iPad Sales are Down, but it’s Still the Place to Sell Apps

| Analysis

iPhone sales are up, iPad sales are down, and everyone is buying at the App Store. Apple brought in US$4.3 billion from iTunes sales during its third fiscal quarter, topping the $4.1 billion its retail stores brought in, and showing that despite what nay sayers may spout about Apple losing its luster, it's still the go-to place for music downloads and mobile apps.

iPad sales are strong, but down. Developers still get to sell lots of apps.iPad sales are strong, but down. Developers still get to sell lots of apps.

According to Apple CFO Peter Oppenheimer, Apple saw its best single month and week ever for App Store sales during the company's third fiscal quarter. So far, Apple has paid out over $11 billion to developers for app sales.

App Store downloads cleared 50 billion in May, and while the company didn't offer up any new figures during its Q3 conference call on Tuesday, it's a safe bet that sales are still going strong. With the momentum Apple has in App Store sales, it isn't likely they would see a dramatic drop off that quickly even if consumers were buying less.

The company's quarterly revenue came in at the high end of its guidance with $35.3 billion in revenue and $6.9 billion in earnings. Earnings per share were $7.47, beating Wall Street's $7.30 estimate.

Quarterly iPhone sales were 31.2 million units, which was a June quarter record as well as a year-over-year increase. iPad sales, however, were down year-over-year from 17 million units to 14.6 million.

The lower iPad sales figure could be an indication that shoppers are losing interest in Apple's multimedia tablet, or it could be an indicator of something else such as consumers holding out for the next iPad refresh, an overall weaker tablet market, or competition heating up from Android tablet makers.

Assuming Android tablets are giving the iPad a run for its money, the real cash for developers is still in Apple's iOS camp. Consumers are still more likely to buy iOS apps and the revenue developers can make from Apple's App Store outshines what they get through the various Android app stores.

The iPad is only a few years old, so it's hard to make long term projections, especially considering how new and volatile the tablet market is. That said, the iPad has consistently proven to be the go-to choice for tablet shopping consumers, and it also has a shared track record with the iPhone: iOS users buy apps. Those app purchases translate into dollars for developers -- some more than others -- and that's a strong draw, regardless of whether or not last quarter's device sales were up or down.

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Comments

Lee Dronick

The lower iPad sales figure could be an indication that shoppers are losing interest in Apple’s multimedia tablet, or it could be an indicator of something else such as consumers holding out for the next iPad refresh

I suspect the later

ibuck

Rumors about new iPads have kept me from buying one, as I was about to purchase an iPad Mini (once I decided between 16GB or 32GB) last month. Probably not alone.

skipaq

I am one customer waiting for the new iPad.

akcarver

I am hoping that someone who is going to upgrade to the new iPad when it finally comes out will freecycle their old one my way.

Rogifan 1

Last year’s June quarter included the new retina iPad.  This year calendar Q1 most likely included a lot of 4th gen iPad and iPad mini sales.  Also, Tim Cook mentioned there was a lot more channel inventory last year than this year.  That indicates Apple is drawing down inventory because a new iPad is coming soon.  If you factor out channel inventory iPad sales decline was only 3%. Not bad considering no product refresh and a lot of people probably holding out for a 5th gen iPad with the mini form factor and/or a retina mini.

Lee Dronick

Same here Skipaq, sort of. My wife wants an iPad, but is fine with waiting for the next model. My iPad II is still serving my needs.

paikinho

Our kids iPad 2 is still more than enough for us for the most part. But it might be nice to have a next generation mini or full iPad and migrate the iPad 2 to the kitchen for full time kitchen duty.

The kids really prefer the size of a regular ipad since they seem to like to huddle around it for movies as well as educational games.
I suppose we will have to let them try the next ones coming out this fall.

geoduck

I’m waiting too. I’m looking forward to the big iPad with mini proportions, narrow sides etc.
Fall quarter will be huge for Apple.

iJack

Crap! I just bought a new iPad mini, fully loaded.

vpndev

The lowered iPad sales are just because the comparison is against the quarter last year when the Retina iPad was introduced. That pushed up last year’s numbers a lot.

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