Bernstein Research’s Toni Sacconaghi reported Wednesday that Apple's iPad may prove more important than the iPhone to the lasting growth of the iOS ecosystem. Specifically, the analyst believes that the iPad's pricing and distribution are stronger than the iPhone's.
Sacconaghi, who has an Outperform rating on Apple shares, and a $725 price target, writes that Android has gone from zero market share to “nearly 70%” of the smartphone world in five years, while Apple’s iOS operating system, has gone from 9% to 19% in the same time.
In the race for tablet supremacy, however, the iPad represented a different reality. "Apple did not leave a similar price umbrella under the iPad," Sacconaghi says. "In fact, the iPad was cheaper than tablets with inferior features when it was first released. Now there are competitive Android tablet offerings at lower price points, especially because competitors such as Amazon and Google are aggressively pricing hardware in as their businesses makes gross profit on content and search, respectively."
"On balance, we believe that these factors suggest that Apple may be able to sustain higher unit share in the tablet market that in smartphones," the analyst concludes, "particularly given Apple’s apparent willingness to offer lower priced devices such as the Mini."
To read more of Sacconaghi's report and corresponding projections, click here.
Source: Barron's
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