It's Apple week! We're examining the world's largest tech company from all angles. Stay tuned to Fool.com all week for full coverage.
Since the iPad's debut a little more than two months ago, shares of Apple
We don't yet know what that is, which means snarling bears are just as likely to be wrong as snorting bulls. So let's focus on what we know:
- More than 2 million iPads have been sold.
- The iPad sells for between $499 and $829, before service plans or other add-ons.
Multiplying 2 million by $664 (the average of those pricing extremes) tells us that Apple has already booked at least $1.3 billion in iPad revenue. That's a good number, but we know from Apple's second-quarter conference call that the iPad is partially responsible for a coming decline in gross margin.
We also know that there's bound to be plenty of competition. Now that Apple is making its own chip for mobile devices, Intel
Dell, meanwhile, has teamed with Google
See the problem here? Apple has to move a lot of iPads to produce iPhone-sized profits, yet forthcoming competition could stunt sales.
Fortunately, the Mac maker already has experience winning in a crowded market. Consider the iPhone. Though still a relative newcomer among smartphones, it's challenging Research In Motion
Remember also that the iPad's chief rival, Amazon's
Strategically, this makes sense for the e-tailer: More stores on more e-readers and smartphones should mean more e-book sales. But this also has a cost. Free consumers from the need to buy an expensive device, and chances are they won't.
Finally, entire industries are betting on the iPad. Newspapers and magazines see the device as their one chance to charge for digital content that heretofore has been free. News Corp.
He has good reason to believe in the device's transformative powers. ChangeWave Research recently found that iPad owners are far more likely to use the device to read newspapers and magazines than comparable e-readers.
How big is Apple's iPad opportunity? Judging from its current momentum, competitive position, and industry support, it's massive. But I could be wrong. That's why I want to hear from you.
Tell us what you think about the iPad opportunity by voting in the poll below. You can also leave a comment to explain your rationale.
Apple and Amazon are Motley Fool Stock Advisor selections. Intel is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers selection. Try any of our Foolish newsletter services free for 30 days.
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 has a covered strangle position on Intel and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is opportunistic when it isn't feeling lethargic.