'Worst is over' as higher price of iPad Pro to offset iPad shipment declines, KGI says

Posted:
in iPad edited October 2015
While iPad shipments continue to sink, Apple's revenue from the product line should stabilize as prices trend toward the higher end, thanks to the debut of the high-end iPad Pro starting at $799.




Analyst Ming-Chi Kuo of KGI Securities issued research note on Thursday, a copy of which was obtained by AppleInsider, in which he declared that the "worst is over for iPad." Specifically, he expects the average selling price of the iPad lineup to improve due to the launch of the iPad Pro, which is set to go on sale next month.

His supply chain sources suggest Apple will ship about 2 million iPad Pro units in the holiday quarter, limited by supply issues with display panels from Sharp. But looking forward into 2016 as supply increases, he expects that the average selling price will also rise.

His estimates suggest the iPad will reach as many as 15.5 million units this quarter.

Kuo calls for total iPad shipments to decline 16 percent in 2016 to between 40 million and 42 million units. But revenues should be offset by higher margins on the 12.9-inch iPad Pro, he believes.

For the iPhone, Kuo believes the iPhone continued its robust year over year growth in the third quarter of calendar 2015. He predicts sales were up 23.6 percent year over year to 48.5 million units in the just-concluded September quarter, the results of which Apple will report next Tuesday.

Of those, he believes as many as 22 million units were from the iPhone 6s launch, and he credits Apple including China as a launch market for helping to propel sales.




For the iPhone 6s product cycle, he does not expect the same level of year over year growth going forward. After a projected holiday quarter with between 70 million and 75 million units, Kuo cautioned that it's possible the iPhone could see its first year over year shipment decline in early 2016.

As for the Mac, Kuo believes it will continue to outpace the sluggish PC market. His supply chain sources indicated the new 12-inch MacBook with Retina display is already Apple's No. 2 most popular product, behind only the 13.3-inch MacBook Pro.

Finally, he believes Apple Watch shipments in the September increased to between 3.5 million and 4 million units, up from an estimate of 3.3 million from the prior quarter. Actual Apple Watch shipments remain unknown, as Apple has declined to give any specific figures for competitive reasons.

For Kuo, his focus on next week's earnings call will be Apple's guidance for the current holiday quarter. To him, if Apple fails to deliver upbeat guidance, the market will revise its early 2016 estimates downward, which could push shares of the stock downward.

"We note that a potential share correction may make a good entry point," he said.

Apple will report the results of its fiscal 2015 fourth quarter on Oct. 27 after markets close. AppleInsider will have full, live coverage of the earnings report and its subsequent conference call with the company's executives.
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Comments

  • Reply 1 of 51
    I for one am anxiously awaiting iPad pro availability. My iPad 3 is too slow and too small.
  • Reply 2 of 51
    So far I haven't seen a ton of rMB's on campus, but I have seen some. I'm not a fan of the keyboard but I do admit to drooling a bit over a gold one on Tuesday. 8-)
  • Reply 3 of 51
    Quote:

    Originally Posted by sog35 View Post

     

     

    Give me a fricken break.  Apple has already gone down from $134 to $114.  That price already reflects a slow decline in iPhone growth.


     

    I think it's more reflective of the whole market's jitters over China concerns. It's not just Apple that's dropped - I've watched my whole portfolio take a tumble.

  • Reply 4 of 51
    I'm anxiously awaiting iPad Pro 2, or a sudden windfall of money ;)
  • Reply 5 of 51
    icoco3icoco3 Posts: 1,458member
    Quote:

    Originally Posted by sog35 View Post

     

    Bottom line is Kuo can't be trusted.

     

    Kuo doesn't even know that Apple's 4Q ends on Sept 26th.  He thinks it ends on Sept 30th.  He didn't even take the time to do simple research, how can anything else he said be trusted?


     

    Getting worried about a little something in your signature????  <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    "$150 AAPL share price by 12.31.15 or banishment."


     



    141
  • Reply 6 of 51
    asciiascii Posts: 5,941member

    With 4GB RAM and an almost 13" screen, the iPad Pro is the first iPad to seriously infringe on laptop territory. That's fine, but it's also a test. Namely, do people want a bigger iPad or a smaller laptop? It's the (new) Macbook vs. the iPad Pro, best of 10 rounds, ding ding ding! 

