47% of iPad mini sales to new customers, cannibalization concerns called 'overblown'

Posted:
in iPad edited January 2014
A new survey of iPad mini buyers has found that nearly half are new to the platform, suggesting the smaller form factor will help grow Apple's market share in a big way.

The data comes from a survey of more than 1,000 U.S. consumers published on Monday by Morgan Stanley and AlphaWise. Analyst Katy Huberty said although iPad mini sales are clearly cannibalizing some full-size iPad sales, she believes concerns over this trend are "overblown."

The survey found that the iPad mini has accounted for 34 percent of planned iPad purchases, making the 7.9-inch tablet a "key demand driver" for the platform.

AlphaWise


However, the poll did indicate that the iPad mini is currently attracting slightly fewer new users than the full-size 9.7-inch iPad. While 47 percent of iPad mini buyers said they were new to the platform, 56 percent of those buying a 9.7-inch iPad were new customers.

Huberty said these numbers show her that the cannibalization risk Apple faces with the iPad mini is "manageable."

AlphaWise


The survey also found that Apple grew its tablet installed base the fastest of any company, and its shipment share it expected to stay flat at 50 percent in the U.S. next year. It also found that Apple again has the strongest retention rate in the industry, with 81 percent of iPad owners saying they will stick with Apple.

Among those polled who own an Amazon Kindle Fire, 7 percent said they plan to switch to an iPad, while 2 percent of Samsung tablet owners say they'll buy an Apple tablet. Thirty-six percent of those with no tablet also said they plan to buy an iPad.
«1

Comments

  • Reply 1 of 37
    Wall Street is always telling publicly traded companies to bring in that money no matter what. So if the mini is eating away at the sales of the larger iPad , so damn what. As long as every growing revenues enter into the cofers of Apple people shouldn't be bitchin.
    I gave my iPad 2 to my gf and I picked up the 32 gig wifi only mini. AWESOME. Now wait until the mini gets the retina treatment and that A6 chip next year. DAMN!
  • Reply 2 of 37
    richlrichl Posts: 2,213member
    Surely the question that should have been asked is: if the iPad mini wasn't available, would you have bought a standard iPad instead?

    Surely that's the only way to measure cannibalisation?
  • Reply 3 of 37
    1000 survey answers is likely far from statistically sound when you considered that tens and hundreds of thousand iPad have been sold in the past few weeks.

    That said, I suspect the comment about fears being overblown are true. Yes the iPad 4 numbers might be down a bit but that could be simply that folks already got the 3 and see no reason to change from a device that is still under the base warranty.especially when we don't know if this Fall release was a change in calendar or the start of a new six month cycle.
  • Reply 4 of 37
    I'm surprised to see the new to platform buyers higher for iPad than iPad mini. Also surprised the other tablets are growing while the Kindle Fire interest is decreasing.
  • Reply 5 of 37
    lkrupplkrupp Posts: 9,455member
    Two different parallel universes exist apparently. In one universe we see articles like this one and others showing Apple is just as popular and powerful as it ever has been. In the other universe Apple is finished, dead and buried with its stock price plummeting the company into oblivion. Choose your universe and live there? Is there no reality for Apple?
  • Reply 6 of 37
    How about people who already own one iPad, like the format.. and are purchasing a second for spouse or kids? Thats completely new business, from existing customers
  • Reply 7 of 37
    charlituna wrote: »
    1000 survey answers is likely far from statistically sound when you considered that tens and hundreds of thousand iPad have been sold in the past few weeks.
    That said, I suspect the comment about fears being overblown are true. Yes the iPad 4 numbers might be down a bit but that could be simply that folks already got the 3 and see no reason to change from a device that is still under the base warranty.especially when we don't know if this Fall release was a change in calendar or the start of a new six month cycle.

    With 1000 as the sample size and a 99% confidence level you get a margin of error of just over 4%. With a confidence level of 90% you get a margin or error of just 2.6%.
  • Reply 8 of 37

    Quote:

    Originally Posted by skyzlmt View Post



    How about people who already own one iPad, like the format.. and are purchasing a second for spouse or kids? Thats completely new business, from existing customers


    This.


     


    This is parallel to the people who owned an iPod circa 2005 and bought iPod Mini's/Nano's/Shuffle's for other situations.   I'm hemming and hawing about buying a Mini (I have a 2 Wifi) vs a 'iPad 4'.   However,  after holding the mini at BestBuy, I saw it as the perfect tweener between my 4s and a MBA (which for me is more useful than an iPad, primarily due to my job.  But a MBA, iPhone, and a mini, seems to be the right 'travel anywhere' kit

  • Reply 9 of 37
    solipsismx wrote: »
    I'm surprised to see the new to platform buyers higher for iPad than iPad mini. Also surprised the other tablets are growing while the Kindle Fire interest is decreasing.

