Purchasing iPads for the purposes of general use may, in fact, be maturing in the United States. The markets in developing countries may be expanding and the focus of Apple and its management today.
To move more iPads into the market, Apple management will need to differentiate iPads on the basis of specific usages medicine, inventory control and business operations, mathematical analytics and trading in banking, design engineering and equipment maintenance in heavy equipment manufacturing---may be what is needed to have Apple penetrate deeper into the marketplace. This is why Apple's relationship with IBM is so interesting and there is history in other computing areas that support this very idea.
Corporations, hospitals and government do not care about Hulu, YouTube, or weather. They need iPads to do specific functions and the iPad infrastructure must integrate with data sources that currently exist on the users computer infrastructure. Partnering with IBM and other system integrators (EDS, Accenture, hundreds of others) and participating in "solution" selling is the proven approach to getting into "the enterprise" (and selling bucket-loads of units in the process)
This is a smart long term strategy and built thru hard work, focus and co-investment. Codos to Apple for their willingness to invest smartly in the long-term.
As the iHaters will allege, Apple is NOT an American company. They repeat the FUD that Apple manufactures nothing and that all their products are made in China. They point to the “Designed by Apple in California” label as proof.
Forty years ago people were asking Americans the same question regarding automobiles. How could an American buy a “Jap” car? How could Americans buy foreign goods when they know it will cause job losses locally? Well, they can and they do.
A great many of those 'Jap' cars are now built in the US. A few years ago the biggest importer of cars into the US was GM, but I don't know if that still stands true.
. I honestly don't get the purpose of a research agency if they're only going to put the numbers where they want them to be instead of where they belong. A research agency that is simply guessing numbers isn't really doing their research.
It's like a stage clairvoyant act. You get to the answer you want to give, by very selective questions. So if company X, is considering a move in the tablet market, then the researcher will get to a point where they know exactly what company X wants to hear. If the company is gung-ho, or undecided or even anti, then the report will echo those sentiments. The more depth required to support the conclusion, means it will inevitably cost more and be more selective, research wise.
At the end of the day, the report or research doesn't have to be exhaustive or even right...and company X still has to make its own decisions.
Product and market "boundaries" are determined by consumer buying behavior, not by the product's physical appearance. If consumers behave as though iPads and other tablets are in the same product category, then they are. If they don't, then they aren't.
Economists use cross-price demand elasticities to gauge the substitutability of one product for another in the eyes of consumers. If Company S drops the price of its tablet by 5%, let's say, and the number of tablets sold by competitor A falls little or not at all, then CONSUMERS do not consider the products of S and A to be equivalents or near-equivalents.
To illustrate: Suppose Hyundai lowers the price of its Sonata by 5%. The demand for Accords and Camrys will drop, but the demand for Corvettes and BMW 5-series sedans won't show any effect. Sonatas, Accords and Camrys are in the same market, while Sonatas, Corvettes and BMW's aren't.
Consider iPad sales over the last year. They dropped to 70 million from 71 million instead of growing by a theoretical (IDC) rate 11%, which would have taken them to 79 million. That implies a theoretical 9-million unit "shortfall" in iPad sales, which would be 9/78 = 12%. Prior to the appearance of white box tablets, iPad had the same sales price as it has today. White box tablets, however, are selling for about $100, or about 80% less than iPad.
That's enough to do a (preliminary) elasticity calculation. If one assumes that the entire 12% "shortfall" in iPad sales is attributable to white box tablet sales, the cross-price elasticity between iPads and the other tablets in this instance is about 12/80 = 0.15.
If and when the coefficient approaches 1, Tim Cook should send up a flare.
I've begun to view those Kia commercials where they say "Just ask the thousands of satisfied customers on our website" with deep suspicion since our local community website was issued with a very strong 'Cease, Desist and Remove' notice from a UK based Korean Trade organisation, regarding some very dissatisfied owners comments on our site. They even asked us to sign a declaration that there was no cached version in existence - which of course we couldn't. How the hell they found us, I'll never know, though its quite possible the Trade Organisation is purely there for that purpose and not much else. We caved.
It's all so confusing and obfuscating. It would be great if Apple had something to REALLY worry about! Instead, they continue to go from strength to strength and the opposition continues to flail about - WHY?
It's all so confusing and obfuscating. It would be great if Apple had something to REALLY worry about! Instead, they continue to go from strength to strength and the opposition continues to flail about - WHY?
Because it's hard to catch up with someone that's had a 13 year head start.