     

    So it's not self-evident that the iPad Pro will reverse certain iPad trends, it's maybe one of the more daring predictions Kuo has made lately. Especially given that the iPad Pro hasn't even gone on sale yet, and (as the article notes) the new Macbook is very popular.

  • Reply 7 of 51
    Quote:

    Originally Posted by sog35 View Post

     

     

    Not worried at all.

     

    Unlike like some here I'm willing to back up my words.  

     

    If I get banned for one year so be it.

     

    And yes I am pissed at Kuo.  Because he was one of the analysist who raised expectations last quarter to unrealstic levels. And when Apple could not reach those unrealisic expectations the stock got punished.


    I'd love for the price to reach $150 by year's end (and continuing up from there), but unfortunately I just don't see this happening that fast.

     

    Is a moderator planning to ban you or will this be self-banishment?  If self-banishment will it be from the entire site or just from commenting?  I've wondered where some long-time frequent commenters have disappeared to over the years.

  • Reply 8 of 51
    dysamoriadysamoria Posts: 1,981member
    More made-up meaningless nonsense for the made-up meaningless speculation game nonsense that is destroying societies. A game pretty much exclusively for the already wealthy (and the left over middle class who still think they can be a become upper class too, some day, if they gamble just right on Wall Street). A distraction from everything that actually matters. Disgusting how much impact it has when it's just people behaving irrationally and attaching value based on expectations of each others' behavior.
  • Reply 9 of 51
    schlackschlack Posts: 686member
    the ipad pro is pretty sweet...but at this price point, I suspect that many people will consider the surface 4 as a strong alternative...since it is a full OS. apple will really have to make a strong showing with their software and ecosystem to kill this.
  • Reply 10 of 51
    Quote:

    Originally Posted by schlack View Post



    the ipad pro is pretty sweet...but at this price point, I suspect that many people will consider the surface 4 as a strong alternative...since it is a full OS. apple will really have to make a strong showing with their software and ecosystem to kill this.

     

    It is a "full OS" with 1/100th of the apps that are touch optimized.  The reality of the Surface doesn't come close to the idea.  

  • Reply 11 of 51
    Quote:

    Originally Posted by dysamoria View Post



    More made-up meaningless nonsense for the made-up meaningless speculation game nonsense that is destroying societies. A game pretty much exclusively for the already wealthy (and the left over middle class who still think they can be a become upper class too, some day, if they gamble just right on Wall Street). A distraction from everything that actually matters. Disgusting how much impact it has when it's just people behaving irrationally and attaching value based on expectations of each others' behavior.



    You've summed up my own view of the Market very well. You'd think people would have learned a lesson from all the insanity surrounding Crash of 1929.

  • Reply 12 of 51
    melgrossmelgross Posts: 31,472member
    sog35 wrote: »
    its a self banishment.  This is based on an honors system.  I did not break any forum rules so a ban cannot be administered by the mods.

    Don't forget that last year between Oct-Dec Apple stock went up 25%.  I can see a similiar jump happening this year.

    Last year from Oct 16th - November 28th the stock jumped from $95 to $119.75.  Over 25% price jump.

    Most of that will depend on what we here on Tuesday. If it's better than expected, then things will be looking up. Otherwise, we could be looking at more downturn.
  • Reply 13 of 51
    melgrossmelgross Posts: 31,472member
    sog35 wrote: »
    Not worried at all.

    Unlike like some here I'm willing to back up my words.  

    If I get banned for one year so be it.

    And yes I am pissed at Kuo.  Because he was one of the analysist who raised expectations last quarter to unrealstic levels. And when Apple could not reach those unrealisic expectations the stock got punished.

    Uh, you won't be banned. That's a bad term, because it means that we would be banning you. You can't ban yourself without dropping your membership, and that's not really a ban anyway. You mean that you will just stop posting for that time, which is voluntary.

    Unless, of course, you want us to ban you. That could be arranged.:\
  • Reply 14 of 51
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Give me a fricken break.  Apple has already gone down from $134 to $114.  That price already reflects a slow decline in iPhone growth.

    Ha, you know as well as I do that doesn't seem to matter with Apple. Watch Google and Amazon report 'meh' numbers this afternoon and their stock skyrocket after hours.
  • Reply 15 of 51
    melgrossmelgross Posts: 31,472member
    schlack wrote: »
    the ipad pro is pretty sweet...but at this price point, I suspect that many people will consider the surface 4 as a strong alternative...since it is a full OS. apple will really have to make a strong showing with their software and ecosystem to kill this.

