Just when I thought that the lack of poor coverage of Apple’s financial results was going to leave me with nothing to write about, along came Christopher Mims and Ritchie King at Quartz, with their efforts to show that the “Surprise drop in iPad sales shows the market for Apple’s tablet has saturated“.
Tldr; version: It doesn’t.
“Apple sold 5.4 million fewer iPads in its most recent quarter than it did in the same three months a year ago. That’s despite having introduced a whole new iPad, the Mini, in the intervening year.”
The iPad mini was introduced in October, and, as a low-end product, was more likely to be a seasonal (read: Christmas) purchase than its larger sibling. It’s also likely there was a well of pent-up demand for a smaller, cheaper iPad which the release date of the product (Christmas) was designed to tap into.
In other words: Lots of people were waiting for an iPad mini, and, when one was released, promptly bought them.
By comparison, the previous iPad release – the retina iPad – shipped in March 2012. That means the first full quarter of supply for that new, radically improved model, was Q3 2012, the equivalent year-ago quarter to the one they’ve just reported on.
In other words, Q3 2012 was the first full quarter of sales for a radically new and improved product. Q3 2013 was the quarter following a major, lower-cost product introduction and biggest buying season. If you think that’s not going to affect year on year sales, I have a bridge to sell you.
The second factor Mims and King ignore is that Apple is not selling solely into the US: 57% of its sales come from “international” markets. And in those markets, tablet penetration remains significantly lower than the US, and so has more headroom to grow. The UK, for example, has around 19% tablet ownership – half that cited for the US.
Mims and King’s failure to look at the effect of product launches other than the iPad mini lead to them to a false conclusion. The failure to remember that Apple is an international company which sells over half its products abroad is an additional piece of myopia.