Its because Apple broke the sacred rule. "Though shall not make computers easy to use" Nerds love job security , if a computer can be made to work by Mom and Pop then they are out of a job. Nerds love to be seen as geniuses, being able to fix Windows makes them feel good and gives off an aura a of perceived cleverness. It's an ego thing! Apple could be at 99% of market share in everything and they would still denigrate everything they do. Don't sweat it. The buggers are just sad indictment on the whole techie/nerd thing mind set. They still don't understand how the Surface failed. IDC, Gartner etc, are spin merchants who are making money selling lies to Corporations and the corporate clones suck it up and sell it to their CTO and the whole circus goes on and on. Its a house of cards? at my workplace there are several WP fans who still think WP is going to succeed. It so amusing watching them squirm as it fails.
I wouldn't be scared either. A lot of these "other" tablets are cheap $50 Big Lots specials. Once they break two weeks in or find out it's a crap non-Play App Store (only) people will realize why they should have bought an iPad.
I am a PC user and have been since MS-DOS 1.0 and proprietary systems before that. I was a support team specialist so I didn't have much choice except to use MS DOS and then Windows. Or should I say suffer at times to use. I didn't have anything against Apple, it was just that I needed to concentrate on PC systems to provide support. When the iPod came out I couldn't wait to get one. The only drawback was running iTunes on Windows. Windows doesn't play nice with well written software. I had to have the iPhone when it was introduced. My first was the iPhone 3G. I now have the iPhone 5S. My friends and colleagues have Samsung phones. Most of them brag about them in public but privately they complain about how slow the phone is, the software that they can't get rid of, and the giant screen is beautiful to look at but it doesn't fit in their pocket.
There are four iPhones and two iPads in our household. After dealing with PC support all day it's nice to know that when I come home that I won't be needed for iOS support.
Watch it, buddy. You are teetering on the brink of being labeled a racist xenophobe. <sarcasm> Gotta keep it politically correct these days.
It's just that if other countries start thinking in the same knee-jerk xenophobic way, US farmers, Boeing, Caterpillar, United Technologies, Dupont, GE, Monsanto, and a lot of other US companies that export stuff would be in a whole lot of trouble. Well, maybe I don't mind that much about Monsanto.
In a sense, I will argue that DED represents both the best and the worst aspects of Apple fanboyism.
It's rude to gloat, but DED does it so masterfully that I admit to deriving guilty pleasure from his articles. On the other hand, to be willing to spend the time to research and craft such articles, even if it is for a paid site, speaks volumes about his passion.
I don't think Apple really needs to do anything, to be honest, but their job. Samsung looks like it is starting to implode under their short-sighted decision to prioritize market share over developing a healthy ecosystem and long term profitability. Apple is only just getting started. You know this when they announced features like continuity in ios8, a feature riding on Bluetooth LE, which incidentally has been in many Apple devices since 3 years ago. That's vision, that's Apple with a plan, and I can't wait to see where Apple goes from there.
I continue debating because it just irritates me when I see blatant lies and misinformation floating around in sites like cnet. The people there aren't even interested in having a civil discussion; they are simply set in bashing Apple every chance they get, just because they can.
So while it may be an uphill battle, doesn't mean I can't fight off for as long as I can.
But remember, you are not alone! There's lots of us.
That explains why Cook also said that "iPad sales met our expectations but we realized they didn't meet many of yours," an allusion to the perpetual growth percentages that analyst dream up without really articulating how such rosy numbers could possibly be achieved without causing unintended side effects, ranging from giving up dollar share in the market, to destroying Mac sales, to erasing any demand for Apple's tablets in the future.
Were Apple being run by analyst-pleasing salesmen, short term demands for ever faster growth might likely have the same detrimental impact on the company's long term viability just as it did with Acer's netbooks, with the Android 2.x tablets Samsung rushed to market in 2010, and with the Old Apple's Performas and Mac Clones back in the 1990s.
Long term Apple vs Short term Google
That same kind of short term thinking is apparent in Google's more recent efforts to dump its super cheap Asus-built Nexus 7 tablets onto the market in a bid to "grab market share."
