“Apple’s itsy-bitsy iPad mini is past its prime, having gone from ripe to rotten in the sales department at the hands of an unlikely source: the company’s own iPhone 6 Plus,” Jenn Van Grove reports for TheStreet.
“The super-sized smartphone will cannibalize sales from the compact tablet in 2015, as Apple customers opt for a ‘one-device-fits-all proposition,’ Trefis analysts wrote in a Friday note on the Cupertino, Calif.-based company,” Van Grove reports. “But Apple will still come out on top. ‘The thicker margins on the new iPhone 6 Plus models should more than make up for potentially lost sales of the iPad Mini,’ Trefis concluded.”
“The larger iPhones won’t help Apple’s iPad problem, but they should give Wall Street something better to fixate on. Trefis holds a $120 price target for Apple, representing around a 10% premium over the current share price. Shares of Apple closed down nearly 1% at $109.33 on the first trading day of the new year. ‘We believe the most popular version of the iPhone 6 Plus is likely to be the 64 GB version, which retails at $849 off contract,’ Trefis analysts wrote in the research note,” Van Grove reports. “At that price, Trefis estimates that Apple makes a gross profit of more than $600 per phone. Margins on the iPad mini, meanwhile, are likely closer to $100 per tablet, according to Trefis.”
Read more in the full article here.
Yawn….the sky is falling or something. Stop the press…now that there are more products to choose from, people choose some apple products over other apple products… I got some apple investing advice dude,…buy and hold!
He’s not saying “sky is falling”; he is saying the opposite. Did you read the article, or just the headline?
He does claim (wrongly, like other analysts) that Apple has an iPad problem …
When you have consistent growth in sales for a product year after year since the product’s initial launch and then you have a year-over-year drop in sales, then you have a problem with that product. Sayin otherwise is disingenuous.
If your sales of that product drop because you are selling a newer, higher margin product instead it’s not a problem. To say otherwise is disingenuous.
The article is obviously saying just what you are. The “problem” is obviously not a literal one.
Some of these comments are disingenuous and pedantic.
Predrag, do you also think market share is the be all to be measured by?
iPod sales are down because every apple product contains an iPod. So people buy an iPhone vs an iPod, its still an Apple sale. Also as one poster on the actual article said, an iPad has a 5 year life, then it gets passed on to the next generation. LOL Its not a yearly buy.
We can look at the possible reasons and explanations for this problem (cannibalisation of the iPad mini by the iPhone 6 plus, longer lifecycle for iPad than for phones, market saturation), and some of those reasons are likely quite valid, but the reality remains that after a consistent YoY growth since beginning, there is now a decline. Again, not a slowdown in growth (for example, from 40% per year to just 15% per year); it is an actual decline in sales (fewer were sold this year than last year). It can mean only one of three things:
1. Cannibalisation of the market by the ‘phablet’ iPhone (but this should be rather negligible; it only affects the iPad mini, and even there, it shouldn’t be that significant)
2. Complete saturation of the addressible global market for iPad (i.e. anyone in the world who can afford the iPad and would be interested in getting one already bought one — not quite likely)
3. Effective competition — those who would be in the market for iPad are buying other devices (Samsung, Amazon, Lenovo, Asus…)
To me, it looks like the third one is the most likely, and gives Apple the greatest opportunity to reclaim the share.
Finally, the most important part of the whole picture is market share. Apple shouldn’t care (and it never did) if its market share isn’t growing. The story of iPhone is a perfect example: market share has been dropping worldwide (although it has been coming back in the US), but that doesn’t really concern Apple; their absolute sales numbers for the iPhone continue to grow year-over-year, enlarging their customer base and sustaining motivation for app developers to continue to support the platform. What Apple needs to do for the iPad is to return the numbers back to growth (instead of decline), to ensure that developers remain committed to the screen size (it never looks good when the number of new devices sold is smaller than the year before). With the original iPad soon turning five years old, replacement cycle will soon be kicking in for those, and hopefully, that will help get the numbers back into positive territory.
I love my 6 plus and it prevented me from upgrading my iPad mini. Still I use my mini and it is a great device. Maybe the insane solution for Apple turn the Mini into a oversize iPhone with all the top upgrade at it next update cycle.
Except the 6 plus does not run iPad apps, it runs iphone apps. Hence the differentiation that most seem to forget.
The iPod Classic is dead! Sell your stock. It’s the end for Apple!
eric, you forgot the /s at the end.
Just saying.
It’s in his name. 24601 is the unicode for sarcasm.
It also means he wants to have an asteroid named after him…
https://en.wikipedia.org/wiki/24601_Valjean
Who is #1?
Analysts are called such because they think with their you-know-what. When the iPhone 6 Plus was released, I told myself: “Good! An all-in-one device that will save me the expense of getting an iPad to replace my aging, first generation iTablet.” After seeing and touching the iPad Air 2, I had a change of heart. I still needed an iPad to enjoy iBooks and Oyster (the Netflix for books) as well as Netflix itself. And Plants versus Zombies 2 was a lot more compelling on an iPad. Let’s not even talk about long emails. So I got myself an iPad Air 2 for Christmas, along with Logitech’s Keys-To-Go. Sorry, Microsoft, but I wasn’t stupid enough to get your Surface. If I wanted a laptop, I’d reach for my MacBook Air.
“Surface” – Microsoft’s answer for which there was no question, or need.
Instead of buying a $399 iPad minis, people are buying $749 iPhone 6 pluses. Analysts see a problem that people are opting to give Apple $350 more. I don’t see how this is a problem.
Apple inc. is quite simply and purposefully moving a form factor from the non-contract (iPad) to contract (iPhone) product lines, with these very distinct benefits
1. Telcos are now fully engaged in pushing the iPhone 6 plus
2. Customers get the iPhone 6 Plus on contract and are more likely to upgrade to a newer model after 2 years
Plus, all this nonsense about how Apple inc. missed the so called “phablet” market can now be buried (they simply waited until the time was right for them to deliver the best performance in that form factor), plus it is another example of how Apple inc. is absolutely not afraid to cannibalise itself, before others do!!
I have both he 6 plus and the the Mini Retina and use them both
So what? Apple’s not afraid to cannibalize their own products. And I think these dumb ass analysts are wrong anyway. I’m on my second iPad mini, and I’ve seen a lot of them around Dallas. If Apple decides to kill the iPad mini, so be it. I’ll just buy an iPad Air, or whatever it’s called when I’m ready to buy again. Stories like this are a waste of data.
I’m expecting Apple to surprise to the upside on iPad numbers.
So, for years people have been telling Apple that they need to sell larger phones, now they say it’s a bad move.