People Expecting Long iPad mini Lines Can’t Do Math

| Analysis

Apple released the iPad mini and iPad with Retina Display on Friday, an event that has earned competing narratives, especially in New York City. Lines of people waiting to buy the iPad mini are either "shorter," according to Reuters, or "still impressive," according to The Wall Street Journal.

In both cases, hundreds of people lined up at Apple's flagship store on 5th Ave. in Manhattan, but those lines weren't as long as they've been at prior product launches. There are two main reasons why this shouldn't be a surprise to reporters.

The first is that New York City is dealing with the aftermath of Hurricane Sandy. Subway lines are closed and large swathes of the city are without power. The second reason is even more important, however, and applies to the entire world: iPad mini won't sell anywhere near as many units as iPad with Retina Display or iPhone, the devices that attract the biggest lines.

Bad Math

According to The Wall Street Journal, "The crowds at Apple's main store in New York looked noticeably smaller than for the iPhone 5 launch in September, but still impressive considering how disrupted the city remains following the storm."

Reuters led its coverage with, "The launch of Apple Inc's iPad mini attracted smaller crowds from Sydney to New York on Friday than have been typical for previous Apple product debuts, events marked by people lining up for hours or even days."

The reality, however, is that shorter lines shouldn't be a surprise. The iPad mini, the real star of Friday's product launch, is expected to account for 25-30 percent of Apple's total iPad sales during the quarter, and 12-18 percent of the total number of iPhones Apple will sell.

For instance, Ben Reitzes of Barclays is modelling for 6.5 million iPad minis this quarter. That's 1.5 million more units for the entire quarter than Apple sold of its iPhone 5 in the first three days of availability in September.

Most analysts are estimating iPad mini numbers in the 5-7 million range during the quarter, and Piper Jaffray analyst Gene Munster told his clients on Friday that Apple will sell 1.5 million iPad minis this opening weekend.

That makes the iPad mini the smallest product launch for Apple since the original iPad launched in April of 2010, when Apple sold 500,000 iPads during the first week. That launch event had very long lines, but customers weren't given the option of pre-ordering the iPad for launch-day delivery.

In fact, launch lines have steadily decreased since Apple started offering same day delivery for preorders, even though overall sales of iOS devices have skyrocketed.

From our perspective, that makes the news for this launch event something more along the lines of, "Holy smokes, there are people lining up for the iPad mini!" This is especially so in Manhattan, where subway lines are closed and big swathes of the city are without power.

That perspective requires a bit of critical thought, however, and when long lines are otherwise the norm for Apple product launches, a kneejerk response isn't all that surprising. It also fits conveniently with the meme that Apple priced the iPad too expensively when compared to Amazon's Kindle Fire HD and Google Nexus 7—See? There are no lines, it's too expensive.

On Thursday, we covered a research note from Shaw Wu in which he argued that customers won't be paying attention to the tech echo chamber's complaints about the iPad mini, an analysis we believe is spot on.

The tablet market remains the iPad market, and the fact that Amazon and Google have to sell their devices at or near cost to compete is the proof of Apple's leadership in tablets. Smaller lines for the iPad mini precisely match the reality that this device will represent a smaller percentage of Apple's iPad sales.

Image courtesy of Shutterstock.

Comments

ibuck

I’m eager to see Apple release iPad sales figures for this weekend, including online orders. AAPL could use a boost.

Bosco (Brad Hutchings)

The big advantage of lining up for an Apple product is that if you bring your SAG card, you might end up in a Samsung commercial watching two cool dudes do something kinky with their phones.

Eolake Stobblehouse

Hi Bry,

Why so certain it will sell less than the iPad big?
It might, but I’m far from sure. For one thing it’s cheaper. For another thing, many people, including often me, feel that the one weakness of the iPad is weight, and sometimes size. The Mini knocks the weight in half. It might even be the idea “Goldielocks” iPad.  I’m much looking forward to getting mine.

Bryan Chaffin

Hey Eolake, good to hear from you. smile

My bias is with the larger form factor, and thus when I see every analyst estimating iPad mini numbers that are 25-30% of their total iPad numbers, it sits well with me.

Some of those estimates are based on supply chain orders, so even if the smaller form factor was more desirable, this quarter’s ratio is probably already set.

Lastly, there are the lines themselves. They are very much in keeping with the projected quarterly numbers.

eolake

I really want the smaller one also. For shorter trips out.

Admittedly I also really want a 15-inch model. For art books, comics, etc etc. Heck even for watching movies.
That one of course will generally demand a stand.
(I already use a stand for the iPad 3, a “Flote”, it’s wonderful.)

Paul Goodwin

I can’t wait to pick one up and try it. My iPad 2 has become an appendage to my body though. I can’t see replacing it. And I can’t see owning both. But the light weight and size are intriguing. Plus my I-don’t-have-it techno envy is howling. It looks lie a pretty incredible little device.

It will be interesting to see what the % of Apple’s tablets the mini will be. It’ll be interesting to see if it affects the iPod Touch sales (only $30 less).

Lee Dronick

I just returned home from the Apple Store where I had a chance to play with the iPad Mini. I had my doubts about its form factor, but after messing around it I find that it is very nice. The size is great for thumb typing and it feels very light it in the hand. Not to mention the excellent display. I will probably get the wife one for Christmas. For myself I am still happy with my iPad original recipe.

Sidebar - I tried posting this from the Apple Store’s iPad mini, but couldn’t get past the captcha. It might have been a cookie setting, but since there was quite a number of people wanting to try the iPad Mini I decided to wait.

Sidebar 2 - That woman in the graphic Bryan used is kind of how I imagine what Siri looks like.

Tom

The other factor being forgotten is that Friday’s release was only the Wi-Fi version of the iPad Mini. On November 16, when the cellular version is released, we will see more - and possibly longer - lines at Apple stores. It stands to reason that many of the people interested in the portability of the smaller device will be desiring greater connectivity on the go and don’t want to be tethered down by Wi-Fi hotspots.

John Martellaro

Looking at Bryan’s choice of teaser graphics, I am reminded of the programmer’s axiom that 1 + 1 = 3 for large values of 1 and small values of 3.

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