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FBR: Media tablet production to decrease significantly

Posted: 07 Jun 2011 ?? ?Print Version ?Bookmark and Share

Keywords:tablet? bubble? iPad? non-iPad?

Production of media tablets in 2011aside from Apple Inc.'s iPadis now expected to be significantly less than previously thought after lackluster sell through and other factors burst "the tablet bubble," according to a Wall Street analyst.

Research in Motion Ltd (RIM) and Motorola Mobility Inc. cut their 2011 production estimates for media tablets following the Mobile World Congress event in February and now expect to build fewer tablets than previously, according to Craig Berger, an analyst at FBR Capital Markets Corp.

Analysts at FBR believe that RIM cut its 2011 production forecast for the company's Playbook tablets by 60 percent, from 7 million units to 3 million units, including 2.2 million units in the second half of the year, according to Berger. RIM's production cut is due to concerns that the product has weak messaging and cellular functionality and because enterprise customers have protested that the Playbook has fewer security features compared to BlackBerry handsets, according to Berger.

Berger and fellow analysts believe that Motorola cut 2011 production estimates for the company's Xoom tablet by 35 percent, from 5 million units to 3.2 million units, including 2 million units in the second half of the year, Berger writes in a report previously circulated.

According to Berger, the "tablet bubble" burst somewhat after Mobile World Congress because of excessive investor expectations and because sell-through of early devices has thus far been lackluster. "Somewhat weak sell-through of non-iPad tablets is now showing up in production schedules, according to our contacts," Berger writes.

Acer Inc. is expected to ramp tablet shipments significantly from almost nothing in the first half of 2011 to 4 million units in the second half of the year, well below its official 2011 guidance of 10 million units, according to Berger.

Tablet build expectations

Despite these lowered 2011 tablet estimates, an expected 20 million or more non-iPad tablets are set to be built next year, a significant opportunity for Qualcomm Inc.'s Snapdragonand presumably other ARM-based applications processorsin 2012, Berger notes.

Nearly 32 million iPads are expected to ship this year and an estimated 50 million in 2012, according to Berger.

FBR maintains an "outperform" rating and $70 price target on Qualcomm's stock. The stock traded at $57.80 early Friday.

- Dylan McGrath
??EE Times

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