Reminds me of an article I read awhile back. It spoke of the technology company graveyard and how it was filled with companies ran by executives who didn't know the difference between market share and profit. Attempting to continually increase market share while sacrificing profits leads to poor product quality and design. Poor customer service. Returned product. Failed company without enough money to continue business. The assets are purchased and many times the once high flying brand name appears as a special promotion. Compaq or Gateway anyone?
so how about talking about "what's really going on here ..."?
i think it's plain the tablet market is revealing itself to be different than smartphones. in the US and other markets that are based mainly on two year telco contracts starting with a partial down payment, most get a new phone every two years because their monthly rate does not automatically drop after that, even tho the phone itself is all paid for. and there is a real used phone sale option too (most go overseas i suppose) that can almost cover the downpayment for a new phone.
but consumers buying a tablet pay the full price up front. so it is not surprising they keep using it longer, probably the four years or so typical of desktop PC's - altho their average lifetimes are getting longer too. an iPad 2 is still a good tabet, good enough for many with its consistently updated OS and apps. this means that most tablet sales nowadays - iPads at least - are still first time users, or an additional household member's tablet. the replacment cycle for older iPads has not kicked in yet, but it will eventually, especially once an iOS update leaves it behind, as with the iPad 1.
Android tablets on the other hand are the reverse. most are running an obsolete version of Android anyway. so why not get a cheapo new one? and then their are all the throwaways, the <$100 tablets for kids and simple needs from the "other" OEM's. there is real sales volume there, but all its pricing is trapped in a "race to the bottom" that is ruinous to profit making - as Samsung's recent results clearly demonstrates.
if IDC et all also reported total sales revenues results instead of guesstimated unit sales, these trends would stand out. and one could calculate the average price per unit easily. but as DED notes, that is not the story they are paid to tell.
I'm surprised that IDC, Gartner and Strategy Analytics are permitted by the SEC to produce fictional stats which obviously impact share prices, isn't that illegal?
Apple is a case study on what is wrong in the current Stock market environment. If you look at what we all know about Apple and its competitors and how these Analysis twist the number or create stats which tell a story, and they are getting away with it with a company which is as so above board and open, image what these guys are doing in other industries where the information is no so easily obtained.
This is what you have companies like Amazon, Facebook and Google with such high valuations but when you look under the covers you start scratching your heads.
The Analysis hate Apple, they use to hate Steve Jobs because he would not talk to them, they just hate Apple now since Apple puts the real number out which shows the games they are playing.
I use get data from a Gartner Analysis and his market data was really good. He never showing things in % anything, he showed the actually numbers which you could very easily verify by looking at the various companies' 10Ks. For the companies who did not report out numbers, he would put a foot note which said it was their best estimates they had based on other information not publicly available.
You see now of this in the data present for Apple.
In my household I am VP Technical Support. Since we practically no longer boot the Dell PC (2 iPads, 1 MacBook Pro, 5 iPhone 5s) the roles are reversed. I ask my kids how to do things now. loving it.
Its because Apple broke the sacred rule. "Though shall not make computers easy to use" Nerds love job security , if a computer can be made to work by Mom and Pop then they are out of a job. Nerds love to be seen as geniuses, being able to fix Windows makes them feel good and gives off an aura a of perceived cleverness.
this is pretty close... In general I agree, but I would argue it's more 'sweat equity' of making the @#$Q%!$ things work, you feel that you've 'earned' the right to say, 'it was a hard horse to break, but now that I've done it, it's the best horse ever!'
There is also the concept that Apple hardware is expensive and time is free, especially if you're getting paid to supply time (paid to be the hero).
Quote:
IDC, Gartner etc, are spin merchants who are making money selling lies to Corporations and the corporate clones suck it up and sell it to their CTO and the whole circus goes on and on. Its a house of cards?
The fact that the Surface was not going to be cloned was a critical failure in the loss of the Corporate bean counters. Windows won the enterprise not on technology but on the fact of ruthless competition for the Hardware sale.
Quote:
at my workplace there are several WP fans who still think WP is going to succeed. It so amusing watching them squirm as it fails.
Gartner pushed WinPhone into 1st Place 'by 2014' in 2007. There's still hope for that bet to come in... not.
I remember in the 90s, showing people the NeXT and telling them this is real object oriented computing, and the Windows SysAdmin just said, "Look at the share price... you trying to tell me to tell management to bet against Windows... it's through the roof!"
(And RIMM's highest ever price was a year after the iPhone was released.... and now we are seeing all those people who bought into that model finally switching... another 'i've finally taught my thumbs how to type on this keypad... I'm a genius/expert/gift!!!!')
I like to wander over and read Thurott occasionally, and see how much his bravado has changed, he who is DED and Gruber rolled into one in the windows world.
The only issue Apple has right now is competing with itself. We have an app that we keep running on iOS 5.1 and higher. 15% of our users are still using an iPad 1 and about 35% are running iPad 2. These are current stats. What that means is that half of our users are running 3 year old devices perfectly well! The "issue" is that Apple has created a near perfect device the first time around so the cycle time is about 3-4 years.
