The iPad Opportunity: Officially Massive

Phileas Fogg traveled around the world in 80 days. Apple (Nasdaq: AAPL  ) sold 3 million iPads over the same duration.

Timing is where the similarities end in these two stories. Fogg is fictitious, created by author Jules Verne for his 1873 novel, Around the World in Eighty Days. Apple's iPad sales performance is real, and really profitable. Next month, the Mac maker will begin selling the device in nine new countries.

"People are loving iPad as it becomes a part of their daily lives. We're working hard to get this magical product into the hands of even more people around the world," Apple CEO Steve Jobs said in a statement.

I'll bet. In the six months since I first opened my now crow-filled mouth about the iPad's market opportunity, Apple says developers have created some 11,000 new apps for the device. And just this week, Barnes & Noble (NYSE: BKS  ) and Amazon.com (Nasdaq: AMZN  ) fired the opening shots in the first of what could be many e-reader price wars, all while the iPad remains above the fray.

Apple won't allow itself to be dragged into the mud with its two book-selling rivals, because it doesn't have to. The iPad isn't an e-reader, but rather a multimedia player. Owners love it for reading newspapers and magazines as much as they do books. They're also using it as a portable TV, thanks to YouTube and a partnership with Netflix (Nasdaq: NFLX  ) .

In the end, the iPad's sales figures tell us two things as investors:

  1. People love the device much more than I expected they would.
  2. By focusing on multimedia rather than literature, the iPad has defined itself as materially different than anything else on the market right now.

And that means today's sales momentum could continue through tomorrow, the next day, and months from now. Right up until Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) introduce meaningful and appropriately priced alternatives -- and they'd better hurry up. As developers and consumers flock to the iPad, the device's momentum only builds.

Think I'm wrong? Give us your take using the comments box below. You can also weigh in on the impact of the iPad on Apple's shares by rating the stock in Motley Fool CAPS. Click here to build a CAPS portfolio today. It's 100% free to participate.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy likes its disclosure fair and unbalanced -- in favor of investors.


Read/Post Comments (5) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 22, 2010, at 3:34 PM, dvena wrote:

    Hey Tim,

    At least you didn't say this - "Ultimately, this thing will matter about as much as Apple TV" - Seth Jayson.

    Now THAT's crow...

    Danny

  • Report this Comment On June 22, 2010, at 4:05 PM, gslusher wrote:

    "Right up until Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ) introduce meaningful and appropriately priced alternatives -- and they'd better hurry up."

    Unfortunately for both Dell & HP, they're likely to produce jerry-built, problem-laden "alternatives" as a result of rushing the development of their tablets. HP will base its on WebOS (why it bought Palm) and Dell probably on Chrome, but they are both way behind already. Apple probably spent at least 2 years specifically working on the iPad--it was actually started BEFORE the iPhone, but was shelved in favor of the phone. Even "worse," essentially all the development for the iPhone also applies to the iPad, save for the phone-specific bits. That means that Apple has a 5-8-year lead on Dell, somewhat less on HP, given the work Palm put into WebOS. Apple is also likely to be zealous about protecting their patents that apply to the iPad.

  • Report this Comment On June 22, 2010, at 4:10 PM, xmmj wrote:

    "It only took Apple 21 days to sell 1 million incremental iPads."

    This is the crux of the matter. It tells us that they have a sales rate of approximately 1.33 M per month. Now let's add to this the fact that they still list shipping as 7-10 days - which has held steady for the last month. This means that hipping and orders are more or less in balance even though we are almost 3 months after launch!

    Now of course that last statement is a little dicey. We really had several launches in this time frame: Initial Wifi only, International, and 3G launches. Each of those instigated a surge in demand that would be above the normal rate.

    I argue, however, that we will see this rate continue for at least the rest of the year. There are three big reasons for this.... [see link]

    http://seekingalpha.com/user/72017/comment/1077855

  • Report this Comment On June 22, 2010, at 9:13 PM, beetlebug62 wrote:

    "Right up until Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ) introduce meaningful and appropriately priced alternatives"

    Was this just a throwaway line? I mean, how confident are you that Dell or HP have the ability to do the above? Did either produce a meaningful and appropriately priced alternative to the iPod? Did either produce a meaningful and appropriately priced alternative to the iPhone?

    I'd have more confidence in the Taiwanese or Korean mfrs, before I'd consider HP or Dell.

  • Report this Comment On June 22, 2010, at 11:08 PM, yetanothersteve wrote:

    For the financial sorts: Think Holiday 2010. This is the new must have iPod. Perfect high priced gift since there's no phone company contract.

    By the holidays Apple should have the manufacturing ramped up. And even if there are alternatives by then... well there have always been iPod alternatives to. No indulgent parent is going to risk the look on their kid's face when they get... a Dell.

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