Look What the iPad Did to the PC Market
Oct 24th 2013 10:00PM
Updated Oct 24th 2013 10:02PM
While some pictures may be worth a thousand words, the chart below is probably worth much more for the tech sector and a particular tech giant.
The graph depicts the rapidly declining rate of PC shipments since the release of an innovative and iconic device a few years ago.
The PC meltdown coincides with the release of the iPad, the gold-standard tablet by Apple in 2010. On a yearly basis, iPad sales have been on the upswing, and Apple has sold more than 170 million of them, according to CEO Tim Cook.
While iPad market share is down in the 40% to 50% range, depending on the estimate chosen (including one from Geekwire), it still is a force. More than 80% of all tablet Web traffic originates from the Apple device. This is an important stat for businesses when they consider where to put their ads.
In time for the Christmas shopping season, the tech giant just announced the release of the fifth-generation of the full-size model, called iPad Air, and the second-generation iPad Mini. The new devices are not a huge breakthrough -- it's hard to beat the original innovation in most anything -- but Apple manages to incorporate state-of-the art technology like the faster 64-bit processor in both models. The Air is slimmed down and weighs less than the earlier versions. The new Mini gets the Retina display introduced previously on the full-size unit.
Boding well for future sales is the fact that about one-third of the functional iPads out there are older, less technologically advanced models. Based upon past trends with Apple products, the savvy user wants the latest and greatest and will probably upgrade to one of the new configurations.
And even with a decreasing average selling price -- now just under $500 -- the iPad will still continue to provide Apple a steady revenue stream. Some of that cash will be directed toward the dividend. Quarterly payouts are now $3.05 a share and the yield is about 2.5%. Apple stock is a good one to have in your income-producing portfolio.
Silver and Bronze
Apple has been fighting off challenges in the tablet market from such notable companies as Amazon.com and Google .
However, Cupertino-based Apple probably has the advantage. Its expertise is in hardware. Nothing against the others, but they develop hardware on a part-time basis and rely on other businesses such as Internet ads, software products, and e-commerce for the bulk of revenues and profits.
Google's mobile device unit has been struggling. During the previous fiscal quarter, revenues dropped 34% and the division reported a loss of $248 million in net income.
However, overall, things at Google look bright, with total corporate earnings up significantly last quarter. Expectations are for even more growth in the future, based upon an update to its most important product, the search engine, which will drive more ad revenue and profit Google's way.
The company is hitting on almost all cylinders. Its stock price exploded to more than $1,000 per share after the recent earnings announcement, and it should be considered for your tech portfolio.
Amazon has shown many Apple-like tendencies with continuous improvement and updates to its product offerings over the years.
The Kindle series -- largely e-reader devices -- gives Amazon a nice product line but commands only 10% of the market, according to some estimates . The Kindle Fire HD and newly introduced HDX have a few superior specs to those of the iPad and other tablets. One of them is visual. You can easily read the latest best-selling novel at the beach. In bright conditions, the iPad screen can be a bit difficult to view. Another big advantage is price --- the typical Amazon tablet can be had for somewhat less than that of the Apple offering.
Amazon's strength resides in its e-commerce business and cloud computing, both of which are top-notch. Nearly one quarter of all online purchases will be made through Amazon by 2016.Amazon Web Services business is nearly five times larger than its 14 other rivals combined.
However, Amazon does need to improve profitability, as earnings and operating income have really not grown much over the last few years. One way it is trying to do that is by sharing warehouse space with some of its major suppliers in order to save on shipping costs.
The invention of the iPad a few years ago helped spawn a reversal of fortune for the PC industry.
While Amazon and Google are great companies and should be considered for your portfolio, Apple takes the cake in the tablet market, holding top rankings in market share and Web traffic. iPad sales help Apple pay a nice, chunky dividend.
What's up next for Apple? You may be surprised
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The article Look What the iPad Did to the PC Market originally appeared on Fool.com.Mark Morelli owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.