iPad sales narrowly beat expectations as Tim Cook targets "negative commentary," says market isn't saturated

iPads beat expectations, didn't beat 2013

In the September quarter, Apple sold 12.3M iPads, versus 14.1M in the year ago quarter. While lower than last year, iPad sales were slightly above Wall Street's expectations.Apple continues to sell more iPads each month than the combined tablet sales of the rest of the top five tablet vendors, globally: Samsung, Asus, Lenovo and Acer

Addressing iPad sales in response to an analyst's question, Cook stated, "I know that there's a lot of negative commentary in the market but I have a little different perspective on it.

"Instead of looking at it every 90 days, if you back up and look at it, we've sold 237 million in just over four years. That's about twice the number of iPhones we sold in the first four years.

"If you look at the last 12 months of iPad, we sold 68 million, and in 2013 we sold 71 million. We're down, but we're down 4 percent on the sell in [to inventory channels], and the sell through [to end buyers] was a bit better than the negative 4 because we took down channel inventory some."

Cook added, "I view it as a speed bump, not a huge issue. That said, we want to grow. We don't like to see negative numbers."

Apple continues to sell more iPads each month than the combined tablet sales of the rest of the top five tablet vendors, globally: Samsung, Asus, Lenovo and Acer, despite the fact that Samsung has long been liberally giving away its tablets while others in the tablet industry (notably Amazon, Google/Motorola and Microsoft) have actively lost lots of money in their tablet experiments— without selling enough devices to even appear in IDC's top five quarterly vendors (Asus brings up the rear among the top five, with shipments of just 1 million units per quarter).

Market for iPad not reaching saturation

"We don't see that [the market is saturated]" Cook said, adding "If you look at our top six revenue countries, in the country that sold the lowest percentage of iPads to customers that had never bought an iPad before, that number is 50 percent, and the range goes from 50 to over 70.

"That's not a saturated market," Cook stated. "Because we've only been in this business four years, we don't really know what the upgrade cycle will be for people.

"Over the long arc of time, my own judgement is that iPad has a great future. How the individual 90 day clicks work out, I don't know. But I'm very bullish on where we can take iPad over time.

"So we're continuing to invest in the product pipeline, we're continuing to invest in distribution. If you look at how we did in emerging markets, like BRIC countries [Brazil, Russia, India and China] as an example, we were up 20 percent for the full year. So these numbers are impressive."

Apple's chief financial officer Luca Maestri separately noted the September quarter's iPad sales "included a 500,000 unit reduction channel inventory prior to the introduction of new iPads this month," indicating that Apple sold a million fewer iPads but a million more Macs compared to last year."We experienced very strong results in Japan, where iPad sales were up 46 percent year over year" - Apple CFO Luca Maestri

That's an idea Cook also alluded to in acknowledging that there is some apparent cannibalization between both iPads and Macs, and between iPad and iPhones, as users decide which products they want to buy.

"iPad sales were consistent with our expectations," Maestri stated, noting in particular that Apple "experienced very strong results in Japan, where iPad sales were up 46 percent year over year."

Maestri also cited research by ChangeWave indicating both a 100 customer satisfaction rate for Retina iPad mini, and that 55 percent of consumers who plan to buy a tablet in the next 90 days said they planned to buy an iPad. That's a rate more than twice as high as the iPad's global tablet "market share" figures created by IDC.