What happened to the iPod product category? iPod sales were cannibalized first by the iPod touch and then iPhone slowly cannibalized sales of the iPod touch. Apple has never been afraid of cannibalising the sales of its existing products. Apple’s late CEO Steve Jobs famously said, “If you don’t cannibalize yourself, someone else will.”

Is iPad facing the same fate as of the iPod? Will the iPad soon not be a major source of revenue for Apple? To understand these aspects let’s get into the details.

From iPad Air to iPad Air 2 – Not a major product update

If we look at the current trend of iPad sales we see some interesting figures; in Q1 2014 Apple sold 26 million tablets compare that to Q1 2015 the company sold 21.4 million. In 2013 Apple launched the new iPad Air and in 2014 the company launched iPad Air 2. Apple sold more iPad Air’s than iPad Air 2 during their respective holiday quarters.

One of the most obvious reasons that explains the fall in sales figures for iPad Air 2 could be due to the new tablet not being a major update when compared to its predecessor. iPad Air was a radical redesign and added many enhancements however, the iPad Air 2 received a modest update with improvements being camera, barometer, new processor with motion co-processor, and Touch-ID. These updates were certainly not enough for users who already own an iPad Air to upgrade.

Was iPad just a fad? Before we jump onto any conclusions we need to delve further into the tablet category.

Different Upgrade Cycles

Unlike iPhones customers are not looking to upgrade their tablets every two-years. Our smartphones have to endure much more rigorous use each day compared to the tablets. So even if you still own an iPad that was introduced in 2012 it may still be working just fine. I have an iPad 2, Retina Display MacBook Pro and iPhone 5. Even though the second-gen iPad now lags in performance after iOS 8 update I still don’t see the need to upgrade. One possible reason could also be that after purchasing the latest MacBook Pro I have increasingly felt lesser need to work on my iPad.

Users’ tablet upgrade cycle will largely depend on what you use the tablet for. If it’s just for browsing, emails, and watching movies then you’re probably not going to upgrade every two years. If you’re into gaming and love to play games on your iPad then upgrading every two years makes sense as Apple upgrades the tablets with much more capable graphic chips and all AAA game titles are quickly updated to take advantage of new features.

Smartphones have also become an expression of showing off the latest gadget you bought as one obviously tends to use it more often no matter where you are. Tablets would probably never reach that level of attention. You don’t upgrade your MacBook Air or MacBook Pro every year just because a new model was made available.

If we look at iPhone’s upgrade cycle where the company introduces major improvements every two years and follows up with minor improvements the following year it still continues to outperform previous years sales figures. iPad category certainly won’t give the same results. There’s still a lot of scope for the tablet however, its adoption into new markets and industries is dependent on factors other than just faster processor and better camera.

More choice

Another reason attributing to the decline in sales could be the introduction of large screen iPhones. Users who would previously carry an iPad mini and an iPhone can now carry just an iPhone 6 Plus. Apple has been always accused of not offering much choice to its customers however, now its a different story.

There’s a 7.9 inch iPad mini, 9.7 inch iPad, 4 inch iPhone 5S, 4.7 inch iPhone 6, and 5.5 inch iPhone 6 Plus. So, even though iPad sales in particular may have been affected, it could potentially be getting converted into iPhone sales.

With the new range of choices now available to customers it may take a couple of years for the sales figures to stabilise and adjust as customers make their choice for their preferred device for various computing purposes.

Content

iPhone had a three years lead on the iPad. When the iPad was first introduced it was not until the iPad 2 that we started seeing a large number of companies creating apps for their employees. iPad’s growth depends a lot on the ecosystem of apps other than games and productivity category. As web developers, companies, educational institutions develop more and more content optimised for the tablet we will witness continuous rise in tablet sales. Apple made a great move to tackle this issue by partnering with IBM to create enterprise ready apps.

So, should Apple be worried about the state of the iPad? No!  Apple should not be worried about lower iPad sales as it leads in market share and competitors aren’t making much progress in differentiating their products from the iPad. Microsoft is offering desktop computer experience on a tablet however, it doesn’t appear to be working favourably for the company. So, clearly if someone needs a tablet they are still looking at Apple.

