Tim Cook remains very confident about iPad

Apple CEO Tim Cook spoke about iPad during the company’s conference call with analysts to discuss fiscal second quarter 2105 earnings. Regarding the iPad business, Cook said:

Have we had cannibalization? The answer is yes. We’re clearly seeing cannibalization from iPhone and on the other side, from the Mac. And of course, as I’ve said before, we’ve never worried about that. It is what it is. That will play out, and at some point, it will stabilize. I’m not sure precisely when, but I’m pretty confident that it will.

The IBM partnership, I think, is in its early stages in terms of bearing fruit here, but everything I see I like on it. I’m a big believer in the ability for iPad to play in a major way in enterprise. And so I’m looking forward to seeing that play out as we move forward.

If you look at the underlying data, it makes you feel a lot better than the sales do. And so things like first time buyer rates, the latest numbers from the U.S. are somewhere around 40%. And if you look at China, they’re almost 70%. And so these numbers are not numbers that you would get if the market were saturated. And so I continue to believe, even though I’ve seen people write that, that I think that theory is not correct, and do not see that.

We also see usage numbers that are off the charts, so far above competition it’s not even in the same planet. And we see customer satisfaction at or near 100%. And so these kind of numbers, along with intent to buy numbers, everything looks fantastic, the ecommerce numbers.

And so my belief is that as the inventory plays out, as we make some continued investments in our product pipeline, which we’re doing, that we already have planned and have had planned for some time, between that, the inventory playing out, the enterprise starting to take over, I think still I believe the iPad is an extremely good business over the long term. When precisely it begins to grow again I wouldn’t want to predict, but I strongly believe that it will.

The full transcript of Apple’s Q215 conference call via Seeking Alpha is here.

MacDailyNews Take: The iPad got off the a very fast start and they are very, very well made. They last a long time which is great news for users, but demands patience from investors, pundits, and Apple themselves. Bringing Force Touch to iOS and iPad, along with a larger “iPad Pro,” would go a long way to jolting the iPad, both in terms of new buyers and the upgrade cycle.

unit sales since launch, iPad, iPhone, iPod
(graphic: Quartz)


    1. I believe they’re displaying devices sold in the first X months since that device was launched (Apple has sold many more iPhones in the period after the first 57 months of iPhone availability).

  1. My niece has been using an iPad 1 since she was 1 year old. She’s still using it today and she’s 5. Those things just don’t break. They’re built like tanks and even the first gen model is still enormously useful.

    That’s maybe the real underlying problem here. They never break, and they never stop being useful.

  2. With the Apple Watch, larger iPhones, and Macs I think people will find it hard to justify owning all of them – or at the very least upgrading all of them so often. Personally my usage of my iPad is almost nil now because my iPhone suits me perfectly when away from my Mac. I can’t do without a phone or a Mac, so the iPad doesn’t offer me enough that is unique that justifies me upgrading. It’s a great product, but I think it’s just being squeezed by other great products. Hardly a terrible problem for Apple to have.

      1. Same. My iPad 3 has been in the closet since I got my iPhone 6 Plus. I want to simplify my life and having one less device to deal with eliminates some hassle.

        But my mom, who is a retired senior citizen, uses her iPad 4 (the last model before the Air came out) as her only computer with its LTE connection as her only internet. She literally hasn’t touched her desktop computer even once since she got her first iPad in 2010. iPad will always be indispensable for senior citizens who think the iPhone 6 Plus screen is too small and desktops/laptops are too confusing, as well as for families with children that are too young to have their own phones. In the longer term, iPad will become indispensable business equipment thanks to the IBM partnership and the industry-specific apps it’s creating. A larger screen model with Force Touch will bring iPad to new levels of productive capability.

    1. I think that you nailed it., mxnt41. Combine that with the longer consumer refresh cycle and iPad sales settle out in the 10M to 12M range on average, except during a major upgrade/refresh period.

      I do not have an iPhone and I use my iPad 3 a lot. My wife used to, but she now splits time between my son’s iPad Air 2 and the family MacBook Air. Both are highly portable and have good battery life.

      Pretty much any company in the world would be delighted to have Apple’s iPad business. i do not know why some people are always seeking ways to be disappointed in something.

  3. I agree with MDN’s take. We purchased a couple of first generation iPads, used them a couple of years, and passed them on to extended family members, where they remain in use today. These were replaced with an iPad Air and an iPad mini over a year ago, and continue in use today, as well. I’m not sure when we’ll upgrade them. There’s little need, and ours are running the latest version of iOS, so we’re not missing much from last fall’s releases.

    I think our experience is probably typical. Apple built a quality, durable device, not a disposable item that must be replaced on a regular cycle. They don’t break down on their own very often, and none of ours at all.

