Wednesday, January 28, 2015

The Cavalcade of Dumb

Yesterday, Apple announced their financial results from the first quarter in their 2015 fiscal year.  It was good.  They announced a record $18.04 BILLION dollars in PROFIT for the quarter.  That is the most profit for a single quarter than any OTHER COMPANY IN THE WORLD. Ever!  Prior to this, the record was $16.2 billion reported by Russia's Gazprom.  The following are some of the other highlights are:

  • 74.5 million iPhones sold (best quarter ever)
  • 5.5 million Macintosh computers sold
  • App Store revenue up 41%
  • 21.42 million iPads sold

As Tim Cook noted, Apple was selling 34,000 iPhones an hour, twenty-four hours a day for EACH HOUR in the quarter.  Their gross margins were reported to be 39.9%.  The number of iPhones sold represent a 46% increase over the volume sold in the year-ago quarter.  The number of Macintosh computers was up 15% from the year-ago quarter.

But it's not all rosy.  iPad sales continued their downward sales trend - 21.42 million iPads represent an 18% decline from volume in the year ago quarter.  Have a look at the following illustration of iPad sales numbers by quarter since the iPad's release in the third fiscal quarter of 2010.

Disturbing, isn't it? 

Well, that is what some pundits and naysayers want you to believe.  They will insist with absolute conviction that  things are dire for the folks in Cupertino.  They will insist that Apple must take immediate action to address this manufactured "problem" facing the iPad line.  Add a stylus!  Release a "pro" version!  Drop the price! 

They just don't get it.

The iPad Air has a 98% customer satisfaction rating. 82% of all U.S. e-commerce transactions coming from tablets, came from iPads. More than 70% of all table-based web traffic comes from the iPad - according to Chitika. Of the iPads that are sold in the US, 50% go to new iPad buyers. In China over 70% of the iPad purchases are from new customers. According to IBM's review of point of sale data, iOS devices accounts for twice the online traffic and four times the commerce sales relative to Android-based devices.  Apple has sold a staggering 258.61 MILLION iPads.

iPad sales are down 18% from the year ago quarter.  Given that fact, they still delivered 21.42 MILLION iPads into the hands of consumers last quarter.  iPad usage is SIX TIMES that of its nearest competitor!

The iPad is just fine.  Apple's problem, if you can call it that, is exactly as Robert Cringely observed back in May of 2014 - the iPad is just made really, really well.  Apple does not include planned obsolescence in their products.  Apple's paramount concern is releasing the best product in a category.  Because of this, people tend to use their products for longer periods of time.

Half of the people buying iPads in the United States are buying their first iPad.  Since its inception, Apple has sold 258.61 MILLION iPads and the majority of those sales are going to NEW customers.  We do not know the average replacement cycle for iPads, but I would speculate that it is a lot closer to that of the Macintosh than it is to the iPhone.

Since 2002, because of my work as a consultant, my primary computer has been a laptop. On average, I get a new laptop every four years.  When I get a new laptop, the previous machine is used by other members of our family when they don't feel like sitting behind their desktops or when we travel.  Consequently, the useful life of a Macbook for our family is between seven and eight years.  The 17" Intel Core Duo Macbook I bought in 2006 is still actively being used by my father on a daily basis, so that machine is closing in on nine years of utility.

My wife used a 450Mhz G4 as her primary machine at home for about five years when it was replaced with a G5 PowerMac.  The two 1Ghz CPUs in the G5 desktop provided more than enough computing capacity to sustain her for seven years.  There was NOTHING that machine couldn't do!  The only reason we replaced the G5 with a 27" iMac was because the Adobe Creative Suite of products stopped supporting the PowerPC architecture.

I see our family's use of iPads following a similar trend.  I pre-ordered one of the first generation iPads the moment it went on sale in 2010.  When the second generation iPad came out in March of 2011, I ordered one of those because my wife and I discovered that any time one of us wanted to use the iPad, the other person had it.   For me, it seems that the iPad replacement cycle is two years and eight months because that is how long I waited before I got the iPad Air.  However, the second generation iPad is still used in our family on a daily basis so I would submit that it still has some legs.

In my opinion, there is still tremendous upside to the iPad story.  I do not believe Apple ever intended for the iPad to fully replace personal computers.  It will for some, but not for everyone.  What the iPad will do is replace traditional computers for people that only used computers for web surfing and light e-mail use.  Tablets in general and the iPad specifically afford us the opportunity to bring computing into more scenarios where a desktop or laptop computer may have been a cumbersome or awkward fit.

Speaking from personal experience, there is not a day that goes by where I do not use my iPad, iPhone and MacBook Pro.  Each device fills a specific need and purpose.

Still.  In spite all of this, there will be those who forsee a bumpy road ahead for Apple's tablet.  No volume of logic or reason will sway them from their pulpit of doom.  Perhaps someday they will be right.  After all, even a broken clock is right twice a day.


Cringely, Robert . "Apple's iPad Problem." I, Cringely. 19 May 2014. Web. 28 Jan 2015. <>

Kumparak, Greg. "Apple Just Had the Most Profitable Quarter of Any Company Ever". Tech Crunch. 27 Jan 2015. Web. 28 Jan 2015. <>.

"Apple Earnings: 74.5M iPhones Sold, Record-Breaking Profit". GigaOm. 27 Jan 2015. Web. 28 Jan 2015. <>

"Global Apple iPad Sales from 3rd Quarter 2010 to 1st Quarter 2015 (in million units)." Statista. 27 Jan 2015. Web. 28 Jan 2015. <>

"Notes of Interest from Apple's Q1 2015 Conference Call." AppleInsider. 27 Jan 2015. Web. 28 Jan 2015. <>

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