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.
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.
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