JP Morgan sees Apple’s tablet rivals cutting down on their build plans after “an early dose of reality”, as analyst Mark Moskowitz has put it. Flagship tablets aren’t selling as their makers have been hoping, JP Morgan concluded tracking “widespread reductions in build activity” in recent months. This includes flagship devices such as Motorola’s Xoom, Samsung’s Galaxy Tab, Research In Motion’s BlackBerry PlayBook and Asustek’s Eee Pad Transformer (which was suspected of falling prey of Apple’s buying power). The weak showing so far has prompted those tablet makers to decrease their build plans by an estimated ten percent, Moskowitz writes in a report to clients:
In our view, the technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan. The nascent tablet market stands to become big enough to create a ripple effect in the broader tech food chain in 2011.
At the same time, Apple’s shipments too will fall short of projections, but for diametrically opposite reasons…
Wall Street reduced Apple’s shipment estimates to 6.75 million iPads in the June quarter. Unlike its rivals, analysts lowered iPad targets because Apple couldn’t make enough units due to ongoing production constraints. According to Moskowitz, tablets will comprise three percent of total handset sales this year and eleven percent of smartphone sales in 2011. Beyond mobile, tablets are killing computer sales, as evident when counting tablet PCs as computers. Tablets will account for as much as 32 percent of desktop shipments this year and about 21 percent of notebook PC units, based on JP Morgan’s revised shipment projections calling for 63 million tablet units in 2011.