The tablet market exploded after the introduction of the iPad. Apple’s competitors are waiting on Apple to take the next leap so that they can copy it.

As long as Apple continues to make improvements and make more capable tablets each year, this category is here to stay.

Photos Credit: Ben Miller, Lap Fung Chan

Late last week, Apple Inc. (AAPL) reported its financial results third calendar quarter and fourth fiscal quarter of 2012. AAPL reported a net quarterly profit of $8.2 billion on $36.0 billion in revenue, which comes out to roughly $8.67 per diluted share. During the fourth fiscal quarter of 2011, Apple reported $28.27 billion in revenue with a net quarterly profit of $6.62 billion, coming out to about $7.05 per diluted share.

With each passing year, Apple has posted a higher quarterly revenue and profit, increasing its per share price by almost $1.67 per share since this time last year. With improvements in each quarter, Apple has set a record revenue for for fiscal 2012, reporting a total revenue of $156.5 billion with a net profit of $41.7 billion. Revenue and profit for fiscal 2012 comes in much higher than 2011, which brought in $108.2 billion in sales and $25.9 billion in profit.

Apple CEO Tim Cook mentioned last year that Asia, specifically China is a major growth opportunity for the company, which proved to be true in 2012. International sales accounted for over 60 percent of Apple’s revenue, which shows major growth from several years ago. During fiscal 2012, Apple sold 4.9 million Mac, an increase of 1 percent from over a year ago, 5.3 million iPods which declined 19 percent from a year ago. Although Apple is posting revenue increases each quarter, the company’s iPod sales have been declining for several quarters, with most sales coming from iPad and iPhone sales.

We’re very proud to end a fantastic fiscal year with record September quarter results,” said Tim Cook, Apple’s CEO. “We’re entering this holiday season with the best iPhone, iPad, Mac and iPod products ever, and we remain very confident in our new product pipeline.

Apple expects revenue for the first quarter of fiscal 2013 to be yet another record with expected revenue of $52 billion and earnings per diluted share of $11.75. Apple has yet to include holiday sales for this year, which will likely be much higher than fiscal 2011, as Apple introduced an entirely new lineup of iPods, the new iPhone 5, as well as the iPad mini which is expected to be a major success this holiday.

{Via MacRumors}

Apple’s iPod nano adopted a new form factor in late 2010, stripping the popular music player of its scroll wheel and replaced it with a small multi-touch screen, with apps for music, radio, and podcasts. Although the new design gave the iPod nano a revamp and introduced a better option for browsing music, many users complained that the device still lacked some of the features that it once had, such as a video camera, and video playback. Japanese site, Macotakara now reports that Apple is planning yet another redesign of the iPod nano line.

According to the report, the next gen iPod nano will carry a larger rectangular display and a home button, similar to the one found on all iOS devices. The screen, although larger than the current generation, would still be relatively smaller than other iOS devices, and as a result, would not run iOS apps. Apple will likely create a new OS for the device and add on a skin to resemble iOS. The report also goes on to mention that Apple may bring a “dedicated new iTunes Service” to the device, however, it remains unclear exactly what that would be.

Apple’s iPod nano has gone through many major redesigns since its first generation, with Apple adding a camera and then removing it in the latest generation. Apple’s 8th generation design was rumored to receive a camera, with images of a camera hole in the clip of the Nano, however, Apple likely scrapped those plans for this new design. This new design makes sense for a number of reasons; a redesign would help increase iPod sales which have been in decline for several quarters, the last two generations of iPod nano have had the same design, and this design would help Apple synchronize its product lines and make multi-touch the focal point.

If Apple released this new design later in the year, iPod nano users would see more functionality with a larger screen, a camera, and a tailored iTunes service.

{via MacRumors}

Apple Inc. (AAPL) on Tuesday reported their Q2 2012 earnings results. As always, AAPL is showing record numbers from revenue to profit and is seeing great increase in the sales of their mobile devices. The company reported quarterly revenue of $39.2 billion and quarterly net profit of $11.6 billion. That’s roughly $6.40 per diluted share, which is up almost 94% from the previous year.