Comments
Purchasing iPads for the purposes of general use may, in fact, be maturing in the United States. The markets in developing countries may be expanding and the focus of Apple and its management today.
To move more iPads into the market, Apple management will need to differentiate iPads on the basis of specific usages medicine, inventory control and business operations, mathematical analytics and trading in banking, design engineering and equipment maintenance in heavy equipment manufacturing---may be what is needed to have Apple penetrate deeper into the marketplace. This is why Apple's relationship with IBM is so interesting and there is history in other computing areas that support this very idea.
Corporations, hospitals and government do not care about Hulu, YouTube, or weather. They need iPads to do specific functions and the iPad infrastructure must integrate with data sources that currently exist on the users computer infrastructure. Partnering with IBM and other system integrators (EDS, Accenture, hundreds of others) and participating in "solution" selling is the proven approach to getting into "the enterprise" (and selling bucket-loads of units in the process)
This is a smart long term strategy and built thru hard work, focus and co-investment. Codos to Apple for their willingness to invest smartly in the long-term.
A great many of those 'Jap' cars are now built in the US. A few years ago the biggest importer of cars into the US was GM, but I don't know if that still stands true.
At the end of the day, the report or research doesn't have to be exhaustive or even right...and company X still has to make its own decisions.
Economists use cross-price demand elasticities to gauge the substitutability of one product for another in the eyes of consumers. If Company S drops the price of its tablet by 5%, let's say, and the number of tablets sold by competitor A falls little or not at all, then CONSUMERS do not consider the products of S and A to be equivalents or near-equivalents.
To illustrate: Suppose Hyundai lowers the price of its Sonata by 5%. The demand for Accords and Camrys will drop, but the demand for Corvettes and BMW 5-series sedans won't show any effect. Sonatas, Accords and Camrys are in the same market, while Sonatas, Corvettes and BMW's aren't.
Consider iPad sales over the last year. They dropped to 70 million from 71 million instead of growing by a theoretical (IDC) rate 11%, which would have taken them to 79 million. That implies a theoretical 9-million unit "shortfall" in iPad sales, which would be 9/78 = 12%. Prior to the appearance of white box tablets, iPad had the same sales price as it has today. White box tablets, however, are selling for about $100, or about 80% less than iPad.
That's enough to do a (preliminary) elasticity calculation. If one assumes that the entire 12% "shortfall" in iPad sales is attributable to white box tablet sales, the cross-price elasticity between iPads and the other tablets in this instance is about 12/80 = 0.15.
If and when the coefficient approaches 1, Tim Cook should send up a flare.
We caved.
Because it's hard to catch up with someone that's had a 13 year head start.
Its because Apple broke the sacred rule. "Though shall not make computers easy to use" Nerds love job security , if a computer can be made to work by Mom and Pop then they are out of a job. Nerds love to be seen as geniuses, being able to fix Windows makes them feel good and gives off an aura a of perceived cleverness. It's an ego thing! Apple could be at 99% of market share in everything and they would still denigrate everything they do. Don't sweat it. The buggers are just sad indictment on the whole techie/nerd thing mind set. They still don't understand how the Surface failed. IDC, Gartner etc, are spin merchants who are making money selling lies to Corporations and the corporate clones suck it up and sell it to their CTO and the whole circus goes on and on. Its a house of cards? at my workplace there are several WP fans who still think WP is going to succeed. It so amusing watching them squirm as it fails.
I am a PC user and have been since MS-DOS 1.0 and proprietary systems before that. I was a support team specialist so I didn't have much choice except to use MS DOS and then Windows. Or should I say suffer at times to use. I didn't have anything against Apple, it was just that I needed to concentrate on PC systems to provide support. When the iPod came out I couldn't wait to get one. The only drawback was running iTunes on Windows. Windows doesn't play nice with well written software. I had to have the iPhone when it was introduced. My first was the iPhone 3G. I now have the iPhone 5S. My friends and colleagues have Samsung phones. Most of them brag about them in public but privately they complain about how slow the phone is, the software that they can't get rid of, and the giant screen is beautiful to look at but it doesn't fit in their pocket.
There are four iPhones and two iPads in our household. After dealing with PC support all day it's nice to know that when I come home that I won't be needed for iOS support.
Watch it, buddy. You are teetering on the brink of being labeled a racist xenophobe. <sarcasm> Gotta keep it politically correct these days.
It's just that if other countries start thinking in the same knee-jerk xenophobic way, US farmers, Boeing, Caterpillar, United Technologies, Dupont, GE, Monsanto, and a lot of other US companies that export stuff would be in a whole lot of trouble. Well, maybe I don't mind that much about Monsanto.
