Apple calls tablets "the mother of all markets," Mac cannibalization not a concern

Posted:
in iPad edited January 2014
The iPad is "the poster child of the post-PC revolution," according to Apple CEO Tim Cook, who expressed no concerns about the company's industry-leading tablet undercutting sales of the Mac platform on which Apple was founded.

iOS lineup
Apple's iPad mini, iPad, and iPhone.


Due to a combination of supply constraints and an admitted level of cannibalization due to the iPad, Apple's Mac sales dropped 17 percent last quarter, with the unit posting its lowest numbers in some time. Cook remains unperturbed by such figures.

"If you look at when we came out with the iPad, what did people worry about? They worried, 'Oh my god, you're going to kill the Mac,'" Cook explained. "The cannibalization question raises its head a lot. The truth is: we don't really think about it that much. Our basic belief is: if we don't cannibalize, someone else will."

Cook reiterated a position he espoused late last year: that the firms that have the most to worry about with regard to cannibalization by the iPad are Windows PC makers, not Apple.

"In the case of iPad particularly, I would argue that the Windows PC market is huge and there's a lot more there to cannibalize than there is of Mac, or of iPad."

iPad sales have over the last two years solidly outperformed a contracting PC market, making Apple the top PC manufacturer when tablets are counted. Cook was quite cognizant of that fact in the interview.

"If you look at the full year last year, there were more iPads sold than [market leader Hewlett-Packard] sold of their entire lineup," Cook said. "I think we're in the early part of this game. The projection is that the [tablet market] will triple in four years."

"I think if a company ever begins to use cannibalization as a primary ? or even major ? factor of what products to go to, it's the beginning of the end."The Apple CEO went on to discuss what he sees as the future of the post-PC market. The tablet sector, he said, will be huge: "the mother of all markets," in fact. Developing markets such as Brazil and China ? where the iPad mini debuted to high demand ? represent a considerable opportunity for Apple, Cook opined.

"You would find that over 50 percent of the people in countries like China and Brazil that were buying an iPad don't own an Apple product," he said. "This is a huge thing for us to go out and show people what Apple is and introduce them to the company."

That ability to bring in new customers tends to pay off for Apple, Cook noted, as new customers tend to come under the influence of Apple's "halo effect": the notion that, once a consumer has bought an Apple product, she is more likely to buy another Apple product in a different category.
"Through the years, we've found a very clear correlation between people getting in and buying their first Apple product and some percentage of them buying other Apple products."
On the whole, Cook was skeptical of the importance of cannibalization, except possibly as a metric for a company's future success. The trick, he said, is not to dwell on it

"I think if a company ever begins to use cannibalization as a primary ? or even major ? factor of what products to go to, it's the beginning of the end."
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Comments

  • Reply 1 of 41
    [SIZE=4][I]"When the Mac first came out, Newsweek asked me what I [thought] of it. I said: Well, it’s the first personal computer worth criticizing. So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."[/I] ~ Alan Key, circa 2007[/SIZE]
  • Reply 2 of 41
    slurpyslurpy Posts: 5,090member
    "I think if a company ever begins to use cannibalization as a primary %u2014 or even major %u2014 factor of what products to go to, it's the beginning of the end."

    Great line. And I agree.
  • Reply 3 of 41


    I don't think a rational person can argue that we're in a post-PC era and worry about cannibalization of the Mac line at the same time.  Reading between the lines, this is what Cook is saying.  Fact: Many people only need a device that will allow web surfing, check email, pay bills, etc.  The need for a personal computer in the traditional sense just isn't there like it was before. 


     


    He's spot on about the "halo" effect, too, and what other tech manufacturer has this?  No one that I can think of.  Over a year ago, I owned zero Apple products, didn't want any.  My oldest daughter wanted an iPod Touch and I gave in.  18 or so months later, we're up to something like 11 Apple products in the household.  I'm not bragging or boasting, just proving his point.

  • Reply 4 of 41


    Another great line on 9to5 but not here, Cook said "I have no idea what market share is, because we’re the only company that reports what we sell.”


     


    One of the most awesome things I've read today!

  • Reply 5 of 41
    19831983 Posts: 1,142member
    Apple was founded on the Apple I/II not the Mac.
  • Reply 6 of 41
    This is what I call forward thinking and caring about the company, not just to the next quarter.
  • Reply 7 of 41
    allenbf wrote: »
    Another great line on 9to5 but not here, Cook said "I have no idea what market share is, because we’re the only company that reports what we sell.”

    Good point there!
  • Reply 8 of 41
    allenbf wrote: »
    He's spot on about the "halo" effect, too, and what other tech manufacturer has this?  No one that I can think of.  Over a year ago, I owned zero Apple products, didn't want any.  My oldest daughter wanted an iPod Touch and I gave in.  18 or so months later, we're up to something like 11 Apple products in the household.  I'm not bragging or boasting, just proving his point.

