25%, says analyst).
Could be a case of managing the supply chain against a backdrop of global recession; of monitoring inventory hang-overs ahead of the next model; or conceding ground to rivals, who knows at this stage? Plenty of commentary out there suggests that rivals are thin on the ground hence the pushing back of IPad3 (Apple update: IPad 3.)
However, there does seem to be interest in the forthcoming Amazon tablet although it has to be said that the main expectation is on price (www.eweek.comAmazon Tablet Threatens Apple iPad, Nook, RIM PlayBook.).
But, if it is competitive on performance, aesthetics and ease of use, then price will become a factor and have the potential to hit Apple's margins.
Although, it also has to be said that there is already a price war being waged by non-Apple tablet suppliers as they seek to shift excess inventory due to over exuberant in-house sales forecasts on seemingly uncompetitive products. Hewlett Packard are reported to be selling their discontinued TouchPad for $99.
Mark Moskowitz (JP Morgan Analyst), also suggests that average selling prices will continue to decline but that the tablet market will continue to grow with 2011 forecasts upped to 51.9m units and 2012 at 72.4m units (previously 76.3m) (www.appleinsider.com: JP Morgan increases 2011 tablet forecast to 51.9M as iPad dominates).
Even without price competition I would expect prices to decline with volume efficiencies and a fast moving technology curve but it is interesting to see that analysts don't think the tablet "fad" is going away.
Looking at the speed in which fortunes can change in the consumer tech markets and the backdrop of a global recession/economic disaster, it goes without saying that the fortunes and future direction of Apple will become more critically analysed now that Steve Jobs has officially departed the CEO role.
There is speculation of a dividend but I think it will be difficult for this to compensate for the initial loss of perception as a growth company and the potential lower rebasing of the share price.
So going forward, and keeping one eye on the portfolio, Apple is one to keep an eye on for any threat to its growth and margins.
Anyway, despite falling by $11 at one point yesterday, Apple seems to have recovered some of its poise by the close along with the shares of its suppliers.
Article links:
- www.eweek.comAmazon Tablet Threatens Apple iPad, Nook, RIM PlayBook
Earlier posts:
- Shares update: Apple's third quarter results. - Apple 2nd quarter update - profits up 95%!
- Apple update: Ipad 2!
- Is Android a reason to invest in Google?
- Globally Diversified Technology, Growth, and Hedge portfolio!!!
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