iPad Cannibalization of Mac Sales

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    Posted: 06 March 2011 05:21 PM #46

    Drew Bear - 06 March 2011 09:09 PM
    DawnTreader - 06 March 2011 07:26 PM

    While there may be some consumers choosing the Apple iPad over a MacBook Pro, I now suspect the Apple iPad and the retail store traffic it creates may actually boost Mac unit sales over the coming year. The losers are netbook makers and the Apple iPad represents a natural draw from the practical limitations of underpowered portable PCs…I suspect the Apple ipad will provide a net boost to Mac portable sales...

    This may be a twisted way to look at it, but it’s possible that people coming into an Apple Store to buy an iPad may get distracted by the 11” MB Air. Could the Air be “cannibalizing” the iPad?

    College students, for example, still need to do a lot of typing. iPad + BT keyboard isn’t exactly a convenient solution, the MB Air is. It may not offer as much battery life, but I’m willing to bet that most college students already carry a laptop AC adapter in their backpacks.

    That’s a long way of saying I agree the iPad will help boost Mac portable sales. But how do you even begin to estimate the significance of that boost?

    Good points.  But keep in mind we really don’t know why people buy certain products once they are in the store.  Tim Cook is asked about this very subject almost every quarter and his answer “we are not sure, but we do see increased mac sales so there isn’t any canabalization from the iPad”

         
  • Posted: 06 March 2011 06:16 PM #47

    Drew Bear - 06 March 2011 09:09 PM

    That’s a long way of saying I agree the iPad will help boost Mac portable sales. But how do you even begin to estimate the significance of that boost?

    One way is to watch the retail store sales data quarter by quarter and follow the overall unit sales trends. It won’t provide precise results but will provide an indication of cannibalization or a boost to Mac unit sales. I’ll we watching to see if Mac unit sales through the stores increases at a rate greater than overall Mac unit sales. I do know the iPad has been a boon to store foot traffic and sales. Of all of Apple’s major product lines, Mac sales are most impacted by Apple’s direct channel sales (online stores, bricks and mortar stores, etc.).

    [ Edited: 06 March 2011 11:01 PM by DawnTreader ]      
  • Posted: 06 March 2011 11:16 PM #48

    DawnTreader - 06 March 2011 07:26 PM

    I’m bringing this topic back to the top in light of two of my most recent blog posts:

    The Apple Macintosh: Success In The Era of Handheld Devices

    Apple Retail Stores: Mac Sales Centers and More

    In the December quarter portable Mac unit sales rose 37% and at the same time the Apple iPad significantly boosted retail store revenue. While there may be some consumers choosing the Apple iPad over a MacBook Pro, I now suspect the Apple iPad and the retail store traffic it creates may actually boost Mac unit sales over the coming year. The losers are netbook makers and the Apple iPad represents a natural draw from the practical limitations of underpowered portable PCs.

    I’ll have more to say after the March quarter numbers are released, but for now I suspect the Apple ipad will provide a net boost to Mac portable sales rather than a product that on the whole cannibalizes Mac portable unit sales.

    That’s interesting you think the iPad could actually boost Mac sales. How much do you think the iPad is worth to the Mac in new sales?

         
  • Posted: 07 March 2011 12:15 AM #49

    Sparky - 07 March 2011 03:16 AM
    DawnTreader - 06 March 2011 07:26 PM

    I’m bringing this topic back to the top in light of two of my most recent blog posts:

    The Apple Macintosh: Success In The Era of Handheld Devices

    Apple Retail Stores: Mac Sales Centers and More

    In the December quarter portable Mac unit sales rose 37% and at the same time the Apple iPad significantly boosted retail store revenue. While there may be some consumers choosing the Apple iPad over a MacBook Pro, I now suspect the Apple iPad and the retail store traffic it creates may actually boost Mac unit sales over the coming year. The losers are netbook makers and the Apple iPad represents a natural draw from the practical limitations of underpowered portable PCs.

    I’ll have more to say after the March quarter numbers are released, but for now I suspect the Apple ipad will provide a net boost to Mac portable sales rather than a product that on the whole cannibalizes Mac portable unit sales.

    That’s interesting you think the iPad could actually boost Mac sales. How much do you think the iPad is worth to the Mac in new sales?

    Time will tell. I’m really intrigued by the apparent boost to Apple retail store foot traffic and revenue sonic the release of the Apple iPad. Since 50% of Mac buyers at the stores are new to the Mac, the iPad is driving consumer traffic to the stores. I’ll have more data after the March quarter numbers are release. I watching retail store sales and Mac unit sales quite closely for clues.

