iPad luring in new users: over 2/3 of Apple's iPad buyers were new to iPad

Over two thirds of people registering an iPad in the last six months were new to iPad, while over half of those registering iPhone were new to iPhone, Tim Cook revealed, highlighting the attraction and loyalty effects Apple is observing in its products.

Cook noted, "Our strong March quarter results bring us to total revenues of over $103 billion for the first six months of the [fiscal] year and earnings per share growth close to double-digits. We estimate that over the last six months, we've added over 60 million new registered users of our four product categories.

"Additionally, over two-thirds of people registering an iPad in the last six months were new to iPad, while over half of the people registering iPhones were new to iPhone," Cook stated.

The Halo Effect and iTunes

"It's wonderful to add tens of millions of first time Apple product users," Cook said, "especially considering the strong halo effect seen over and over again in our history. Customers who have a great experience with their first Apple product often become loyal and happy owners of multiple Apple products over time."

In addition to the "halo effect" cast by attention getting hardware products that drive traffic into Apple's retail stores, there's also an iTunes ecosystem effect that drives loyalty among Apple's customers.

Cook drew attention to the "staggering" figure of Apple's nearly 800 million iTunes accounts, most of which are tied to the customer's credit card for friction free buying.

Apple's corporate controller Luca Maestri noted that Apple's App Store revenue reached $2.6 billion, growing 9 percent year over year. Maestri also cited statistics from App Annie, noting that Apple's App Store generated 85% more revenue globally than Google Play during the quarter, despite the idea that Android devices now make up 80 percent of the volume of products fitting the definition of "smartphone."

Among enterprise clients, Apple is seeing not only strong hardware sales of iPads and iPhones to replace what Maestri called "legacy devices and systems," but also an expansion of custom app development to "drive innovation at their companies," a move that ensures those companies will continue to buy iPads rather than generic tablets that might be cheaper up front.

Maestri said Deutche Bank now has nearly 20,000 iPhones on its network, and has created 40 internal iOS apps to "expand the capabilities of its mobile workforce." Siemens has 30,000 iPhones in use, and has built 15 apps "for field service teams, sales associates and corporate executives for solutions that are only possible with iOS and iPhone. We are really happy with the continued growth and strength of the Apple ecosystem "only possible with iOS and iPhone," he noted.

"iPad continues to lead all other tablets by far in terms of user engagement, software ecosystem, customer satisfaction and e-commerce," Maestri noted, pointing out statistics from Chitika noting that U.S. iPad users drive nearly four times the web traffic of all Android tablets combined, while Changewave cited a 98% satisfaction rate for both Apple's new iPad Air and the iPad mini with Retina Display.

Proprietary Enterprise Apps driving iPad sales

Two thirds of buyers who expect to buy a tablet within 90s plan to buy an iPad, Maestri stated, adding, "iPad continues to allow companies around the world to reimagine the way they use technology to drive efficiency and improve employee satisfaction. "Eli Lilly has deployed over 20,000 iPads and 50 internal apps as part of a laptop replacement program that dramatically increased the productivity and capabilities of its employees" - Apple's Luca Maestri

"Thousands of iPads are used at FedEx everyday. In an industry where efficiency is critical, FedEx pilots and maintenance crews around the world use iPad to transform operational processes and save the company millions of dollars."

Maestri also noted that, "Eli Lilly has deployed over 20,000 iPads and 50 internal apps as part of a laptop replacement program that dramatically increased the productivity and capabilities of its employees."

Additionally, "The U.S. Department of Veterans Affairs is on its way to deploying iPads to 11,000 providers to transform the way doctors and patients interact. As part of this initiative, a suite of applications is being developed to allow quick access to real-time secure medical information.

"In education, according to the latest data published by IDC, iPad has over 95% share of the U.S. education tablet market as teachers and students increasingly benefit from the growing range of engaging iBooks, textbooks and solutions that are helping to transform the education experience."

Missed expectations

Cook preceded his comments with an introduction that described Apple's March quarter performance as setting a new record for a non-holiday quarter, noting that the company surpassed internal expectations despite challenging "currency headwinds" in Japan and other countries. He specifically noted that Apple's iPad sales came in at the "high end of the company's expectations." "We continue to believe that the tablet market will surpass the PC market in size within the next few years and we believe that Apple will be a major beneficiary of this trend" - Tim Cook

Maestri also addressed analysts' potential concerns about iPad having "missed" expectations by noting that sell through had improved over the year ago quarter, while inventory levels were more slowly replenished, creating a temporarily reduction in inventory at the end of the quarter.

Overall, analysts had expected Apple to sell 19 million iPads in the quarter, based on educated guesswork that involves "channel checks" and other efforts to model an idea of how many devices customers are buying.

Cook reiterated, "we continue to believe that the tablet market will surpass the PC market in size within the next few years and we believe that Apple will be a major beneficiary of this trend."