    I think the Kindle Fire was a flash in the pan last holiday season. What will be interesting is what kind of following Microsoft can build; if they can edge out Samsung in market share it will be very good for Apple. Being in the dominant position with multiple platforms fighting for the scraps is a powerful spot.

    As for cannibalization, if I were to be honest, I think the previous "disappointing" quarters of iPad sales indicates that there really is a market for the smaller form factor, and that will likely be the primary target going forward. That complicates things for the platform in several ways though, since it would seem that the UI will need to be tweaked for a Retina experience. Maybe coding for 5 different screen sizes isn't that much of a problem though. (Many of my iPad apps would actually be better on a smaller screen-- inefficient screen utilization for 9.7".)
  • Reply 10 of 37


    I don't get what the split between new and existing purchasers tells us about cannibalization. I know this is probably the easiest figure to measure, and that's why it is always used, but in my eyes it does not mean anything with regard to the cannibalization matter.


     


    I am an existing purchaser (iPad 1), and I got a mini now. So am I a cannibalization case or not? You can't tell. Only I can because I know I would have gotten a full-size iPad around this time or maybe later (but the iPad 4 would have been pretty compelling), but I would definitely not just given up on tablets or moved to Android, Kindle or whatever due to my existing ecosystem. So yes, I am a cannibalization case. 


     


    And I've got a friend who never owned a tablet but was planning to get one. He considered the full-size iPad or a Nexus (7 or 10). But now he's getting a mini, saving a few bucks over the standard iPad that he would probably have gotten. So he is also a cannibalization case.


     


    So the split between existing and new buyers is totally irrelevant. q.e.d.

  • Reply 11 of 37

    Quote:

    Originally Posted by lkrupp View Post



    Two different parallel universes exist apparently. In one universe we see articles like this one and others showing Apple is just as popular and powerful as it ever has been. In the other universe Apple is finished, dead and buried with its stock price plummeting the company into oblivion. Choose your universe and live there? Is there no reality for Apple?




    Reality is what is left when you stop believing in it.

  • Reply 12 of 37

    Quote:

    Originally Posted by SolipsismX View Post





    With 1000 as the sample size and a 99% confidence level you get a margin of error of just over 4%. With a confidence level of 90% you get a margin or error of just 2.6%.




    So, a lower confidence level gives you a lower MoE?

  • Reply 13 of 37
    kevtkevt Posts: 195member


    Doubt Apple is worried. So they may lose out a bit in profit margin on some iPad Mini sales that may have been 9.7" iPad. But selling more is more important in the medium term. Having a larger installed base will reinforce iOS lead in software development for tablets. Two screen sizes (one pixel-doubled over the other) means better optimised Apps for screen size than Android where a number of resolutions have to be taken into account.

  • Reply 14 of 37


    First-time potential iPad Mini buyer here.  I've not considered a larger iPad, I really want the smaller one.

     


    Problem is, stock is incredibly restricted right now at the local Apple Store... they can promise nothing. Yesterday, I was told by one salesperson to arrive every morning, an hour ahead of opening time, and there'd be a slim chance of a first-come, first-served grab, because stock comes in nightly.  But my spouse followed those instructions today and this story was refuted by a manager.  Stock does not necessarily come in overnight, it can arrive at any time of day.  He added that even employees are waiting to purchase one.  Not to be cynical, but that does not bode well for "trickling down" to potential customers like me.


     


    Anyone have any bright ideas on how to acquire one (16gb white WiFi) in time for Christmas?  That doesn't involve inflated third party pricing or dodgy sourcing?

  • Reply 15 of 37
    jragostajragosta Posts: 10,473member
    charlituna wrote: »
    1000 survey answers is likely far from statistically sound when you considered that tens and hundreds of thousand iPad have been sold in the past few weeks.
    That said, I suspect the comment about fears being overblown are true. Yes the iPad 4 numbers might be down a bit but that could be simply that folks already got the 3 and see no reason to change from a device that is still under the base warranty.especially when we don't know if this Fall release was a change in calendar or the start of a new six month cycle.

    Absolutely false. Depending on the confidence level you choose, 1000 answers is enough to reduce the margin of error to a few percent.

