iPad luring in new users: over 2/3 of Apple's iPad buyers were new to iPad

Posted:
in iPad edited April 2014
Over two thirds of people registering an iPad in the last six months were new to iPad, while over half of those registering iPhone were new to iPhone, Tim Cook revealed, highlighting the attraction and loyalty effects Apple is observing in its products.

Tim Cook


Cook noted, "Our strong March quarter results bring us to total revenues of over $103 billion for the first six months of the [fiscal] year and earnings per share growth close to double-digits. We estimate that over the last six months, we've added over 60 million new registered users of our four product categories.

"Additionally, over two-thirds of people registering an iPad in the last six months were new to iPad, while over half of the people registering iPhones were new to iPhone," Cook stated.

The Halo Effect and iTunes

"It's wonderful to add tens of millions of first time Apple product users," Cook said, "especially considering the strong halo effect seen over and over again in our history. Customers who have a great experience with their first Apple product often become loyal and happy owners of multiple Apple products over time."

In addition to the "halo effect" cast by attention getting hardware products that drive traffic into Apple's retail stores, there's also an iTunes ecosystem effect that drives loyalty among Apple's customers.

Cook drew attention to the "staggering" figure of Apple's nearly 800 million iTunes accounts, most of which are tied to the customer's credit card for friction free buying.

Apple corporate controller Luca Maestri


Apple's corporate controller Luca Maestri noted that Apple's App Store revenue reached $2.6 billion, growing 9 percent year over year. Maestri also cited statistics from App Annie, noting that Apple's App Store generated 85% more revenue globally than Google Play during the quarter, despite the idea that Android devices now make up 80 percent of the volume of products fitting the definition of "smartphone."

Among enterprise clients, Apple is seeing not only strong hardware sales of iPads and iPhones to replace what Maestri called "legacy devices and systems," but also an expansion of custom app development to "drive innovation at their companies," a move that ensures those companies will continue to buy iPads rather than generic tablets that might be cheaper up front.

Maestri said Deutche Bank now has nearly 20,000 iPhones on its network, and has created 40 internal iOS apps to "expand the capabilities of its mobile workforce." Siemens has 30,000 iPhones in use, and has built 15 apps "for field service teams, sales associates and corporate executives for solutions that are only possible with iOS and iPhone. We are really happy with the continued growth and strength of the Apple ecosystem "only possible with iOS and iPhone," he noted.

"iPad continues to lead all other tablets by far in terms of user engagement, software ecosystem, customer satisfaction and e-commerce," Maestri noted, pointing out statistics from Chitika noting that U.S. iPad users drive nearly four times the web traffic of all Android tablets combined, while Changewave cited a 98% satisfaction rate for both Apple's new iPad Air and the iPad mini with Retina Display.

Proprietary Enterprise Apps driving iPad sales

Two thirds of buyers who expect to buy a tablet within 90s plan to buy an iPad, Maestri stated, adding, "iPad continues to allow companies around the world to reimagine the way they use technology to drive efficiency and improve employee satisfaction. "Eli Lilly has deployed over 20,000 iPads and 50 internal apps as part of a laptop replacement program that dramatically increased the productivity and capabilities of its employees" - Apple's Luca Maestri

"Thousands of iPads are used at FedEx everyday. In an industry where efficiency is critical, FedEx pilots and maintenance crews around the world use iPad to transform operational processes and save the company millions of dollars."

Maestri also noted that, "Eli Lilly has deployed over 20,000 iPads and 50 internal apps as part of a laptop replacement program that dramatically increased the productivity and capabilities of its employees."

Additionally, "The U.S. Department of Veterans Affairs is on its way to deploying iPads to 11,000 providers to transform the way doctors and patients interact. As part of this initiative, a suite of applications is being developed to allow quick access to real-time secure medical information.

"In education, according to the latest data published by IDC, iPad has over 95% share of the U.S. education tablet market as teachers and students increasingly benefit from the growing range of engaging iBooks, textbooks and solutions that are helping to transform the education experience."