    I’m sure we’ll replace them eventually. I use my Air probably four hours a day. When they add some new features down the road, as perhaps haptic feedback or Force Touch, or whatever, that, and my aging iPad Air may encourage me to go for something newer. The addition of Touch ID was nice, but not enough. That’s critical on my iPhone 6; on my I
    Pad, less so.

    So, that’s it in a nutshell. The ~300 million iPads Apple has sold are probably mostly still in use, lying around on a coffee table or kitchen counter for use around the house, with no need for upgrading. They work just fine. When they wear out, or something newer comes along that appears to be must-have in comparison, they’ll get replaced. No need until then.

    The open question then becomes finding new uses for it that could expand its customer base. The IBM deal may drive some new sales, we’ll see. But, my interest in the iPad hasn’t waned at all. We may just be nearing saturation in the current market. I expect the iPad to have a long future as it settles into just being another reliable product in Apple’s lineup.

  4. Apple’s iPad revenue alone is still one quarter of the entirety of Microsoft’s revenue as of Q2 2015. That’s amazing. Add up everything Microsoft has going for it: Windows, Office, Server, Phone, Surface, Bing, Xbox…and iPad alone is 25% of that.

    iPad is an enormously successful business and 13 million units sold in just 3 months is still astonishing. The IBM partnership will bring the enterprise sales in time.

  5. Wall Street is not going to pay attention to Tim Cook’s explanation about the iPad. All they’re going to do is focus on declining iPad sales. If Apple does 9 things right out of 10, Wall Street is going to focus on the 1 thing they’re not satisfied with. I can’t believe that any company can sell every product equally. I think most companies would be satisfied with 5 out of 10 products selling well.

    I do believe eventually iPad sales will stabilize and then improve. I think Apple just has to find the right apps to make consumers want to upgrade. I believe it will happen next year, but even if it doesn’t, so what.

  6. Last weekend, I had a rehearsal with my old band. Six people there; six iPhones (5, 5s, 6), four iPads (for reading music scores, as well as for controlling the digital mixer), two MacBook Pros (both for MainStage). Needless to say, no Android / Win devices in sight.

  7. I took that Cook quote in two ways:

    1) Cook is looking to businesses to energize iPad sales in the future and IBM is too slow for him. Step on it IBM, get with the plan. I’d say more then half could do what they do in the Office with an iPad. Another one third could do what they do with a Macbook Air and a large monitor.

    2) And, agreeing with MDN on this one, the “renewal time” for iPads is longer then you might think. I still using a 5 year old iPad 1. It is fine and still does what I need it to do. In my case, I’m mid contract on my 5s, in September or October when the next iPhone comes out, I’ll see if a larger 6plus like iPhone will completely replace the iPad. If not, I’ll buy another one then. 5.5 years out of a device is real good. My corporate Dells were absolute dogs after 24 months or less. My first portable “Archos” hard drive for storing music and photos lasted 10 months- two long road trips and the battery completely died. Probably 100 or so recharges. Apple builds good products and their replacement time is longer.

    In addition, if you are going to only read books, do Facebook on the web, and watch a movie or two, a $200 tablet can make sense. You won’t be happy, while you are watching that movie, but you can watch it. You’ll also spend WAY more time getting that movie and dealing with it than you will in the Apple ecosystem. I like thinking about a movie at lunch, downloading it in the afternoon and watching through my Apple TV at night. Total time fooling with it without watching something- less then a minute. But some will think spending $200 is SAVING money and devices those people buy ARE competition for an iPad.

  8. This chart means nothing. Context for each product introduction was completely different.

    The iPod was released only on the Mac platform at first, it created its own market, and the iTunes Store was just getting off the ground. It created a whole new paradigm for personal media management.

    When the iPhone was released, the iTunes store was established and popular, the iTunes desktop app was available for Mac and Windows (and it worked great!), and OSX had proven itself to be mature and solid. Apple barely needed to market it, because everyone already knew how great the iPod was. But Apple chose to release only through AT&T in the USA, so it took some time for the iPhone to spread to other carriers.

    When the iPad was released, it was sold on multiple carriers, and the iPod and iPhone had already established the market for mobile devices.

    Sales of the iPad are now flat because many people have discovered that they still need a Mac to do productivity work. The iPad has its role, but with Macs becoming slimmer all the time, many users are choosing to go with OS X to get away from the many limitations of iOS. It’s a pain in the ass to manage a household full of iOS devices. So given the choice, many users prefer to have just one iOS device — and in those instances it will almost always be the iPhone + Mac instead of the iPad + Mac.

    Full disclosure — I have the first generation iPad and it now spends most of its time gathering dust. The iPhone and multiple Macs do all the digital work.

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