"The iPad did not seem destined to be a runaway product success straight out of the box," said Colin McGranahan, retail analyst at Bernstein Research, in a note. "By any account, the iPad is a runaway success of unprecedented proportion."
At this current rate, the iPad will pass gaming hardware and the cellular phone to become the 4th biggest consumer electronics category with estimated sales of more than $9 billion in the U.S. next year, according to Bernstein. TVs, smart phones and notebook PCs are the current three largest categories.
"This is much bigger than I thought it would be," said Pete Najarian, co-founder of TradeMonster.com and a ‘Fast Money’ trader. "It’s really a total media device and there’s not much a PC can do that you can’t do on an iPad."
To be fair to the DVD, they were a bulky, pricey change from video recorders that had become a staple of most American homes. It took five years for the DVD to reach the unit sales pace that the iPad reached in just its first quarter, according to Bernstein. The iPad had the advantage of being the extension of Apple’s ever-expanding ecosystem of iPhones, iPod touches and Macs that are marked by ease of use and a familiar style.
Bernstein’s McGranahan covers Best Buy, the first major retailer to sell the iPad. His analysis found that not only are the iPads cannibalizing the netbook/notebook category in stores, but could also be hurting sales of TVs and digital cameras.
"It is the rare American household that would spend $600-plus dollars on an iPad and buy a TV or a PC or a digital camera in the same month, or the same quarter, or maybe even the same year," said McGranahan.
The cannibalization of computers by tablets is one of the reasons Goldman Sachs downgraded Microsoft, sending the shares to the worst performance of any Dow Jones Average member today.
"The company needs a credible iPad answer in the near term to allay concerns that tablet proliferation necessarily cannibalizes Windows sales," wrote Goldman analyst Sarah Friar in a note. "To compete with Apple, and Google through Android and Chrome, Microsoft would likely benefit from collaborating with hardware manufacturers on an instant-on, always connected device that has longer-than-PC- battery life and a vibrant ecosystem of applications."
Apple has been the rare company that keeps the "first mover" advantage. As tablets from Microsoft and Research-In-Motion soon flood the market, and Apple’s market capitalization approaches Exxon Mobil, the company’s going to need the next big extension of that ecosystem. Apple TV is on sale now.