Apple’s [AAPL  286.091    -2.849  (-0.99%)    ] iPad sold three million units in the first 80 days after its April release and its current sales rate is about 4.5 million units per quarter, according to Bernstein Research. This sales rate is blowing past the one million units the iPhone sold in its first quarter and the 350,000 units sold in the first year by the DVD player, the most quickly adopted non-phone electronic product. “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.”

APPLE INC  (AAPL) 286.091     -2.849  (-0.99%%) NASDAQ

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 [BBY  40.76    -0.12  (-0.29%)   ], 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 [MSFT  24.19    -0.16  (-0.66%)   ], sending the shares to the worst performance of any Dow Jones Average [.DJIA  10931.74    -12.98  (-0.12%)   ] 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 [GOOG  530.7136    -7.5164  (-1.4%)   ] 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.

By: John Melloy
Executive Producer, Fast Money

According to August data from The Nielsen Company, Android has passed the iPhone and BlackBerry to become the popular operating system for people who bought a smartphone in the past six months. Over the past six months, 32 percent of new smartphone owners chose an phone with an Android operating system, while 25 percent chose the iPhone OS and 26 percent chose RIM’s Blackberry smartphones. The data, which covers a period that includes a full-month of iPhone 4 availability, also shows that Blackberry still holds largest share of the smartphone market with 31 percent of the market. Twenty-eight percent of smartphone owners have Apple iPhones, compared to 19 percent who have Android devices. While consumers may have a peaked interest in Android phone, Apple’s iPhone marketshare remained steady from Nielsen’s June findings. While Apple’s marketshare is still up by a significant amount (ten percentage points) over Android phones, it’s impressive that Android is surpassing the iPhone in terms of new interest and recent adoption.

Source: UBS Investment Research

Apple's (AAPL) tightly integrated software and content ecosystem is the template by which a UBS team led by Maynard Um judged the key players in the battle they see "brewing among the mega caps to own the consumer" in what they call the global digital living room.

"We believe the 'holy grail' for these vendors," they write in a 48-page report issued Friday, "is to provide users with seamless access (eventually through the Internet or so-called 'cloud') to all types of content across all types of devices (anything with a screen) anywhere and at all times. It is what we dub the Global Digital Living Room. Unlike in past years, technology and ecosystems are now enabling this to be a reality. While the race is still in the early stages, we believe Apple, Google, and Microsoft are the early leaders in the group -- each with strengths and weaknesses in different areas -- and a number of 'dark horses' including Sony, Amazon, and Samsung. However, the early leaders are the ones that have 'glued' or are in the process of 'gluing' the content together with the hardware through end to end ecosystems.

We believe the barriers to entry for standalone new entrants are rising and see a number of more vertically focused companies that make their own operating systems such as Research In Motion, Nokia, and Hewlett Packard (via the Palm acquisition) as currently more challenged to compete either given their lack of media-generated content, limited strategy across multiple devices, or, perhaps most importantly, the need to invest heavily to 'keep up with the Joneses' - namely Apple, Google, and Microsoft.

The report goes on to analyze each of the players' current position using the diagram above as its starting point. Only Apple's is mostly green (for "strong"). Google's (GOOG) and Microsoft's (MSFT) have large areas of yellow (needs improvement). Amazon's (AMZN) is mostly red (no solution).

Below: The report's summary of how Apple took the high ground.

With content, in our view, currently being the key pillar, we believe Apple has generated an early ecosystem lead, having pioneered the a la carte music purchase model via iTunes. Apple has leveraged that content to create its ecosystem (i.e., iTunes as a central content repository) that allowed seamless transfer of music to multiple devices -- first iPod and then to iPhone. The introduction of the App Store then built upon the early successes and installed base, which we believe has also been a key driver to the iPad's success.

With more than 160 million iTunes accounts, Apple has built a strong user base that we believe, in part, is captive because of the investments users have put into the ecosystems from a time and dollar perspective as well as familiarity and ease of use. We believe Apple is the benchmark by which others will be judged. Although we believe much of the music within iTunes libraries are likely "ripped" by users, we believe there have been increasing music purchases, some of which may be DRM'd. These purchases that are not transferrable to other media devices could make switching costs higher. The same principle applies to applications. Apple has gained a head start with the rapid success of its App store. While many of the apps users download are free or relatively inexpensive, they still represent an investment into the Apple ecosystem as these applications only work on iOS devices and searching for and downloading the same apps on other platforms could be time consuming.

