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Apple: iOS is the New Windows

 November 21, 2012 03:52 PM

(By Mani) Although PCs are under pressure, the notebook + tablet market is growing (not to mention smartphones). Apple, Inc. (NASDAQ:AAPL) is gaining as the ratio of total notebooks to iPads plus MacBooks peaked at over 30 times in 2006 and is now just 1.6 times.

The tablet fuses essential compute capability with mobility and personal convenience. Tablets are at the heart of the bring-your-own-device (BYOD) movement with enterprises embracing personal technology beyond the smartphone. Apple has enjoyed a first-mover advantage with rivals now entering.

"Not only could iPad maintain half the tablet market, but MacBooks might steal a significant number of Windows PC users," UBS analyst Steven Milunovich said in a note to clients.

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Apple has dominated tablet sales so far. IDC estimates that in the September quarter, Apple had a 50 percent share, Samsung had 18 percent, Amazon.com, Inc. (NASDAQ: AMZN) at 9 percent and Asus (the Google Nexus 7) had 9 percent.

"We expect Apple's share to decline from 60%, but the market to grow at an attractive rate," Milunovich said.

Markets tend to diverge rather than converge. Although Windows tablets should achieve a double-digit share of enterprise tablets, Apple should lead in both the business and consumer markets.

"Our survey indicates that Windows tablet success likely comes more at the expense of notebooks than iPads. Also, we prefer Apple's tablet business model to Amazon's and Google's," the analyst noted.

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Windows tablets are late to the game—notebook vendors endured two years of cannibalization by iOS and Android tablets. Apple's increasing influence in the post-PC era bodes well for its standing in the next leg of tablet growth.

"Its iOS and OS X operating systems may become the dominant mobile personal computing ecosystem, eclipsing Windows-based notebooks and tablets," Milunovich said.

Although, Windows tablets are developing a presence in the corporate market, there is confusion among consumers relating to software versions and the herd of vendors churning out product. Studies show that consumers freeze and buy less when there are too many choices.

"Vendors developing Win8 tablets see the new market as a means to offset declines in notebooks. We see little room for differentiation among suppliers," the analyst said.

In addition, the increasing confusion could aid Apple given that it is the industry leader with a relatively simple product line, and consumers know they can find support at Apple stores.

At the recent UBS Tech Conference, Intel, Inc. (NASDAQ: INTC) said 26 Windows tablets with the company's Clover Trail processor will be introduced over the next 6-7 weeks. Including several RT models based on ARM processors, consumers will have almost as many choices in tablets as in notebooks.

As the market segments, Apple's could decline, but the market size should surprise to the upside. Already the number of tablet and convertible choices is confusing.

"We think user confusion favors Apple given its leading brand, relatively simple product line, and retail store support," Milunovich wrote.

Meanwhile, despite the decline in the overall notebook category, MacBook shipments have doubled from a quarterly run-rate of 2 million in mid-2010 to more than 4 million last quarter. MacBook share has increased from 5 percent to 8 percent over the same time period. One benefit of the rising Apple brand could be a meaningful switch of Windows PC users to Macs.

"We hear that in enterprises that are giving employees a choice of PC, more than expected are shifting to Mac. In the consumer market, we expect to Apple to gain share as the younger generation has grown up on Apples at school. Pretty soon it could be that the "rebels" will be the Windows users rather than the Mac users," Milunovich added.



11/21/2012 4:54:24 PM
Not likely by PaulC
iOS isn't the new Windows any more than the netbook was the new PC. iOS certainly has a market, and it might be biting into PC sales, but it does not provide nearly the capabilities that Windows does. Only those with the most basic of computing needs can accomplish on an iPad what they used to on Windows, and I'd wager the amount of people who could do so in a business setting is absolutely miniscule. Windows, and Microsoft, may have lost a lot of it's luster, but it's still a ubiquitous and indispensable system, and that's not going to change any time soon. I just love all these predictions of the demise of Windows (ironically including that my Microsoft of the demise of the desktop UI). It all assumes no one needs to actually accomplish anything and instead spends all their time watching YouTube, playing Angry Birds and twiddling their time away on Facebook. I'm not sure where that world exists, I certainly don't see it anywhere around me.
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