Apple Inc. (AAPL)’s New Growth Driver

Apple’s iPad Has Been Cannibalizing PC Sales

Charlie Wolf with Needham & Company said in a note to investors that PC education shipments fell by 265,000 units, or 13.9%, from the June quarter a year ago. Apple, meanwhile, sold nearly a million iPads in the K-12 market in June, which he said is “definitive evidence” that the iPad has been “cannibalizing” PC sales in the U.S. education market.

“Clearly, a significant portion of iPad sales represented an expansion of the market,” Wolf wrote. “But in view of the fact that Mac sales held steady at around 520,000 units but overall PC sales declined by 265,000 units from 1.90 million to 1.64 million units, we believe the inescapable conclusion is that the iPad is beginning to cannibalize a material portion of PC sales in this market.”

Apple Launched 128 GB iPad

Apple added another important update to its growing iPad collection. The company recently launched a 128 GB update to its retina display fourth-generation iPad, doubling the storage capacity of its earlier highest-end tablet for an additional $100 in price.

Microsoft plans to launch its own tablet PC, the Surface Pro. By launching an iPad with the same storage option as the Surface Pro, Apple is effectively positioning the high-end iPad as a computer replacement.

Gartner Says iPad Market Will Grow By 35%

Gartner estimates that the iPad market will grow to about 170 million unit sales in 2016, at an average of about 35% annual growth rate.

The opportunity that lies in the nascent tablet market is so immense that Apple doesn’t mind cannibalizing its own computer line, the Mac. At $799, the 128GB iPad is just $200 cheaper than the entry-level MacBook Air. Sales of the iPad to the education market are only the beginning. I believe the iPad will begin to meaningfully chip away at PC sales in other, larger markets in the near future.

The article Apple’s New Growth Driver originally appeared on Fool.com and is written by Anindya Batabyal.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.