iPad sales narrowly beat expectations as Tim Cook targets "negative commentary," says market isn't s
In today's earnings conference call with analysts, Apple's chief executive Tim Cook explained why he remains "very bullish" about iPads despite the tablet's sales not maintaining the growth rates of iPhones or Macs in every region.
Addressing iPad sales in response to an analyst's question, Cook stated, "I know that there's a lot of negative commentary in the market but I have a little different perspective on it.
"Instead of looking at it every 90 days, if you back up and look at it, we've sold 237 million in just over four years. That's about twice the number of iPhones we sold in the first four years.
"If you look at the last 12 months of iPad, we sold 68 million, and in 2013 we sold 71 million. We're down, but we're down 4 percent on the sell in [to inventory channels], and the sell through [to end buyers] was a bit better than the negative 4 because we took down channel inventory some."
Cook added, "I view it as a speed bump, not a huge issue. That said, we want to grow. We don't like to see negative numbers."
Apple continues to sell more iPads each month than the combined tablet sales of the rest of the top five tablet vendors, globally: Samsung, Asus, Lenovo and Acer, despite the fact that Samsung has long been liberally giving away its tablets while others in the tablet industry (notably Amazon, Google/Motorola and Microsoft) have actively lost lots of money in their tablet experiments--without selling enough devices to even appear in IDC's top five quarterly vendors (Asus brings up the rear among the top five, with shipments of just 1 million units per quarter).
"That's not a saturated market," Cook stated. "Because we've only been in this business four years, we don't really know what the upgrade cycle will be for people.
"Over the long arc of time, my own judgement is that iPad has a great future. How the individual 90 day clicks work out, I don't know. But I'm very bullish on where we can take iPad over time.
"So we're continuing to invest in the product pipeline, we're continuing to invest in distribution. If you look at how we did in emerging markets, like BRIC countries [Brazil, Russia, India and China] as an example, we were up 20 percent for the full year. So these numbers are impressive."
Apple's chief financial officer Luca Maestri separately noted the September quarter's iPad sales "included a 500,000 unit reduction channel inventory prior to the introduction of new iPads this month," indicating that Apple sold a million fewer iPads but a million more Macs compared to last year.
That's an idea Cook also alluded to in acknowledging that there is some apparent cannibalization between both iPads and Macs, and between iPad and iPhones, as users decide which products they want to buy.
"iPad sales were consistent with our expectations," Maestri stated, noting in particular that Apple "experienced very strong results in Japan, where iPad sales were up 46 percent year over year."
Maestri also cited research by ChangeWave indicating both a 100 customer satisfaction rate for Retina iPad mini, and that 55 percent of consumers who plan to buy a tablet in the next 90 days said they planned to buy an iPad. That's a rate more than twice as high as the iPad's global tablet "market share" figures created by IDC.
iPads beat expectations, didn't beat 2013
In the September quarter, Apple sold 12.3M iPads, versus 14.1M in the year ago quarter. While lower than last year, iPad sales were slightly above Wall Street's expectations.Apple continues to sell more iPads each month than the combined tablet sales of the rest of the top five tablet vendors, globally: Samsung, Asus, Lenovo and Acer
Addressing iPad sales in response to an analyst's question, Cook stated, "I know that there's a lot of negative commentary in the market but I have a little different perspective on it.
"Instead of looking at it every 90 days, if you back up and look at it, we've sold 237 million in just over four years. That's about twice the number of iPhones we sold in the first four years.
"If you look at the last 12 months of iPad, we sold 68 million, and in 2013 we sold 71 million. We're down, but we're down 4 percent on the sell in [to inventory channels], and the sell through [to end buyers] was a bit better than the negative 4 because we took down channel inventory some."
Cook added, "I view it as a speed bump, not a huge issue. That said, we want to grow. We don't like to see negative numbers."
Apple continues to sell more iPads each month than the combined tablet sales of the rest of the top five tablet vendors, globally: Samsung, Asus, Lenovo and Acer, despite the fact that Samsung has long been liberally giving away its tablets while others in the tablet industry (notably Amazon, Google/Motorola and Microsoft) have actively lost lots of money in their tablet experiments--without selling enough devices to even appear in IDC's top five quarterly vendors (Asus brings up the rear among the top five, with shipments of just 1 million units per quarter).
Market for iPad not reaching saturation
"We don't see that [the market is saturated]" Cook said, adding "If you look at our top six revenue countries, in the country that sold the lowest percentage of iPads to customers that had never bought an iPad before, that number is 50 percent, and the range goes from 50 to over 70."That's not a saturated market," Cook stated. "Because we've only been in this business four years, we don't really know what the upgrade cycle will be for people.
"Over the long arc of time, my own judgement is that iPad has a great future. How the individual 90 day clicks work out, I don't know. But I'm very bullish on where we can take iPad over time.
"So we're continuing to invest in the product pipeline, we're continuing to invest in distribution. If you look at how we did in emerging markets, like BRIC countries [Brazil, Russia, India and China] as an example, we were up 20 percent for the full year. So these numbers are impressive."
Apple's chief financial officer Luca Maestri separately noted the September quarter's iPad sales "included a 500,000 unit reduction channel inventory prior to the introduction of new iPads this month," indicating that Apple sold a million fewer iPads but a million more Macs compared to last year.
