According to Mizuho's research report, the PC market remains slow and tablets continue to cannibalize traditional computing devices. OEMs keep experiencing pricing pressures and are still working through inventory with price points for touch-enabled machines remaining high. According to firm's analyst, Dell and HP will keep losing market share in C4Q12 as they lack suitable product portfolio while Apple Inc. (NASDAQ:AAPL) remains dominant at the upper end of the market. Apple Inc. (NASDAQ:AAPL) is also gaining from the strong reception of iPad mini and significant improvement in iPhone 5 supply.
Here are some key points
Dell and HP to continue losing market share in PCs while end demand remains lackluster.
Mizuho's checks indicated that demand for PCs remained very weak with OEMs trying to clear older hardware inventory. Within laptops, sub-$500 machines were selling while Apple Inc. (NASDAQ:AAPL) dominated the $1,000+ category. The research firm continue to believe that prices for touch-enabled machines (currently available for >$800) need to come down to the $500-700 level to stimulate demand. HP and Dell have a very weak lineup for the holidays, which Mizuho's analyst believe will result in them losing market share to Asian vendors. Additionally, given the consumer slowdown, the research firm believe both of them will also experience significant pressure on ASPs in the quarter.
iPad remains the leader in the tablet space.
Apple’s iPad, especially the recently launched iPad mini, is experiencing strong traction in the space with Android gaining some momentum at the low end of the market. There were some Android tablets available for less than $150 that were being relatively well received. Microsoft’s ability to establish itself in the space remains limited by the lack of various offerings. OEMs do not have a strong lineup of Windows 8 based tablets though Microsoft’s Surface continues to receive good reviews. However, given the limited distribution of Surface, consumers are largely unfamiliar with the device. Mizuho's research firm do not expect OEMs like Dell and HP to gain from the Windows 8 launch until the middle of 2013 while Apple Inc. (NASDAQ:AAPL) will keep solidifying its market leading position in the meantime.
Apple on track to deliver over 50M iPhones in the December quarter.
Mizuho's checks indicated that there was significant supply of iPhone 5s during the weekend and Apple Inc. (NASDAQ:AAPL) has worked hard to improve the supply situation of its flagship phone. The firm continue to believe that Apple Inc. (NASDAQ:AAPL) will deliver over 50M iPhones during the quarter with consensus being in the high 40s. In Mizuho's view, the recent pullback in Apple’s stock has created a buying opportunity as upside to shipment estimates will drive margin and earnings out-performance which should help move the stock higher.
According to Mizuho's research, the biggest risk to Apple Inc. (NASDAQ:AAPL)'s stock could result from the company's inability to keep innovating. The current management team is very capable of delivering on Steve Jobs' vision, however, the stock could be materially impacted if the company were to lose some key executives. Additionally, we need to monitor the launch of new Windows 8 based devices later this year, which according to analyst could slow down Apple Inc. (NASDAQ:AAPL)'s momentum in its key markets.