With iTunes, Apple has created a hub that users use to store, transfer, sync and manage all of their content across multiple devices. The ability for a user to purchase one song and then be able to play that song on their PC's, tablet, smartphone, TV, and music player is a very attractive value proposition for iTunes users. While other competitors (such as Google and Microsoft) are not far behind, in our opinion, no other company currently offers as much content that is as seamlessly integrated on such attractive platforms as Apple does.

Based on current download rates, the crossover could come before the end of the year

Click to enlarge. Source: asymco.com

The chart at right, drawn by Asymco's Horace Dediu, compares two of Apple's (AAPL) signal developments: the growth of legal digital music downloads and the growth of downloadable mobile apps. Graphed on top of each other, by months since launch, the chart shows traffic on the App Store reaching in 2.2 years the same total -- nearly 7 billion downloads -- that the iTunes Music Store reached in five. "The two curves," Dediu writes, "are likely to be the same height (around 13 billion each) before the year is over."

Commenting on Dediu's post, AppsFire's Ouriel Ohayon says we shouldn't be surprised, even though there are 12 million songs on iTunes and only about a quarter million apps. "Apps are the new ringtones and wallpapers," he writes, "the new way (and the best way)" to personalize your phone." Moveover, he adds, many of them are free. He focuses on a second Dediu chart, copied below, that shows that the two download rates are not nearly as smooth as the first suggests. In fact, this fever chart shows a sharp falloff in daily download rate for songs starting about a year ago. Ohayon doesn't offer an explanation. Any theories?

Ohayon's chart:

Source: AppsFire.com

via : http://tech.fortune.cnn.com/2010/09/08/apps-set-to-overtake-songs/

Steve Jobs at iAd's unveiling. Apple is withdrawing from its ad network business that places ads across multiple mobile platforms in favor of concentrating on its iAd network that works only on Apple devices. The company has notified advertisers and developers that it is no longer accepting campaigns for the Quattro network and will cease running mobile campaigns through Quattro on Sept. 30. The ad network ran campaigns that stretched across several mobile platforms, including rival Android. "We believe iAd is the best mobile ad network in the world, and starting next month we're going to focus all of our resources on the iAd advertising platform," Quattro states on its Web site.  Instead, Apple is committed to building iAd, a platform for iPhone applications. Apple has slowly rolled out iAd, with The Wall Street Journal reporting delays in getting campaigns up and running, which some agencies peg on Apple's penchant for control. Apple's love of control likely fueled the decision to abandon a large-scale mobile ad network in which Apple couldn't guide the entire experience. The move also addresses the problem of operating iAd, which charged $10 CPMs and $2 CPCs, alongside Quattro's far lower rates. "[Apple] is typically a niche player and they're positioning themselves as that," said Paran Johar, CMO of Jumptap, an independent rival mobile ad network. "They're focused on the ultra high end. They're the abandoning the performance side of things." Apple paid $275 million for Quattro early this year. The move to enter the ad business came after Google released its rival Android OS and bought mobile ad net AdMob. Apple's rationale for owning an ad network was to provide developers with options, other than straight sales, to make money from apps they build for iPhones and iPod Touch devices. Apple CEO Steve Jobs, at the unveiling of iAd, promised the placements wouldn't "suck" like other mobile ads. Apple is reportedly asking for $1 million commitments to run iAd campaigns. Shutting Quattro will provide a boost for other mobile ad networks, including Google-owned AdMob and independent networks Jumptap, Crisp Wireless and Millennial Media. The Wall Street Journal yesterday reported Apple rival Research in Motion, maker of the BlackBerry, has negotiated to purchase Millennial.

Today marks the six year anniversary of Google's IPO. How do Google's first six years as a public company stack up against tech giants Apple and Microsoft?

As you can see below, Microsoft's stock was an amazing rocket in its first six years. Apple's was not, doing slightly worse than Google's.

Obviously, there's caveats when comparing stock prices. When Google went public, it was a more mature business than when Microsoft went public.

As an aside, it's worth noting that on Google's six year anniversary of being public, the only thing the tech world cares about is Facebook Places. Sort of an omen, no?