    The real problem with surveys like this is not sample size - it's ensuring a representative sample.

    So, a lower confidence level gives you a lower MoE?

    Yes. Start here:
    http://en.wikipedia.org/wiki/Margin_of_error#Different_confidence_levels
  • Reply 16 of 37
    jragostajragosta Posts: 10,473member
    pscooter63 wrote: »
    First-time potential iPad Mini buyer here.  I've not considered a larger iPad, I really want the smaller one.

     
    Problem is, stock is incredibly restricted right now at the local Apple Store... they can promise nothing. Yesterday, I was told by one salesperson to arrive every morning, an hour ahead of opening time, and there'd be a slim chance of a first-come, first-served grab, because stock comes in nightly.  But my spouse followed those instructions today and this story was refuted by a manager.  Stock does not necessarily come in overnight, it can arrive at any time of day.  He added that even employees are waiting to purchase one.  Not to be cynical, but that does not bode well for "trickling down" to potential customers like me.

    Anyone have any bright ideas on how to acquire one (16gb white WiFi) in time for Christmas?  That doesn't involve inflated third party pricing or dodgy sourcing?

    Like anything else that's in high demand, you have to shop around. Amazon usually offers good prices on Apple products (although their prices for the Mini are high right now). Check all the retailers who have it. Search online. It happens every year - Cabbage Patch Dolls, Furbies, Wii consoles, etc. You might get lucky - or you might have to order one and put a picture in a box under the tree.

    And next year, don't wait until the last minute to buy a high demand item.
  • Reply 17 of 37


    Interesting that they only seemed to ask about cannibalization of the ipad4.  I have brought two ipad minis, one instead of ipod touch and the other instead of ipad 4. Both are cannibalization - but the actual impact on Apple depends on if I improved their profit margin, or reduced it.

  • Reply 18 of 37


    I was at a Sams Club yesterday, and got to see and hold an iPad Mini for the first time. All I can say is wow. This is a really nice device! Especially, when you compare it to the 7" Android tablets close by - one can clearly see the screen real estate one gets with the Mini.


     


    The form factor is so much nicer too...


     


    I own an iPad 3 and my wife has the original iPad (hand-me down). This would be a really nice present for her. However, I could easily justify having a smaller iPad myself.


     


    I'm sure Apple is selling these like hotcakes. Let's hope they get their stock levels up, so there is enough to go around to all the consumers who want one.

  • Reply 19 of 37
    quinneyquinney Posts: 2,528member
    Analyst Katy Huberty said although iPad mini sales are clearly cannibalizing some full-size iPad sales, she believes concerns over this trend are "overblown."

    Come on, Katy. Name names. Exactly who is that promoted those overblown concerns?
  • Reply 20 of 37

    Quote:

    Originally Posted by quinney View Post





    Come on, Katy. Name names. Exactly who is that promoted those overblown concerns?




    here's one:


     


    "Cannibalization occurs when a potential iPad buyer is swayed towards the iPad Mini -- because of the lower price or any other factor," said Sameer Singh of Tech-Thoughts in an email today. "So if the iPad Mini did not exist, those buyers would have bought the larger iPad."


     


    According to Singh, the iPad Mini will cannibalize sales of the standard 9.7-in. iPad to the tune of around 50%. In other words, 50% of the buyers of the iPad Mini would have, failing the availability of the smaller 7.9-in. tablet, bought a full-sized Apple tablet instead."


     


    And another:


     


    "Previously, Wu forecasted that the iPad mini would cannibalize a portion of sales of the new iPad. Wu's revised his predictions with sales for Q4 to go down to 23.5 million units, which is lower from the previous estimate of 25 million. Wu believes that the larger 9.7-inch iPad sales will see a decline as consumers tend to lean towards tablets with the smaller 7-inch displays."


     


    And yet another"


     


    "UBS (UBS) cut its price target on Apple (AAPL) to $700 from $780 on Friday but maintained its “buy” rating.


    Shares of the Cupertino, Calif.-based tech giant slumped some 3% to $513.


    The brokerage firm also lowered its outlook on Apple device sales in the March, June and September quarters, cutting out a total of five million iPhones and two million iPads due to the possible cannibalization of the new iPad by the iPad mini as well as a softer build rate."


     


    I think the it was starting to sound like the general consensus was that iPad Mini sales were going to cannibalize iPad sales in a negative way because so many stories were coming out about it.


     


    To me it looks like Cook is trying to keep iOS market share while maintaining gross revenue, even if margins take a hit.

Sign In or Register to comment.