BMO ups its iPad sales estimate 30%

Analyst sees Apple taking 35% to 40% of the tablet and e-reader market in 2010

Photos: Apple Inc.

In a note to clients issued Thursday, BMO Capital’s Keith Bachman offers several reasons for raising his price target on Apple (AAPL) to $265 a share from $250, including a 17% increase in Mac sales and the likelihood that the company will release a new iPhone in June.

But the biggest change in his model — and the subject that dominates the bulk of his report — is his iPad forecast. Bachman’s initial estimate — that Apple would sell 2.5 million units in fiscal 2010 and 5.5 million in fiscal 2011 — was smack in the middle of the analyst pack when he made it in January.

He’s now saying that 2.5 million “may be conservative” given how many iPads he believes Apple is building, and he’s raised his fiscal 2011 estimate to 7.2 million — a 30.09% increase.

His reasoning:

  • IDC forecasts 6 million tablet devices and 5 million e-readers will be sold in calendar 2010. Bachman thinks Apple is a cinch to grab 35% to 40% of that business.
  • He believes the tablet category will grow 50% to 100% in calendar 2011, which works out to a total accessible market of 17 to 22 million units next year.
  • The e-reader category, he believes, will double between 2009 and 2010 to 5 million units, and continued rapid growth in 2011, he says, is a “reasonable assumption.”
  • Although iPhone sales grew nearly 80% in its second year and iPod sales grew 450% in its third and fourth years, he believes the iPad faces more competition than either of those devices so his growth estimate is actually relatively modest.
  • Finally, he believes it’s not unreasonable — given the depth of the App Store’s software library — to expect the iPad to capture 11% of the netbook market, which he estimates will be 40 million units in calendar 2010.

One eye-opening footnote: ultra-low voltage notebook computers running Microsoft (MSFT) Windows 7, Bachman says, takes at least 2 minutes to boot up. Consumers who pick up an iPad will find it is considerably more responsive.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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