But remember, you are not alone! There's lots of us.
Reminds me of an article I read awhile back. It spoke of the technology company graveyard and how it was filled with companies ran by executives who didn't know the difference between market share and profit. Attempting to continually increase market share while sacrificing profits leads to poor product quality and design. Poor customer service. Returned product. Failed company without enough money to continue business. The assets are purchased and many times the once high flying brand name appears as a special promotion. Compaq or Gateway anyone?
so how about talking about "what's really going on here ..."?
i think it's plain the tablet market is revealing itself to be different than smartphones. in the US and other markets that are based mainly on two year telco contracts starting with a partial down payment, most get a new phone every two years because their monthly rate does not automatically drop after that, even tho the phone itself is all paid for. and there is a real used phone sale option too (most go overseas i suppose) that can almost cover the downpayment for a new phone.
but consumers buying a tablet pay the full price up front. so it is not surprising they keep using it longer, probably the four years or so typical of desktop PC's - altho their average lifetimes are getting longer too. an iPad 2 is still a good tabet, good enough for many with its consistently updated OS and apps. this means that most tablet sales nowadays - iPads at least - are still first time users, or an additional household member's tablet. the replacment cycle for older iPads has not kicked in yet, but it will eventually, especially once an iOS update leaves it behind, as with the iPad 1.
Android tablets on the other hand are the reverse. most are running an obsolete version of Android anyway. so why not get a cheapo new one? and then their are all the throwaways, the <$100 tablets for kids and simple needs from the "other" OEM's. there is real sales volume there, but all its pricing is trapped in a "race to the bottom" that is ruinous to profit making - as Samsung's recent results clearly demonstrates.
if IDC et all also reported total sales revenues results instead of guesstimated unit sales, these trends would stand out. and one could calculate the average price per unit easily. but as DED notes, that is not the story they are paid to tell.
Apple is a case study on what is wrong in the current Stock market environment. If you look at what we all know about Apple and its competitors and how these Analysis twist the number or create stats which tell a story, and they are getting away with it with a company which is as so above board and open, image what these guys are doing in other industries where the information is no so easily obtained.
This is what you have companies like Amazon, Facebook and Google with such high valuations but when you look under the covers you start scratching your heads.
The Analysis hate Apple, they use to hate Steve Jobs because he would not talk to them, they just hate Apple now since Apple puts the real number out which shows the games they are playing.
I use get data from a Gartner Analysis and his market data was really good. He never showing things in % anything, he showed the actually numbers which you could very easily verify by looking at the various companies' 10Ks. For the companies who did not report out numbers, he would put a foot note which said it was their best estimates they had based on other information not publicly available.
You see now of this in the data present for Apple.
I know why the PC brigade hate Apple:
Its because Apple broke the sacred rule. "Though shall not make computers easy to use" Nerds love job security , if a computer can be made to work by Mom and Pop then they are out of a job. Nerds love to be seen as geniuses, being able to fix Windows makes them feel good and gives off an aura a of perceived cleverness.
this is pretty close... In general I agree, but I would argue it's more 'sweat equity' of making the @#$Q%!$ things work, you feel that you've 'earned' the right to say, 'it was a hard horse to break, but now that I've done it, it's the best horse ever!'
There is also the concept that Apple hardware is expensive and time is free, especially if you're getting paid to supply time (paid to be the hero).
The fact that the Surface was not going to be cloned was a critical failure in the loss of the Corporate bean counters. Windows won the enterprise not on technology but on the fact of ruthless competition for the Hardware sale.
Gartner pushed WinPhone into 1st Place 'by 2014' in 2007. There's still hope for that bet to come in... not.
I remember in the 90s, showing people the NeXT and telling them this is real object oriented computing, and the Windows SysAdmin just said, "Look at the share price... you trying to tell me to tell management to bet against Windows... it's through the roof!"
(And RIMM's highest ever price was a year after the iPhone was released.... and now we are seeing all those people who bought into that model finally switching... another 'i've finally taught my thumbs how to type on this keypad... I'm a genius/expert/gift!!!!')
I like to wander over and read Thurott occasionally, and see how much his bravado has changed, he who is DED and Gruber rolled into one in the windows world.
The only issue Apple has right now is competing with itself. We have an app that we keep running on iOS 5.1 and higher. 15% of our users are still using an iPad 1 and about 35% are running iPad 2. These are current stats. What that means is that half of our users are running 3 year old devices perfectly well! The "issue" is that Apple has created a near perfect device the first time around so the cycle time is about 3-4 years.