“In a recent Seeking Alpha article an author argued that the iPhone 6 from Apple, which will have two screen size options (4.7″ and 5.5″), both larger than the current iPhone, will cannibalize iPad sales by as much as 60%,” Kevin Greenhalgh writes for Seeking Alpha. “This conclusion seems badly overblown.”
“My biggest problem with the previous article is that the author argues that 50% of large iPhone 6 sales will result in the loss of an iPad sale. This is very off base,” Greenhalgh writes. “Apple sold 35.3 million iPhones and 15.3 million iPads in the quarter ending in June 2014. In percentages this means it sold 43.3% as many iPads as iPhones. Assuming every consumer who buys an iPad also buys an iPhone (which is not the case), only 43.3% of iPhone sales are eligible to result in the cannibalization of an iPad sale. Therefore it is obviously impossible for 50% of large iPhone sales to result in a cannibalized iPad sale.”
“Besides being mathematically impossible, there also is significant evidence that sales of larger phones do not cannibalize tablet sales,” Greenhalgh writes. “That’s not to say that any cannibalization is impossible. There will be consumers who buy a 5.5″ iPhone and decide they don’t need that 7.9″ iPad mini they would have bought. However I believe this scenario will account for a majority of cannibalized sales. A 4.7″ phone and an 8″ or 10″ tablet offer dramatically different experiences, as do 5.5″ phones and 10″ tablets. The only area I expect the experience to be similar enough to cause any meaningful crossover would be between the 5.5″ iPhone and the 8″ iPad mini.”
Read more in the full article here.