After reporting record profits, Apple apologists are rushing to justify iPad’s soft sales. Wayne Rash over at eWeek goes to great lengths, or at least a lot of words on the page, to explain “Why Apple Isn’t Worried About iPad Sales Numbers”
Let me attempt to break down Rash’s reasoning. Rash states in no uncertain terms that analysts do not understand tablet sales. Tablets serve a different use case than cell phones and due to this sale differently. He then goes on to explain this in great detail, even running through his own history of iPad purchases.
Personally, I think this is a case of smoke and mirrors. His initial argument is that the analysts projections were wrong. And then goes to great lengths to explain why tablets would sell less than cellphones. And therein lies the problem. One has nothing to do with the other. And that’s the trick. By the time you get to the end of the lengthy article, his expectation I’m sure, is that he’s convinced you enough that tablets don’t sell as well as phones, that you’ll accept his original statement as proven. But it’s not.
Realistically, of course tablets don’t sell as well as phones. We’re almost to the point that everyone has a phone. And the vast majority of those that have phones, will upgrade as soon as they are eligible. Not as many have tablets. And here’s what the author expects the reader to believe, that he knows that, and we know that, but that the analysts do not know that. A pretty big stretch in logic if you ask me.
The fact of the matter is that Apple missed projections on iPads. For the second consecutive quarter, iPad sales have dropped. In fact, it’s been a 9.2% decline from last year. But in the big picture, does it even matter? iPhone sales were up, and the company posted a record $7.7B in profit. That’s nothing to scoff at. It was an extremely successful quarter for Apple. So why do some see the need to rush to defend? My opinion? Because it shows a weakness that they don’t want us to see.
Let me ramble on and give my own non-professional opinion. Apple sold a lot of iPhones. Record numbers of iPhones. But we also know that there are a lot of iPhones sitting unsold. And we’ve watched as Apple has been very creative in ridding themselves of the iPhones. By offering recycle deals on users old iPhones, trading old for new, they can move unsold iPhones under a different budget, and probably get some sort of credit for recycling. Quickly giving replacement iPhones to those that have bricked their phones trying to update to iOS 7 allows further depletion of unsold stock under perhaps a warranty budget? Allowing T-Mobile users to test drive devices, would easily fall under a warranty budget, provided Apple is footing the bill for these phones rather than T-Mobile, which they may or may not be doing. Why would Apple be going to such an extent to give away these phones in these methods? We BlackBerry users know. We saw what happened with the Z10′s. When you have excessive stock that is not moving, eventually, you must take a markdown on those devices. And when that happens, there is more than a financial loss. There is a loss of confidence.
Now, iPad sales did not meet analysts projections. Did they meet Apple’s? I don’t know. But if Apple manufactured close to what analysts projected, then there should now be a fair amount of stock sitting around hoping for someone to buy them. Can Apple manage to find budgets to give away these devices? I’m sure they can with a company that size. Or maybe, just maybe, they can talk someone else in to giving a new purpose for the iPads. To give people an even greater reason to buy them. To maybe even devote a sales force to sell them? Enter IBM.
Let’s make this clear, these are my own thoughts, based on nothing else than the information I’ve presented here. Do I think Apple is doomed? No. Do I think the next iPhone won’t sell? Not at all, I’m sure there will be lines again. But what I do think, is that unless Apple learned something over the last year, there will be a further gap in what Apple thinks they will do, and what they actually do. And eventually, we shall see the dreaded ‘markdown’ word again, only this time it won’t be about BlackBerry.