Apple iPad demand: What's the real story?
After reports of weak iPhone demand, now we're hearing about weak demand for the tech giant's tablet.
As we head into the most important earnings release Apple (AAPL) has ever had, demand concerns are popping up left and right.
First, there were worries about the iPhone, now we're hearing about iPad concerns. What's the real story?
Reuters has a report that Sharp has cut output for iPad screens, suggesting that demand is slowing for the full tablet, shifting to the iPad Mini.
This isn't anything new. Wall Street has been expecting that iPad Mini sales would cut into the 9.7-inch iPad tablet sales since the product was announced in October. Investors must also bear in mind that Apple has multiple parts suppliers for screens, including LG.
Concerns over rivals overtaking the iPad appear to be speculative at best, with companies like Google (GOOG) and Amazon (AMZN) having limited success with their tablet offerings. Only Samsung has managed to grab significant market share, but Apple still holds a dominant portion of the market, with 53.8% according to IDC.
It's become "cool" to hate Apple now. "I can't believe liking Apple is now contrarian," said a hedge fund analyst, who declined to be named. The analyst, who has a position in the company, has been buying shares on the way down as Apple hit its all-time high in September, only to retreat below the $500 level earlier this week.
The iPad Mini has proved a hit, with Apple announcing it sold over 3 million fourth-gen iPads and iPad Minis the first week both tablets were available. A look at Apple's website shows the iPad Mini is still on backorder, with consumers having to wait a week for the various models.
While demand has never been an issue, margins are another story. Most analysts believe that the iPad Mini has lower gross margins than the full iPad, and that's causing some concern. JPMorgan analyst Mark Moskowitz believes that the iPad Mini "appears to be grabbing a bigger part of the mix" in terms of the overall market. He expects iPad ASPs (average selling prices) to come down as a result.
However, there is a ray of hope. Moskowitz believes the iPad Mini actually has better margins than the iPad. "The silver lining here is that our research indicates that gross margin on the iPad Mini could be better than the larger iPad, which is partly why our consolidated gross margin assumptions are improving for the Dec-Q and out quarters," Moskowitz wrote in a note. He rates Apple "overweight."
Demand for the iPad and iPad Mini is not shifting to other companies, it's shifting between Apple products. CEO Tim Cook has repeatedly said Apple doesn't worry about cannibalizing its own offerings. "...[S]o we've learned over the years not to worry about cannibalization of our own products, it's much better for us to do that than somebody else to do it...," Cook said on Apple's fourth-quarter earnings call. He noted that there are still over 300 million PCs being bought each year, and that Apple would rather eat into that market than worry about cannibalizing itself.
Demand for the iPad isn't slowing down. If anything, it appears to be heating up, as consumers realize the benefits of the iPad Mini. Now, if only Apple could keep them in stock.
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Here's my take on this,,,, sorry for being so long.
I've been a MSFT devotee for 24 years now, even had a MSN online a/c at one time. I knew windows like the back of my hand and found it ergonomic and intuitive. To me it was a no brainer. I knew how to navigate through their programs with ease. Went from XP (skipped Vista, bad reviews) to windows 7 and was not very happy. 7 changed the way things used to be. Instead of improving windows I felt like they were going backwards in many ways. What used to be an easy task like e mailing and printing now required different ways to do it . Right clicks no longer allowed you to e mail web pages and documents, "send to" no longer worked. I could not believe that "send to e mail" is grayed in windows 7 and 8. BTW windows 8 is ridiculous. It's actually 2 separate operating systems in one, the original windows "Desktop" & the new "Metro". I have it on my new PC and it took 3 weeks for me to get it to run smoothly. If you don't set up a MSFT a/c your PC will never run right. There are many buggy things in it and you have to learn how to re- set many settings to smooth it out. In the end the desktop is all I need and use. For me Metro is slow and totally useless on a PC. It's so aggravating when you are on the desktop and it switches to Metro for picture view and then you have to go through many clicks to get back to desktop again. I also looked at surface and the windows phone and was totally unimpressed.
Now to my phone,,,,I have a Motorola droid X 2 years now I'm getting tired of it often freezing and needing restarting. They seem to have a planned obsolescent built into their phones.
Where am I going with this,,,,,
I am really contemplating Apple for my next purchase. I'll need an I Mac, laptop, I pad mini and I phone. It seems to me that apple products are more stable, reliable and easier to use. Windows 7 and 8 seem to be MSFT's way of trying to emulate the Apple thing but not in a very good way. They've changed things to be more MAC like but they are going in the wrong direction. If they had just refined XP and made it more stable Microsoft would have hit a home run, instead they messed it up totally with windows 8. Things that were easy for me to do on windows no longer exist and now involve convoluted paths for me to do. I don't want to have to re-learn what I have been doing in windows for the past 24 years.
So in conclusion, I no longer have the 24 year allegiance and love I had for Windows. Metro is of no use for me. I kind of feel betrayed by Microsoft. I've discussed this with many other "old timers" and they also feel the same way. I also observed that most of the younger generation are using Apple products. Unfortunately, Microsoft has lost it's way and I believe in the end will eventually lose to them.
Not really sure Jobs, "was a motivator of innovations", way too many came before him; So as to have laid the "groundwork" in technology that could be tweaked to have differnt appearances and applications for a fickle mind...More or less buying something you don't really need, OR will only use 50-75% of a that product's capability.
I would more liken Jobs to a "snake-oil salesman" peddling his elixir/wares to a Generation and fringe generations that feel they are entitled to the latest and greatest....And needing more then the Jones;
Not just keeping up with them....He knew his audiences and buyers well and played/plays on their weaknesses....The Gotta Haves
A "Marketeer Extraordinaire" that had risen to the top of the food chain of snake oil salesmen.
And having a base of buyers, that possess ignorance and arrogance as a mindset.
PT Barnum made a great observance of this group decades ago.
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