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Tablet sales may disappoint this year say analysts

A surprising chill crept into the usually feverish forecasts about Apple last week, with two analysts daring to damp down the usual hysteria

By PETER WHITE

Published: 18 November, 2010

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A surprising chill crept into the usually feverish forecasts about Apple last week, with two analysts daring to damp down the usual hysteria. Rodman and Renshaw believes the iPad, and the tablet market in general, will disappoint during the holiday season, amid continuing consumer caution. And although Apple overtook RIM to lead the US smartphone market in Q3, according to several calculations, ABI Research believes BlackBerry OS will maintain its US lead, bar the occasional quarter, until 2015.

The forecasts from Rodman and Renshaw, cited by Bloomberg, say that tablets will be hit, during this holiday season, by the fact they remain a luxury, not an essential, item. This could mean that Apple sells only slightly more iPads than it did last quarter, despite the holiday effect - around 5 million units, says the report, compared to 4.9m in Q3 (which was itself a disappointment to analysts). And it says Samsung has already cut back planned production of Galaxy Tab for Q4, by as much as 50%, after lower than expected initial sales or pre-orders.

Customers are cutting back on discretionary spending and are more likely to outlay money on smartphone or netbook upgrades, or hold off altogether. As analyst Ashok Kumar says: "It's a nice-to-have product, for those of us who don't have a budget, but is it a must have product? I don't think so."

Apple shares fell by $8.63, or 2.7%, to $308.03 in Nasdaq trading. The firm has also disappointed some users and analysts by not releasing iOS 4.2 yet, and ABI Research thinks its victory over RIM - which CEO Steve Jobs boasted of so aggressively at the quarterly results conference - will be shortlived. It says BlackBerry will maintain its lead in north America until 2015, though Apple and Android will gain a solid presence.

As for Nokia, rising pressures on device sales will make services revenues increasingly important to Apple on the mobile side. One of its critical platforms is the iAd mobile advertising system, which it is expected to expand to Europe from this week, having been active in the US since July 1. Apple will reportedly name its first European iAd partners this week, and iPhone or iPod Touch users will see the first campaigns before year end. According to the London Financial Times, European launch partners could include L'Oréal, Renault and Nestlé.

Going live on iAd represents a considerable investment - most US marketers are spending at least $1m, and some up to $10m if they want various levels of exclusivity within their vertical markets. In Europe though, the FT says Apple is in talks with European advertisers to run sub-$1m campaigns in an effort to attract top level brands. "Apple is in a weaker position than you'd think," an ad agency source told the newspaper, and another added: "Apple is still figuring out how to sell advertising. You don't just become a sell-side media company overnight. The infrastructure is missing at Apple right now."

The vendor has also run into disputes over its tight creative control over the process, which lengthens the time it takes to make a new ad live, and does not allow advertisers to choose where their campaigns run - in sharp contrast to the highly targeted ad platforms being launched by several carriers such as Telefonica O2.

Personally we think they are likely to be wrong on a global basis, though they may have picked up the caution of the US consumer markets perfectly.

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