Boosted by strong sales of the Kindle Fire, JP Morgan forecasts worldwide tablet shipments will climb 55.2% to 99.3 million next year and reach 132.6 million by 2013. The investment bank had previously estimated tablet shipments would reach between about 70 million and 80 million next year.
Amazon on Thursday announced it had sold 1 million Kindle Fire units a week for the last three weeks, despite recent criticism about design flaws and reports of dissatisfied customers returning the device. The online retailer has said it plans to release a software update for the tablet in a couple of weeks that will improve its design and performance.
JP Morgan analysts reiterated their view that the Kindle Fire “phenomenon” is real and establishes a market for a lower-priced tablet ($199) with a more limited set of features. The firm believes the device is on track to meet its projection of selling 5 million units in the fourth quarter and 20 million in 2012.
“We expect to see increased pricing pressures on other tablets as a result of the Kindle Fire’s early sales momentum,” stated its updated tablet forecast, released Friday.
Microsoft’s expected launch of a Windows 8 tablet in the second half of next year could give tablet sales an additional boost -- especially if it includes the company's popular Office suite. Currently, the commercial market represents only 5.6% of total tablet units, according to IDC, but about half of all PCs. This leaves plenty of room for growth that Microsoft could capitalize on, especially with BlackBerry-maker Research in Motion stumbling in the tablet race.
The biggest risk is that Microsoft ends up pushing back the release of a Windows 8 tablet until 2013 -- which would not be completely surprising, given its history of delaying new product launches. But JP Morgan anticipates Microsoft will introduce a tablet next fall, since so much is riding on its success in the nascent market. Rising tablet sales are eating into the PC market, historically the driver of its desktop software business.
What about Apple, which to date has dominated tablet sales to date through the iPad? The company is expected to control a lion’s share of the tablet market, at least until the rollout of a Windows 8 tablet. The firm projects it will ship 45.5 million units next year, representing a 46% market share.
Data released Thursday by research firm IDC showed that tablet shipments globally increased 265% in the third quarter from a year ago to 18.1 million. Still, that was below the 19.2 million that IDC had projected. Of the total, 11.1 million were iPads, giving Apple a 61.5% share of the market. With the surge of Kindle Fire sales, IDC estimates Android-based tablets will account for about 40% of the tablet market by year’s-end.
JP Morgan said it expects Apple to release an updated iPad model next spring, bumping down the price of the iPad 2. A separate report Friday from Asia-based DigiTimes suggested that Apple will likely release a smaller iPad next year, coming in at 7.85 inches compared to the current model, which is 9.7 inches. If so, the device would be a more direct competitor to the 7-inch Kindle Fire, especially if comparably priced.
In issuing its forecast Friday, JP Morgan said it was combining previously separate projections from its U.S. and Asian technology research teams into a single global estimate for the tablet market.