    Some will claim that only happened because Apple locked you in with their monopolistic iTunes Store. They'll ignore the fact that most people don't get the majority of their content from the iTS, or that it was Apple that wanted music to be DRM long before it happened way back in 2009, or that you can load your content into iTunes, or that there numerous apps that will let you load or play a massive amount of content without using iTunes at all. They'll do anything to deny that the HW and SW design has anything to do with making the user experience desirable.
  • Reply 9 of 41

    Quote:

    Originally Posted by SolipsismX View Post





    Some will claim that only happened because Apple locked you in with their monopolistic iTunes Store. They'll ignore the fact that most people don't get the majority of their content from the iTS, or that it was Apple that wanted music to be DRM long before it happened way back in 2009, or that you can load your content into iTunes, or that there numerous apps that will let you load or play a massive amount of content without using iTunes at all. They'll do anything to deny that the HW and SW design has anything to do with making the user experience desirable.


     


    Yep - but they can blame it on what they like - the reality is, I was completely blown away with the hardware, level of detail and the smoothness of iOS (I came from Android 3, so...yeah). 

  • Reply 10 of 41
    Tim Cook talks much more than Jobs. Yet, he sticks to his talking points and repeats the same catch words again and again. Very disciplined. Apple's PR people must find life less interesting but calmer undr his regime.
  • Reply 11 of 41
    paxmanpaxman Posts: 4,589member

    Quote:

    Originally Posted by AppleInsider View Post



    "I think if a company ever begins to use cannibalization as a primary ? or even major ? factor of what products to go to, it's the beginning of the end."


    Or NOT to go to. I really like Tim's view on cannibalization. 

  • Reply 12 of 41

    Quote:

    Originally Posted by paxman View Post


    Or NOT to go to. I really like Tim's view on cannibalization. 



     


    Likewise. A smart organization continues to 'skate to where the puck "will be", not where it's been'.

  • Reply 13 of 41
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by paxman View Post




    I really like Tim's view on cannibalization. 



    I don't know how other companies could possibly cannibalize the Mac or how Apple's iPad can cannibalize Windows PCs. I thought cannibalize meant one of your own products displaces one of your other products. I know what he meant, but the term used in that sense should not refer to other companies.

  • Reply 14 of 41
    robmrobm Posts: 1,068member

    Quote:

    Originally Posted by mstone View Post


    I don't know how other companies could possibly cannibalize the Mac or how Apple's iPad can cannibalize Windows PCs. I thought cannibalize meant one of your own products displaces one of your other products. I know what he meant, but the term used in that sense should not refer to other companies.



    I agree - but they're going to to eat them up irrespective of the lack of a correct term.

  • Reply 15 of 41
    sockrolidsockrolid Posts: 2,788member


    Originally Posted by AppleInsider View Post



    "Our basic belief is: if we don't cannibalize, someone else will."

     


     


    There ya go.  iPhone cannibalized iPod touch sales.  iPad is cannibalizing Mac sales.


     


    It's all part of the process.

  • Reply 16 of 41

    Quote:

    Originally Posted by mstone View Post




    Quote:

    Originally Posted by paxman View Post




    I really like Tim's view on cannibalization. 



    I don't know how other companies could possibly cannibalize the Mac or how Apple's iPad can cannibalize Windows PCs. I thought cannibalize meant one of your own products displaces one of your other products. I know what he meant, but the term used in that sense should not refer to other companies.



     


    I don't think that cannibals eat their own tribe... i think that would be called ingest...


     


    Kinda' reminds me of the old Hank Williams favorite --  The Cannibal Song:


     


     ? Today, I passed you on the street...

  • Reply 17 of 41


    Wall Street has given Cook's presentation today a big thumbs down.  Talk about arrogance, ignorance, and incompetence all rolled into one.


     


    Also got to love my posts getting deleted by coward mods/admin who can't take reality and defend the truth.  What are you, Tim's personal doggies?

  • Reply 18 of 41


    Originally Posted by KingChael View Post


    Also got to love my posts getting deleted by coward mods/admin who can't take reality and defend the truth.  What are you, Tim's personal doggies?



     


    Let's see, insulting users of the forum, spreading FUD about Apple… pretty sure you know exactly why they were deleted.

  • Reply 19 of 41
    What Tim Cook had to say was very, very impressive and he only managed to drive the stock down $12. He's a real charmer, he is. If he keeps talking any more he can take the stock all the way down to $400. Is that a silken tongue or what? He should realize that no matter what he says it's going to sink Apple. Nobody actually believes him and I fully expect Apple's P/E to fall even further this year. That's the difference between Tim Cook and Jeff Bezos. Tim Cook can talk all day long and the more he talks, the further Apple will fall. If Jeff Bezos just clears his throat, Amazon stock will go up $20. Please, Tim Cook, put a sock in it. Whatever you're saying, Wall Street doesn't want to hear it and neither do Apple shareholders.
  • Reply 20 of 41
    ecsecs Posts: 307member
    Wrong thinking like these Tim Cook thoughts are what are causing the Apple stock decline, and what will cause a major failure in the long term. To begin with, after reading this I'm no longer confident about how safe is to invest on the new Mac Pro when it's released.

    I need a new computer because the supposedly "post PC" toys cannot run professional applications, nor can compile code either, and I need both. But investing >2000 dollars on a machine when the CEO considers such machine obsolete even before it's released doesn't look safe. Better put my money on professional computing makers.

    Sorry Apple, but my days with you seem to be arriving to an end. Your "post PC" philosophy isn't based on technology which offers more performance than previous generations, but on the (wrong) belief that the "post PC" user doesn't need to run professional Adobe software. And that's wrong, we -need- to run professional Adobe tools, as well as from other pro vendors
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