Apple sells 3 million iPads: So what?
Record weekend sales obscure the company's larger issues. The tablet simply isn't the undisputed steamroller that Apple is used to.
The backs of Apple (AAPL) employees must look sunburned after the company spent Monday patting them for selling 3 million iPads this weekend. But what does that number really mean?
In Apple's world, sales numbers often swirl into a cider that looks impressive and smells just fine, but mellows after a bit of fermentation. Right now, 3 million sales of Apple's new iPad Mini and its updated full-sized model look brag-worthy."Customers around the world love the new iPad mini and fourth-generation iPad," CEO Tim Cook crowed in an Apple statement. "We set a launch weekend record and practically sold out of iPad minis."
Those 3 million iPads are more than double the record 1.5 million iPads the company sold during a similar span in March after releasing its third-generation iPad. They are also more than 20% of the 14 million iPads Apple sold last quarter and more than half of the 5 million iPads Apple sold in 2010 after the first version of the device debuted in April of that year.
The iPad's story, however, is no longer strictly about sales, but about the context of those sales.
The 14 million iPads Apple sold in its final quarter were an 18% drop from the quarter before as fans put off purchases until the company released its next big thing. Even though the company still sold 26% more iPads than it did the year before, the combination of lost sales and the increased overhead of iPad Mini production led Apple to miss earnings estimates and dial back its forecast for holiday sales in the first quarter.
Part of the problem is that the iPad isn't the undisputed steamroller Apple grew accustomed to with the iPod and iPhone. The iPad held about half of the overall tablet market in the third quarter, according to IDC, and doubled the share of second-place Samsung. However, Samsung partner Google (GOOG), Amazon (AMZN) and others have produced low-priced, highly acclaimed competitors in recent months and have gnawed away roughly 10 percentage points of Apple's tablet market share in the last year. While the iPad more than quadrupled unit sales between fiscal 2010 and 2011, sales in fiscal 2012 grew only 59% by comparison.
The other issue is that Apple is now staking the iPad's success to a product that brings in less per unit than the original-recipe iPad. The latest Retina-display iPad starts at $499, while the Mini is only a third smaller while knocking $170 off the price. Consumers may love what the smaller iPad does to their wallet, but it comes at a cost to Apple's margins.
If Apple fans and investors remain confident about the iPad in the comment fields, they're somewhat less so on the market floor. Apple's share price has more than tripled in the last two years and is still up by more than 40% this year, but dropped by $100 between April and May and has fallen more than 17% since the iPhone 5 was released in September.
Apple had a good weekend, but the iPad still has a whole lot of work ahead before the holidays.
More from Top Stocks
This article is highly ignorant.
For example, just because an ipad mini costs less than an ipad, does NOT mean it costs Apple's margins. What matters is how much the profit is on each of those. IMO, with its cheaper components and still high cost, the ipad mini probably has a very high profit margin. The author makes the opposite case without specifying any facts.
"Wait til Windows 8 tablet gets in full swing with the bugs worked out. The Ipad will be a thing of the past. Gone with the wind. Windows 8 RT ect is a full OS almost capable Tablet that can do a 100 more things than a Ipad could even imagine.. Apple will have to put a almost full version like Mac Osx like system to continue to be in competition with the others"
Didnt we hear this with every iteration from Microsoft? The Zune was going to kill the Ipod. The WIndows Phone 7 was going to kill the iphone. Hell they said that about MacOS and its still going strong. Should Apple rest on its laurels? No. WIll it become a thing of the past? Doubtful. There is still the 'wow" factor with owning an ipad or iphone and I don't think that will go away any time soon.
apple is holding back on upgrade performance to keep selling the latest technology as one little peice of cheese at a time. right now apple is laughing all the way to the bank holding on to a niche market of geeks and the glutans that have to have what they don't need.
the catch up suppliers will make strides toward what business really needs at more attractive price. sooner or later the consumer market will buy what they need. by that time apple will have poured out lots of iiiiiiiissssss with the little pieces of cheese attached.
What's going to hurt apple the most? when all competitors combined have sold more product that population mostly because apple flooded the market iiiiiiissss but demand will be for more than a little peice of cheese
Copyright © 2014 Microsoft. All rights reserved.
The company complains after the son of Florida State's football coach is televised wearing -- gasp -- Under Armour.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.