Analyst: Apple will dominate expanded tablet market in 2011

Despite the crush of tablets expected to hit next year, Apple's (NASDAQ:AAPL) iPad likely will continue to dominate the market through 2011, according to a report from J.P. Morgan.

J.P. Morgan analyst Mark Moskowitz wrote that tablet shipments will reach 46 million in 2011, totalling $24.9 billion. That will grow to 78.2 million and revenue of $34.1 billion in 2012, the firm predicted--adding that Apple will retain a tight grip on the market. J.P. Morgan's estimate for 2011 is slightly higher than IDC's prediction of 42 million tablet shipments in 2011.

According to J.P. Morgan's estimates, Apple will command 61 percent of the overall tablet market by the end of 2011 and 44.3 percent by the end of 2012. Apple captured 95 percent of the tablet market in the third quarter, according to Strategy Analytics, although many of the iPad's competitors, while announced, have yet to hit the market.

Research In Motion (NASDAQ:RIMM), Motorola (NYSE:MOT), Hewlett-Packard, LG and others all plan to release tablets next year. Many companies are expected use version 3.0, dubbed "Honeycomb," of Google's (NASDAQ:GOOG) Android platform for their tablet offerings.

"Our assumption is that Apple's dominance will remain firmly intact in the near to mid-term, but gradually, technology improvements and component cost declines will enable the laggards to offer ‘good enough' solutions to loosen some of Apple's grip," Moskowitz wrote. "Of note, we expect a host of competitive tablets in 2H 2011, following the release of Android 3.0 this coming spring. The upgraded Android operating system should gradually improve the competitiveness relative to Apple's iOS. Our conversations with industry contacts indicate that the current version of Android does not provide a computing rich experience, which is a requisite of tablets."

Interestingly, RIM's PlayBook likely won't drop until March at the earliest. According to comments by RIM executives during the company's quarterly earnings conference call, RIM will not record PlayBook revenues until the start of its fiscal first quarter, which begins in March.

The troubling aspect of the tablet market next year, according to a blog post penned by Gartner analyst Nick Jones, is that there may be too many models and not enough buyers. "Our expectations for the tablet market in 2011 are positive, but to put things in context tablets will still be niche devices, maybe 15 percent of smartphone sales," he wrote. "So I think we'll see more supply than demand in 2011, and probably some vicious price competition because Apple will remain the leader in style, features and shipments. Price-insensitive buyers will just drop into their local Apple store without considering Android or the other also-rans, so maybe we'll see a pile of discounted remaindered tablets on sale in H2 of 2011."

For more:
- see this AllThingsD article
- see this IDG News Service article
- see this Gartner blog post

Related Articles:
IDC: Smartphones, tablets will dominate computing in 2011
Sprint will launch 4G tablet in 2011
ARM chief expects tablet sales near 60M next year
Report: Apple gobbled up 95% of tablet market in Q3

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