"We experienced very strong results in Japan, where iPad sales were up 46 percent year over year" - Apple CFO Luca Maestri
That's an idea Cook also alluded to in acknowledging that there is some apparent cannibalization between both iPads and Macs, and between iPad and iPhones, as users decide which products they want to buy.
"iPad sales were consistent with our expectations," Maestri stated, noting in particular that Apple "experienced very strong results in Japan, where iPad sales were up 46 percent year over year."
Maestri also cited research by ChangeWave indicating both a 100 customer satisfaction rate for Retina iPad mini, and that 55 percent of consumers who plan to buy a tablet in the next 90 days said they planned to buy an iPad. That's a rate more than twice as high as the iPad's global tablet "market share" figures created by IDC.
Comments
And speaking of iPad sales...
I'd like to report myself for posting off-thread.
Send the warning via email to my SHINY NEW IPAD WHICH I WILL HAVE TOMORROW!!!
(Thank you, Apple.)
Good, I can't wait to see benchmarks on that monster. If the A8X is like the A8 and doesn't have to throttle that thing will destroy every other tablet on the market.
The percentages of people buying their first iPad is reassuring. Honestly, the big issue for me is lack of killer apps...there has been a serious slowdown lately. It's not that developers aren't making apps on iOS...they're just not doing anything amazing. Add in the fact that the App Store is a mess and, well...they need curation help for sure.
And in other new . . . iPod sales are also dropping. APPLE IS DOOMED!
Let's say, just for fun, that iPad sales continue to drop while iPhone sales, Mac sales, and Apple Watch sales go up, such that total Apple Inc. sales are higher in 2015 than in 2014. What exactly is the problem? Apple could have called the iPhone 6 plus the iPad Communicator. Then "iPad sales" would be up up up. And nothing other than the naming would be different than where we are today. I'm elated that Apple won't be releasing watch numbers. That way people can't complain about what a failure the new product is when it doesn't sell at least three per US household. The only thing that matters (as an investor) is that the $$ is more this year than last. Check.
As far as the A8X chip, I think Apple needs to do a better job highlighting the benefits of this technology. How is my iPad experience going to be improved with this chip? What are some really cool apps that will take advantage of all this power? I never felt they really did that with the A7 and 64-bit. How is the average person supposed to know why 64-bit is better?
The profit margin sucks though.
I’d like to offer my condolences to my fellow Apple enthusiasts.
It’s been a relatively non-productive twelve months for Apple this year. The lack of innovation (as demonstrated in the common-as-balls Mac Pro), the unpopular iPhone 6, the nine bendable iPhone 6 Pluses, the feature-poor train-wreck of a desktop OS that was Yosemite, thinner and more powerful iPads, the announcement of the iWatch, a regular flow of updates and improvements to their software and hardware, the poor stock performance, the empty retail stores (not to mention the long queues by customers to get out of them without purchasing anything), the return of manufacturing jobs to America for the first time in many years...
No wonder all of those three people are calling for Tim Cook's head.
You can’t help but think if Tim ever sits back and wonders what Steve would think Jesus would do?
You know, after Steve died, I didn’t want to accept it but now it’s becoming very obvious:
Apple is Doomed.
Oops.
Sorry.
It appears everything that I just typed was utterly wrong.
Let me re-type that:
Apple is BOOMED!!!
By the way, all you Apple Slamboys that frequent this site on a regular basis…
It gets worse next year.
Most of the competitors are junk, leaving people with a bad taste in their mouth about the tablet world. They see the ecosystem in Apple and get it. It's the same reason Google is running around with its OEMs rushing out competing parts of the ecosystem, and forgetting to scale maturely.
Manufacturing cost on the first-gen Mini has to be like $17.50 now.
iPads are mini-computers for heaven’s sake. Most keep computers until they can’t be updated or something spectacular comes along that demands an upgrade. Well, unless one has cash to waste or status to pander. Phones are by contract so cost-wise it sort of makes sense to upgrade every two years; you can still sell the two year-old for fair loot. I suspect the ?Watch will follow the same trail. What a hullabaloo there will be when they are said to have peeked come five years or so.
Next year, especially if the fingerprint aspect comes down in price, will see a surge I suspect. I do find the iPm2-32gb pretty enticing at $359. Wonder what I’d get for my iPad3-64gb?
N/C
mhikl
I think people don't upgrade their iPads because the older ones still work fine.
I wonder if sales of all those garbage tablets will be down too.
You know... those cheap tablets sold by companies we've never heard of... yet add up to 40% of the tablet market. :err:
The reality is in the numbers, and they are quite clear in the back to school quarter. Mac sales surge, iPad sales flat-a little lower.
Is the market saturated? No. Is anyone else winning at the space? Definitely not. Is this also the "Post PC era" so for told, largely no in my opinion. When push comes to shove the fascination is still phones as the driver and laptops for everything else. Maybe tablets will eventually take off the way smart phones have, maybe they won't, the jury is still out.
Dear Tim, release an iPad tied to features such as multi-user touch ids and split-screen multi-tasking and you will see "the mother of iPad upgrades".
Just release one that is larger.
I wonder if Tim was dying to talk about an iPad Pro!
Whatever the case may be, I'm getting the Air 2. Pixelmator for the iPad is really getting me excited.
I was hoping for some new Apple Maps stuff last week, including a web interface at maps.apple.com.