High Hopes for Apple's new iPad (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL) now has the iPad to sell to the masses and analysts were quick to print Apple could sell 1 to 5 million iPads in its first year.  Apple shares are down 3.8% today and trading just under $200, could the company's iPad dreams be just too much for Wall Street?

(AppleInsider.com) Across the board Thursday, analysts were bullish in their reactions to Apple's newly announced multi-touch iPad. First-year sales predictions range from 1 million to 4 million, with potential for growth even further as the market expands and further iterations of the product improve.

Analyst Charlie Wolf with Needham & Company called the iPad "another winner," noting that the device's true potential will not be realized until developers create new software for it on the Apple App Store.

"Apple is a company willing to take risks and define new categories of products," Wolf said. "The iPad is not a revolutionary product. But it has the potential to become one once the creative juices of content providers are unleashed."

Acknowledging that reaction from the tech community has not been particularly enthusiastic, analyst Mike Abramsky with RBC Capital Markets quipped that "not everyone initially liked the Ten Commandments either -- but they endured."

RBC Capital Markets

Abramsky said the $629 starting price for the 3G-enabled iPad, along with an absence of what he called "hoped-for features," may leave some investors skeptical of the iPad -- but they shouldn't be.

"With iPad, Apple creates a revolutionary e-reading, browsing, media, gaming experience," Abramsky wrote to investors Thursday. "Newspapers, Web pages, books 'come alive' with video, animation, color and fullscreen touch."

He did note that the lack of Verizon compatibility, absence of a camera, and inability to multitask were disappointing. But Abramsky believes the simplicity of the iPad will be its greatest strength.

He has forecast first-year sales of 5 million, adding 30 cents earnings per share to AAPL stock with an average iPad selling price of $600.

Kaufman Bros.

Analyst Shaw Wu noted the $130 premium for the 3G-connected iPad could be a deterrent for potential buyers. He believes the Wi-Fi only version of the hardware could ultimately prove to be the best seller.

In addition to hardware price, Wu said 3G speeds are typically too slow for primary Web browsing. Plus, he said consumers will likely be reluctant to buy an additional data plan if they already have one with a smartphone.

"We see iPad as a new product category that is superior as a shared device in a group setting (such as a living room or meeting) or as an ultra-portable computer," Wu wrote. "Sure, there could be some cannibalization, but it doesn't quite replicate the functionality or for m factor of either device."

The analyst had hands-on time with the device and came away impressed. Wu did not forecast first-year sales, but noted that supply chain checks indicate Apple intends to build 5 million units in its first 12 months, and as many as 10 million units in its second year.

Needham & Company

Wolf has taken a long-view with the iPad, noting that the iPod and iPhone both got off to relatively slow starts before they experienced explosive growth. But the iPad has an advantage, he said, due to its access to more than 140,000 applications on the App Store.

Because Apple is defining a new category of devices, sales of the iPad are likely to ramp slowly," Wolf said. "But the $500 starting price point is low enough to attract a sizable portion of the early adopter crowd, consisting of iPhone and iPod owners.

"It's noteworthy that the iPad's initial price is below the iPhone's initial price and not much higher than the price of the first iPod, introduced in 2001. Our best guess at this time is the Apple could sell four million iPads in its initial year on the market, which translates into at least $2 billion of revenue."

Initial plans are for the iPad to only be sold through Apple's online and retail stores. However, Wolf said he would expect the device to see wider availability in the future.

SOURCE: http://www.appleinsider.com/articles/10/01/28/wall_street_expects_apples_risky_ipad_to_sell_1m_5m_in_first_year.html