Missed expectations

Cook preceded his comments with an introduction that described Apple's March quarter performance as setting a new record for a non-holiday quarter, noting that the company surpassed internal expectations despite challenging "currency headwinds" in Japan and other countries. He specifically noted that Apple's iPad sales came in at the "high end of the company's expectations." "We continue to believe that the tablet market will surpass the PC market in size within the next few years and we believe that Apple will be a major beneficiary of this trend" - Tim Cook

Maestri also addressed analysts' potential concerns about iPad having "missed" expectations by noting that sell through had improved over the year ago quarter, while inventory levels were more slowly replenished, creating a temporarily reduction in inventory at the end of the quarter.

Overall, analysts had expected Apple to sell 19 million iPads in the quarter, based on educated guesswork that involves "channel checks" and other efforts to model an idea of how many devices customers are buying.

Cook reiterated, "we continue to believe that the tablet market will surpass the PC market in size within the next few years and we believe that Apple will be a major beneficiary of this trend."
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Comments

  • Reply 1 of 27
    snovasnova Posts: 1,281member

    I personally thought the over 60% of iPhone 4S and 5C buyers came from Android was a more interesting statement then the iPad comparison.

    Breaking out the 2/3 comparison for iPad as being completely new to Tablets vs Android switchers would have been just as interesting.

  • Reply 2 of 27
    The iPad has ALWAYS been about New Users.

    Apple tapped into this "Brand New Vertical", when the iPad was initially released.

    I wrote this very post on 2/3/2010:

    ***
    WHY [will] the iPad will be a HUGE SUCCESS and truly change the way people use "mobile" computers.

    It's 100% the Operating System and the User Interface.

    Complete computer illiterate's will be able to pick one up and just use it.
    The iPhone and iPod installed base is just a small piece of the market.
    And when the Apps, specific to this platform take off, millions will be sold.
    Wait till you see the New Apple iPad commercials, showing off Apps.
    ***

    The iPad is still catering to,
    "Complete computer illiterate's [who] will be able to pick one up and just use it."
  • Reply 3 of 27
    iqatedoiqatedo Posts: 1,550member

    Interesting user information... Apple makes a product that doesn't just last physically but that remains relevant. The turnover rate might be affected by this (I'm still on the first generation iPad and use it every day) but new sales are still healthy. Further to this, I very much doubt that Apple is yet through with redefining product categories. In this respect (an aside), little seems to be spoken of in the press about Apple redefining the retail experience, which it surely has achieved. Further innovation. :) 

  • Reply 4 of 27
    solipsismxsolipsismx Posts: 19,566member
    I was hoping AI would pull out this information. A slight* YoY drop sounds bad but when you see that 2/3rds are new iPad and after reading the comments on JLG's most recent Monday Note article it's clear that the iPad isn't being ignored like the flash-in-the-pan netbook rush but simply settling in to their position as the [I]personal computer for the rest of us[/I].**


    [SIZE=2]* It's only 3% when you use the same YoY accounting practices.
    ** Not me, and probably not you, but for the average user where the "PC" was a daunting and cumbersome requirement for modern life.[/SIZE]
  • Reply 5 of 27
    solipsismxsolipsismx Posts: 19,566member
    iqatedo wrote: »
    Interesting user information... Apple makes a product that doesn't just last physically but that remains relevant. The turnover rate might be affected by this (I'm still on the first generation iPad and use it every day) but new sales are still healthy. Further to this, I very much doubt that Apple is yet through with redefining product categories. In this respect (an aside), little seems to be spoken of in the press about Apple redefining the retail experience, which it surely has achieved. Further innovation. :)  

    I had already decided that my iPad updates will likely come around the same, if not longer, intervals as my Mac updates.
  • Reply 6 of 27
    balubalu Posts: 4member

    I'm one of the newbies. Despite some teething problems I'm already enjoying my apple experience with my brand spanking new iP4s and MBA 11 :-)

  • Reply 7 of 27
    snovasnova Posts: 1,281member
    Quote:

