Apple calls tablets "the mother of all markets," Mac cannibalization not a concern
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.
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."
"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.
"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."
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.
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"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."
"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."
Comments
Great line. And I agree.
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.
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!
Good point there!
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.
Quote:
Originally Posted by SolipsismX
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).
Quote:
Originally Posted by AppleInsider
"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.
Quote:
Originally Posted by paxman
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'.
Quote:
Originally Posted by paxman
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.
Quote:
Originally Posted by mstone
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.
Originally Posted by AppleInsider
"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.
Quote:
Originally Posted by mstone
Quote:
Originally Posted by paxman
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...
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?
Originally Posted by KingChael
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.
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