iSuppli: Global tablet computer sales are expected to reach 126.6 million units in 2012

On May 16, 2012, Rhoda Alexander, an analyst at US market research firm iSuppli, released a report today saying that Apple will be able to use its iOS operating system to "re-consolidate its leadership in the global tablet computer market."

iSuppli predicts that global tablet sales will "increase significantly" by 85% this year to 126.6 million units, and will grow again by 63% in 2013 to 350.4 million units in 2016. Based on the company's "final analysis", iOS accounted for 55% of global tablet shipments in the fourth quarter of last year, but this proportion will rise to 61% in 2012; Google's Android operating system accounted for 41% in the fourth quarter from 31%, and this year it will probably be only 38.4%.

Alexander said Apple's devices, apps, videos, books and music have formed an "ecosystem" that "took Apple years to integrate, starting with the iPod plus the iTunes Music Store more than nine years ago, and has proven difficult for the company's competitors to replicate." Alexander also added that "supply-side sources" have revealed that Apple will launch a smaller 7.8-inch iPad "later this year."

iSuppli also expects growth in the "PC tablet" category, which is basically Microsoft's Windows 8 operating system running on a variety of hardware configurations. iSuppli believes that "PC tablet growth is a format shift within the larger notebook market and does not reflect any cannibalization of the media tablet opportunity. This is because PC tablets will still lag far behind their media tablet competitors next year, with just over 8 million units compared to 197 million for media tablets."

Barclays analyst Ben Reitzes reiterated his Overweight rating on Apple today, with a price target of $750. Reitzes noted that while Mac sales were weak -- market research firm NPD reported yesterday that Apple's Mac sales in the U.S. fell 13% in April -- Microsoft should benefit from growth in international markets, and new products like the $800 MacBook Air released in June mean the current decline is just a "hiatus."

Reitz also believes that the probability of Apple releasing a smaller iPad later this year is increasing, with the probability being around 70%. He noted that a smaller iPad would increase Apple's market share in the textbook and video game markets. "We believe that a smaller, lower-priced iPad will not weaken the iPad brand and iOS ecosystem."