         
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    Posted: 07 March 2011 04:05 AM #50

    That 50% new-to-Mac-Apple Store customers statistic, assuming it to be accurate (and I see no reason why it isn’t) has been repeated by Oppenheimer in his prepared remarks since…forever, it seems.  Throw in iPad and iPad 2 driving even more foot traffic…the virtuous cycle continues.

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  • Posted: 07 March 2011 12:06 PM #51

    Mav - 07 March 2011 08:05 AM

    That 50% new-to-Mac-Apple Store customers statistic, assuming it to be accurate (and I see no reason why it isn’t) has been repeated by Oppenheimer in his prepared remarks since…forever, it seems.  Throw in iPad and iPad 2 driving even more foot traffic…the virtuous cycle continues.

    The mutual Apple product halo effect appears to quite extraordinary and the iPad may be carrying other Apple products along for the ride. Again, the retail store revenue supports the halo effect claims. I’m looking forward to the March numbers and expect the iPad to boost Mac unit sales in the quarter. It’s the netbook makers that may be taking a big hit.

         
  • Posted: 07 March 2011 01:13 PM #52

    When the iPad was first introduced, the first thing people speculated about was whether it would succeed. The second thing people speculated about was whether it would cannibalize Apple’s other product lines. Many expected the Mac line to take a significant hit. I felt that the Mac line would see some impact but that the iPod Touch line might suffer the severest damage. Wow, was I wrong.

    I remember when it was first revealed that not only was the iPad selling in historic numbers, but that both iPod Touch and Mac sales had significantly INCREASED as well. It was literally a breath taking moment. For the first time I realized that in the iPad, Apple had not just created a a great new product, but, instead, they had created a company changing phenom.

    I don’t want to discount the role of the iPhone. Tim Cook said it was “the mother of all halos.” Maybe so. But in the iPad, Apple has, in Steve Jobs words, “a tiger by the tail”. Both the iPhone and the iPad are doing great things for Apple, the company. But the iPad is ripping the heart out of the competition, as well.

         
  • Posted: 07 March 2011 01:30 PM #53

    FalKirk - 07 March 2011 05:13 PM

    When the iPad was first introduced, the first thing people speculated about was whether it would succeed. The second thing people speculated about was whether it would cannibalize Apple’s other product lines. Many expected the Mac line to take a significant hit. I felt that the Mac line would see some impact but that the iPod Touch line might suffer the severest damage. Wow, was I wrong.

    I remember when it was first revealed that not only was the iPad selling in historic numbers, but that both iPod Touch and Mac sales had significantly INCREASED as well. It was literally a breath taking moment. For the first time I realized that in the iPad, Apple had not just created a a great new product, but, instead, they had created a company changing phenom.

    I don’t want to discount the role of the iPhone. Tim Cook said it was “the mother of all halos.” Maybe so. But in the iPad, Apple has, in Steve Jobs words, “a tiger by the tail”. Both the iPhone and the iPad are doing great things for Apple, the company. But the iPad is ripping the heart out of the competition, as well.

    Totally agree.  The iPad is the product that finally made the light bulb go on for the silent majority.  Up until then they could rationalize that a desktop was a desktop or a laptop from Dell was roughly equivalent to a Macbook.  The difference between an iPhone and a Blackberry was not understood by many at the beginning.  The iPad as a concept was easily grasped and their was nothing like it anywhere but Apple.  Capitulation is taking hold.  It’s a beautiful thing.

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  • Posted: 07 March 2011 01:32 PM #54

    DawnTreader - 24 January 2011 06:22 AM

    This issue was addressed during Tuesday’s conference call with analysts. I’ll be looking for clues over the next few quarters. But something that struck me during my first analysis of the FQ1 revenue results is that all other product segments (other than the Apple iPad) maintained the same combined 40%+ revenue growth in FQ1 that was realized in FY2010.

    This suggests preliminarily that cannibalization of other Apple product sales is quite limited, if it’s occurring at all. Mac unit sales growth in FQ1 was about 23% versus the 31% pace of growth realized in FY2010. However, domestic and global PC sales growth may have slowed as well.

    I’m currently looking closely at the trends in Mac unit sales. In the December quarter Mac ASPs rose sequentially from $1,254 to $1,313, reversing a downward trend. If there is some cannibalization of Mac sales it’s most likely at the low-end of the Mac market.