    Originally Posted by balu View Post

     

    I'm one of the newbies. Despite some teething problems I'm already enjoying my apple experience with my brand spanking new iP4s and MBA 11 :-)


    welcome

  • Reply 8 of 27
    woochiferwoochifer Posts: 365member

    Man, talk about a spin job. I find it disappointing that DED decided not to include the actual sales figures (16.35 million units shipped, plus channel inventory reductions), yet he cited the analyst projections -- the figures that become obsolete once the actual numbers come out. The fact of the matter is that iPad sales plateaued last quarter, and no amount of whitewashing makes that fact go away. The most important point of discussion centers on how and why this happened, and what it all means.

     

    I get that this article wants to highlight the strong points of the iPad's market segments, but the discussion needs to BEGIN with the bottomline sales and revenue figures (and YOY growth) and then branch out from there. Ignoring the most pertinent facts about the market and moving straight over to the qualitative stuff about owner loyalty, new buyers, and enterprise adoption makes for a disingenuous article at best. If anything, I wanted to see DED's take on the future of the tablet market, and how Apple can tap into these strong suits and use them to potentially find new growth opportunities. Too bad this article takes the easy way out.

  • Reply 9 of 27
    froodfrood Posts: 771member

    Very solid showing for Apple.  I think if they release the larger 4.7" iPhone they can really hit things out of the park in 2014.  I like the plan to raise the price $100.  Even if they can't get the carriers to pony up half of it in subsidies (and I suspect Apple will still be able to pull it off), Apple users will have a huge buy rate and they are not going to leave Apple for $100.  Margins are back!  I think trying to target Android users would be a mistake out of the crate.  Price it high, extract a ton of money from Apple users, and completely baffle analysts...  Record sales numbers *despite* a substantially higher price, and reseating the *profitability* crown more firmly on Apple's head.  Icing on the cake is that by being priced higher and still beating the competition Apple will be 'racing to the top' while others are heading in the other direction.  When the initial onslaught of sales is over, they can look at reducing its price *slightly* with the later release of the iPhab concurrent with either Samsungs S6 or more likely Note 4 and really put the squeeze on Samsung not by price, but by new product availability and momentum.

  • Reply 10 of 27
    It was interesting to hear Cook's observations of the iPad history.

    He pointed out that the iPad's total sales in its first four years were much higher than the iPhone for its first four years. And so, it has quickly reached a market penetration that much quicker, which goes some way to explaining why there is room for levelling off of growth on a quarterly level.

    I surmise that as Apple introduces new models, growth will once again accelerate. I would be interested to see DED take a look at the iPod history to see what the impact of adding more models had on its growth, and what the implications might be for the iPad.
  • Reply 11 of 27
    woochiferwoochifer Posts: 365member
    Quote:

    Originally Posted by snova View Post

     

    I personally thought the over 60% of iPhone 4S and 5C buyers came from Android was a more interesting statement then the iPad comparison.

    Breaking out the 2/3 comparison for iPad as being completely new to Tablets vs Android switchers would have been just as interesting.


    I think the "new to tablets" vs "Android switchers" distinction would shed some light on the state of the tablet market. But, I think another key point would be who buys the so-called "white label" tablets that run Android and make up the fastest growing segment of the tablet market, if you only count the unit numbers. Do these "white label" tablet customers more readily switch over to the iPad than competing models from the likes of Samsung or Lenovo? Or does the Android ecosystem have any sort of stickiness, and the iPad newbies come primarily from people who had yet to buy a tablet?

     

    Answers to all of those questions would likely help answer the bigger question of whether iPad growth has peaked, or if the tablet market still has significant unmet demand that Apple can tap into.

     

    At this point, it seems clear that smartphones have a larger addressable market than tablets and other connected devices (including wearables), primarily because the broader consumer market finds them more essential than even PCs, and because the upgrade cycles are shorter. Even in a maturing market for phones, there's still a large upside with consumers migrating over from feature phones and lower cost Android phones that are used like feature phones. And that very well might be what the 4s and 5c tap into.

