J.P. Morgan Securities expects tablets to evolve into a $35 billion market by 2012, eating into the share of PCs, and competition to drive down premium prices.
The brokerage, which nudged up its forecast for tablet unit shipment and revenue, sees steep adoption rate and increasing number of available devices driving tablet market growth.
It sees tablet market growth spurred by improved operating system platforms and penetration of enterprise and education customer verticals.
We expect tablets to have an increasingly negative impact on PC shipments, analyst Mark Moskowitz said. More than 35 percent of tablets sold in 2012 will be cannibalistic, particularly as relates to netbooks and notebooks, he said.
JP Morgan raised its 2011 tablet revenue estimates to $26.1 billion from $24.9 billion and 2012 estimates to $35.2 billion from $34.1 billion.
It expects 2011 unit shipments of 47.9 million, up from its prior view of 46.1 million. For 2012 it sees unit shipments of 79.6 million, up from its prior view of 78.2 million.
The brokerage expects the tablet market to get more crowded in the third and fourth quarters of 2011 and sees premium pricing enjoyed by Apple Inc's iPad to then diminish.
Separately, the brokerage cut its rating on Seagate Technology to underweight from neutral citing potential market share loss in enterprise drives in 2011 and 2012.
(Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Don Sebastian)