Apple’s Tim Cook Sees “Huge Opportunity” For iPad In Mac Cannibalization

ipad-with-ipad-mini

Apple CEO Tim Cook responded to questions about the issue of potential cannibalization of Mac sales by iPad devices on today’s earnings call, a question made more timely by the fact that Mac sales were down considerably on the quarter. He reiterated that supply constraints are leading to fewer sales, but also tackled cannibalization as a broad topic, noting that there is opportunity there for the iPad in a couple of important ways.

Cook reiterated that Apple “never fear[s] cannibalization,” since it’s always better to cannibalize your own products rather than have someone else do it to you. But then he went on to address the larger picture, talking about the PC market in general. ”On iPad in particular we have the mother of all opportunities here, because the Windows market is much larger than the Mac market,” he said. “I’ve said in the past that I believe the tablet market would be larger than the PC market at some point and I still believe that.”

Another point he made sure to bring up was the so-called “halo effect” that the iPhone has been shown to have, whereby first-time buyers of Apple devices who pick one up tend to then purchase other products. The iPad, too, has plenty of potential to trigger that phenomenon.

“If someone buys an iPad mini or an iPad and it’s their first Apple product, we have great experience over the years knowing that there’s a great percentage they’ll buy another iPad product,” he said. “We’re very confident that that will happen and we’re seeing some evidence of that on the iPad as well, so I see cannibalization as a huge opportunity.”

Cannibalization is something Apple has always embraced, but that’s because the products that replace it always tend to rack up way more sales than the ones they’re pushing to the periphery. The Mac may be on the decline, but as long as the iPad continues to shine, it’s true that that’s likely of limited concern to Apple and its top brass.

Apple’s Tim Cook Says iPhone And iPad Supply Component Order Cut Rumors Don’t Tell The Whole Story

iphone5-camera

Apple CEO Tim Cook took time on the company’s earnings call today to comment on a specific rumor, which is an extreme oddity for Apple’s top-tier executives. He prefaced it by saying he doesn’t want to make a habit of addressing rumors, but went on to comment on recent reports that iPad and iPhone part order volumes have been cut owing to weak demand.

“I know there’s been lots of rumors about order cuts and so forth,” he said. “I would suggest it’s good to question the accuracy of any kind of rumor about build plans, and even if a particular data point were factual, it would be impossible to interpret that data point for what it means for our overall business.”

Cook ended his discussion of the issue by summarizing that a “single data point is not a great proxy for what’s going on.” The intent was clearly to defuse the ability of supply chain reports to affect analyst outlooks on the company and subsequently stock price, since the recent outburst of these kinds of stories coming from suppliers are likely a key component of recent stock price volatility.

Apple’s Q1 2013 Breaks iPhone And iPad Sales Records With 47.8M, 22.9M Units Sold Respectively

Screen Shot 2013-01-23 at 2.49.12 PM

Apple just released its earnings report for Q1 2013, ending in December of last year, with a solid hardware quarter overall. The iPhone dominated with 47.8 million units sold in the quarter, up quarterly and yearly, with Apple also breaking records with 22.9 million iPads sold.

The iPhone 5 saw its first full quarter of availability this period, as well as a nice holiday sales boost. Analysts had suggested earlier this month that iPhone 5 production orders had been cut on signs of weak demand.

22.9 million iPads sold is a solid increase from last quarter’s 14 million. It’s also a 33 percent YOY increase, up from 15.4 million last year. The iPad missed predictions last quarter.

Though Apple doesn’t break out specific numbers on various models, it’s fair to assume the iPad mini, which was available for the majority of the period, played a part in the increased sales along with the holiday spike. And let’s not forget, Apple also introduced an upgraded 4th-generation iPad with Lightning port alongside the little guy.

However, the iPad mini has more to make up for, as its gross margin is significantly lower than other products.

Apple sold 47.8 million iPhones over the three-month period, vs. 26.9 million last quarter and 37 million last year. That represents YOY growth of 23 percent.

Analysts believe that the iPhone may have already saturated developed markets like the U.S. and the UK, which are Apple’s strongest regions, which explains the production cuts.

However, Apple is rumored to be developing two versions of the next-gen iPhone, and one is said to be a budget model aimed at developing markets.

In terms of iPods, the new family of colorful iPod products has managed to breathe a little life into a flagging business for Apple. The introduction of the iPhone has most certainly chomped into this segment of the business, but Apple still managed to sell 12.7 million, up from 5.3 million last quarter, representing a YOY loss of 18 percent.

Apple Sells 4.1M Macs In Q1 2013, Down 21% Year Over Year And 16% From Previous Quarter

index_hero

Apple’s Mac sales for its first fiscal quarter of 2013 were not very impressive, despite high holiday appetite among consumers and new models. The company moved 4.1 million Macs in total, including notebooks like the new 13-inch Retina MacBook Pro released last quarter, and all-in-ones like its refreshed iMac line, which also made their first appearance during Apple’s fiscal Q1.

Apple introduced a slew of new Macs during the past quarter, in fact, including brand new 21.5 and 27-inch iMacs with ultra thin new cases, a brand new Mac mini with faster processors and a quad core options, as well as the new 13-inch Retina MacBook Pro, the second in Apple’s line of notebooks with HiDPI displays capable of smooth on-screen graphics rendering that makes digital graphics mostly indistinguishable from high-quality prints. Despite the new hardware, Mac sales dipped year over year after experiencing decent growth last holiday season.

Mac sales missed the previous quarter’s 4.9 million Macs by 800,000 units, or 16 percent, and also fell short of 2011 holiday sales of Apple’s computer hardware by 1.1 million devices, missing last year’s sales by 21 percent. Macs may make up a relatively small portion of Apple’s overall sales, but the numbers this time around show that interest is dwindling fast in traditional computing form factor.

It should be noted that while Apple’s newest Macs were introduced during the quarter, many of them weren’t actually available for most of the reporting period, including the 27-inch iMac, which only began shipping out to customers in mid-December. Still, the 13-inch Retina MacBook Pro and revamped Mac mini were out and out and available around a month into the quarter. Supply issues might be to blame for the low numbers, but it could also be that more users are opting to buy iPads, since iPad sales were up year over year.

Apple also had one less week in this reporting period versus the year ago quarter, with 13 weeks instead of 14, so that could account for some of the variance, but not all. And while unit sales dropped over 20 percent, revenue from those sales took a lesser hit – it declined 16 percent from fiscal Q1 2012.