    Again, there isn’t sufficient data to draw any conclusions and I’ll be watching for clues over the next few quarters. But overall, the iPad appears to be having little to no effect on overall revenue growth when all other revenue sources are combined.

    DT, have you thought of changing the title of this topic to state iPad sales are not cannibalizing other Apple product sales?

         
  • Posted: 07 March 2011 01:33 PM #55

    BillH - 07 March 2011 05:30 PM
    FalKirk - 07 March 2011 05:13 PM

    When the iPad was first introduced, the first thing people speculated about was whether it would succeed. The second thing people speculated about was whether it would cannibalize Apple’s other product lines. Many expected the Mac line to take a significant hit. I felt that the Mac line would see some impact but that the iPod Touch line might suffer the severest damage. Wow, was I wrong.

    I remember when it was first revealed that not only was the iPad selling in historic numbers, but that both iPod Touch and Mac sales had significantly INCREASED as well. It was literally a breath taking moment. For the first time I realized that in the iPad, Apple had not just created a a great new product, but, instead, they had created a company changing phenom.

    I don’t want to discount the role of the iPhone. Tim Cook said it was “the mother of all halos.” Maybe so. But in the iPad, Apple has, in Steve Jobs words, “a tiger by the tail”. Both the iPhone and the iPad are doing great things for Apple, the company. But the iPad is ripping the heart out of the competition, as well.

    Totally agree.  The iPad is the product that finally made the light bulb go on for the silent majority.  Up until then they could rationalize that a desktop was a desktop or a laptop from Dell was roughly equivalent to a Macbook.  The difference between an iPhone and a Blackberry was not understood by many at the beginning.  The iPad as a concept was easily grasped and their was nothing like it anywhere but Apple.  Capitulation is taking hold.  It’s a beautiful thing.

    That’s an interesting point. The iPad is so different people might give it and other Apple products a fresh look.

         
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    Posted: 07 March 2011 02:28 PM #56

    DawnTreader - 07 March 2011 04:06 PM

    The mutual Apple product halo effect appears to [be] quite extraordinary…

    Apple has multiple intersecting halos that create a massive synergy. I think it will be difficult to calculate which halo is responsible for what portion of that synergy. The overall effect is that “cannibalization” of any Apple product is moot.

         
  • Posted: 07 March 2011 02:38 PM #57

    Drew Bear - 07 March 2011 06:28 PM
    DawnTreader - 07 March 2011 04:06 PM

    The mutual Apple product halo effect appears to [be] quite extraordinary…

    Apple has multiple intersecting halos that create a massive synergy. I think it will be difficult to calculate which halo is responsible for what portion of that synergy. The overall effect is that “cannibalization” of any Apple product is moot.

    I’ll leave it to DT to do the analysis. He said he’d have some feedback after the March results. Multiple intersecting halos is a nice way to look at it.

         
  • Posted: 07 March 2011 06:39 PM #58

    BillH - 07 March 2011 05:30 PM

    The iPad is the product that finally made the light bulb go on for the silent majority.  Up until then they could rationalize that a desktop was a desktop or a laptop from Dell was roughly equivalent to a Macbook.  The difference between an iPhone and a Blackberry was not understood by many at the beginning.  The iPad as a concept was easily grasped and their was nothing like it anywhere but Apple.  Capitulation is taking hold.  It’s a beautiful thing.

    A great point. A seriously great point.

         
  • Posted: 07 March 2011 07:37 PM #59

    Sparky - 07 March 2011 06:38 PM
    Drew Bear - 07 March 2011 06:28 PM
    DawnTreader - 07 March 2011 04:06 PM

    The mutual Apple product halo effect appears to [be] quite extraordinary…

    Apple has multiple intersecting halos that create a massive synergy. I think it will be difficult to calculate which halo is responsible for what portion of that synergy. The overall effect is that “cannibalization” of any Apple product is moot.

    I’ll leave it to DT to do the analysis. He said he’d have some feedback after the March results. Multiple intersecting halos is a nice way to look at it.

    I like the imagery as well.  grin

    I’m working hard at the numbers already but I do need the March quarter results.

         
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    Posted: 07 March 2011 07:38 PM #60

    I’d be especially interested in how many iPad owners don’t yet have an iPhone.  It may be a modest number, but iPad + smartphone combo owners who don’t have an iPhone for whatever reason may be reconsidering in droves.

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