  • Reply 12 of 27

    What people aren't getting is that consumers aren't going to renew their iPad every 2 years like they do their phone, and thats normal. You don't buy a new computer every 2 years, and the iPad is more towards that segment than it is towards mobile phone. 

  • Reply 13 of 27
    rayzrayz Posts: 814member
    Quote:

    Originally Posted by justp1ayin View Post

     

    What people aren't getting is that consumers aren't going to renew their iPad every 2 years like they do their phone, and thats normal. You don't buy a new computer every 2 years, and the iPad is more towards that segment than it is towards mobile phone. 


     

    Pretty much spot on. 

     

    Most iPads are not sold on a phone contract, and even if they were, there is very little reason to update that often since Apple is pretty good at supporting older iPads with iOS updates.

  • Reply 14 of 27
    kibitzerkibitzer Posts: 1,113member

    It's Deutsche Bank.

  • Reply 15 of 27
    clexmanclexman Posts: 144member

    I don't know a lot of people that have upgraded a tablet. The 50% of people that are new to iPhone is the story here. Everyone has a cellphone, but not everyone has a tablet... yet.

  • Reply 16 of 27
    snovasnova Posts: 1,281member
    Quote:
    Originally Posted by clexman View Post

     

    Everyone has a cellphone, but not everyone has a tablet... yet.


    its seems to me that young kids which don't have cellphones yet, have tablets instead.

  • Reply 17 of 27
    snova wrote: »
    I personally thought the over 60% of iPhone 4S and 5C buyers came from Android was a more interesting statement then the iPad comparison.
    Breaking out the 2/3 comparison for iPad as being completely new to Tablets vs Android switchers would have been just as interesting.

    Android tablet sales have been so terrible that I don't think there were many switcher to iPad. Also, keep in mind that a lot of the Android sales of tablets were for $89.95 tablets which are so rudimentary to hardly be called a reader, much less a tablet.

    The part I think is sweet is that once someone switches to Apple devices, only a severe concussion with accompanying loss of memory and loss of the sense of good taste will get them to switch back. It's a good feeling being an Apple customer who Apple wants to delight as opposed to being an Android user that Google considers to be a bag of data to be sold to advertisers over and over until you escape to Apple and can no longer be exploited as conveniently or thoroughly.
  • Reply 18 of 27
    rayz wrote: »
    Pretty much spot on. 

    Most iPads are not sold on a phone contract, and even if they were, there is very little reason to update that often since Apple is pretty good at supporting older iPads with iOS updates.

    ...and those who do upgrade for more storage or features will pass their old tablet on down, thus delaying another tablet purchase in the family.
  • Reply 19 of 27
    It was interesting to hear Cook's observations of the iPad history.

    He pointed out that the iPad's total sales in its first four years were much higher than the iPhone for its first four years. And so, it has quickly reached a market penetration that much quicker, which goes some way to explaining why there is room for levelling off of growth on a quarterly level.

    I surmise that as Apple introduces new models, growth will once again accelerate. I would be interested to see DED take a look at the iPod history to see what the impact of adding more models had on its growth, and what the implications might be for the iPad.

    Apple could spur a huge upgrade cycle if they made higher memory iPads available at the price of 16Gb models currently. I understand it costs Apple $11 to double the memory. Alternately Apple could collapse the memory steps to $50 instead of $100. All the market needs is a "reason" to upgrade and there would be a stampede.
  • Reply 20 of 27
    thepixeldocthepixeldoc Posts: 2,257member
    ...and those who do upgrade for more storage or features will pass their old tablet on down, thus delaying another tablet purchase in the family.

    Exactly why user profiles, an oft wished for feature by the short-sighted posters here, is absolutey preposterous.

    Edited: wait... what are trying to say with "delaying"? The "upgrade" purchase is one more iPad sold and added to a family that values the iPad. One day that upgraded iPad will also work it's way down, replaced by a new one...:???:
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