    I don't think so. These are very different products. What a lot of Windows people don't seem to understand is that organizations like iPads specifically because they are not a Desktop OS device. As such, they have few of the problems of a Desktop OS. Management is much easier, and less expensive. They are much more secure, out of the box. Even the fact that they have no standard USB port is seen as an advantage, because much data theft today is done using USB sticks with software designed to siphon off organization IP.

    So while IT might love the Surface, it's not doing too much in other areas. And with Office being a major influence, the iPad, particularly the Pro, will be more entrenched.
  • Reply 16 of 51
    wizard69wizard69 Posts: 12,719member
    Sadly I was waiting for an iPad Air update so any slowing of iPad sales are directly due to Apples stupidity.
    ascii wrote: »
    With 4GB RAM and an almost 13" screen, the iPad Pro is the first iPad to seriously infringe on laptop territory. That's fine, but it's also a test. Namely, do people want a bigger iPad or a smaller laptop? It's the (new) Macbook vs. the iPad Pro, best of 10 rounds, ding ding ding! 
    It isn't much of a challenge considering the Mac Book misses on so many levels, it is hardly a laptop. Beyond that I own a laptop and an iPad tight now and they will never replace each other.
    So it's not self-evident that the iPad Pro will reverse certain iPad trends,
    It won't because it is a niche product. Apples failure to upgrade the Air has doomed the entire product line. Nobody wants to pay list price for an iPad with 2 year old technology in it. The idea of the Pro is a good one I just don't see an overwhelming demand for the machine.
    it's maybe one of the more daring predictions Kuo has made lately. Especially given that the iPad Pro hasn't even gone on sale yet, and (as the article notes) the new Macbook is very popular.

    Where do you get the idea that the Mac Book is popular, I've yet to see one in the wild. Seriously I'd like to be convinced otherwise but the lack of any sightings leaves me to believe that most people feel the same about Mac Book as I do.
  • Reply 17 of 51
    icoco3icoco3 Posts: 1,458member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Why should Apple update the iPad Air lineup every year if people only upgrade every 3-5 years?

    ...


     

    And that is why the iPad most likely is not selling in massive quantities like the iPhone that people upgrade every 1-3 years.  2 years is most likely where the majority is.  I have an iPad 4th Gen and it does everything I need it to do.

     

    Also, it could be the Plus series of iPhones are big enough to do double duty for some people so no iPad is needed/desired of that group.  A lot of factors to consider.  How is the market for other tablets doing?  Is it a general slow down or just the iPad?  I find analysis that is hashed out here usually is better than what the "pros" offer anyway.

  • Reply 18 of 51
    MacProMacPro Posts: 18,142member
    I for one am anxiously awaiting iPad pro availability. My iPad 3 is too slow and too small.

    Got to say I'd all but given up web surfing then came along AdBlocker and my iPads is fast again ... Yay!
  • Reply 19 of 51
    asciiascii Posts: 5,941member
    Quote:

    Originally Posted by wizard69 View Post



    Where do you get the idea that the Mac Book is popular, I've yet to see one in the wild. Seriously I'd like to be convinced otherwise but the lack of any sightings leaves me to believe that most people feel the same about Mac Book as I do.

     

    I got it from the article above "His supply chain sources indicated the new 12-inch MacBook with Retina display is already Apple's No. 2 most popular product, behind only the 13.3-inch MacBook Pro." But yeah, I haven't seen many in the wild either. Seen massive numbers of Macbook Pros though (as always).

  • Reply 20 of 51
    MacProMacPro Posts: 18,142member
    sog35 wrote: »
    Everyone needs a smartphone.  Not everyone needs a tablet.  That's just the facts.  The tablet will never sell as many units as a phone no matter how good it is.

    I think the average upgrade cycle for iPad's are at 3-5 years since iPad3.  The jump from iPad1-iPad3 was massive and most upgraded.  

    As you said the 6+ is also canibalizing iPad sales.  Which is 100% fine with Apple since the 6+ makes Apple much more profit per unit compared to ipads.  That's why I've always felt that once the 6+ came out iPad and iPhone sales should be combined.  They are basically the same device but with different sized screens.

    You know, if an iPad made and received phone calls and you rarely receive or make calls (that describes me), an iPad alone would be just fine.
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