Apple sold a whopping 35.1 million iPhones, 11.8 million iPads, 4 million Macs, and 7.7 million iPods in the quarter. This represents an 88 percent growth for iPhone sales a massive 151 percent increase for the iPad, a 7 percent increase for Macs, and unsurprisingly, a 15 percent decline in iPod sales. iPod sales have been steadily declining for the last two years, and decreased by about 21% just last quarter.

Even with this decline, Apple is surpassing its expectations from last quarter, where revenue for the second quarter of fiscal 2012 was projected to be $32.5 billion, with an earnings per diluted share of $8.50. Apple CEO Tim Cook spoke about the earnings, noting that he is pleased with the profit margins and sales:

We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter. The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.

Apple has not been resting on their laurels with meeting their expectations and has continued to go above and beyond their financial projections. Following Apple’s earnings calling, CFO, Peter Oppenheimer even went as far as to say that he expects revenue of about $34 billion and diluted earnings per share of about $8.68.

{via Apple}

Apple released iPhone 4S last October, with a very positive adoption and witnessed increase in sales figures when compared with previous launches. However, rumors on the web are already focusing on the upcoming iPhone 5 (sixth gen), expected to debut this September or October. Japanese blog Macotakara reported on Monday that the sixth gen iPhone will arrive in September or October, similiar to the iPhone 4S and will retain the Fall release pattern.

The report also suggested that Apple is looking to keep this announcement cycle for “many years”. This would allow Apple to release the next gen iPhone exactly one year after the 4S debuted in October of 2011. It would not make any sense for Apple to scale back the announcement to June and release a re-designed iPhone only 8 months after the last generation. However, the possibility of Apple looking to introduce new hardware during WWDC 2012 can’t be completely ruled out.

The iPhone launch now occupies the place of the iPod event, usually held the first week of September as the iPhone and iPad begins to gain more attention from Apple. The iPod line has remained unchanged from the previous year and may experience some serious changes in the coming months, with iPod sales declining drastically over the past few quarters.

The launch of a new iPhone 5 in the September / October timeframe works well for Apple and allows them to take advantage of the upcoming holiday season and experience an increase in sales. The iPhone 4S saw a record 37 million units sold during Apple’s December quarter because of the late debut.

There have been many rumors that Apple is looking to switch back to a June release, however based on this report and many others, it appears that the September/October timeframe will be kept for iPhone 5 release.

{via AppleInsider}

Apple Inc. (NASDAQ:AAPL), over the past two years has been not only increased its revenue but also its quarterly profits and on Tuesday, the company reported their best quarter ever for the 1st quarter of 2012. AAPL posted a revenue of $46.33 billion and net quarterly profit of $13.06 billion, which equals to $13.87 per diluted share.

This is much improved and higher than the same time last year, where Apple reported $26.7 billion and net quarterly profit of $6 billion, or $6.43 per diluted share.

Q1 2012 gross margin was at 44.7, higher than the 38.5 from last year, and international sales, unsurprisingly accounted for about 58% of the quarter’s revenue. This was a new record for the Cupertino company, in both profit and revenue, with the company increasing drastically higher each year, and is showing no signs of any slow down.

We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” said Tim Cook, Apple’s CEO. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.

Apple also shipped 5.2 million Mac computers during the quarter, a unit increase of 26 percent from the previous year. iPhone unit sales reached 37.04 million, up 128 percent from a year ago quarter, and the company sold 15.4 million iPods during the quarter, representing 21 percent unit decline.

Apple has not been experiencing the same heavy iPod sales as they once did, making the popular devices now a small part of the company’s revenue, with majority coming from the iPhone and iPad. Apple’s projected revenue for the second quarter of fiscal 2012 is $32.5 billion and earnings per diluted share of $8.50.

Mac sales for the first two months of 2010 are up 39 percent year over year. With an estimate that Apple will sell around 2.8 to 2.9 millions Macs in March. Higher than Wall Street’s estimate of 2.7 million.

iPod sales were also up by around 7% for the beginning of 2010, which is the first increase in sales in over a year.

Sales for Apple were slow in 2009, which put it in a good position to improve this year.

Piper Jaffray has maintained its overweight rating for AAPL stock, and a 12-month price target of $284.

As of the writing of this article shares in AAPL have actually dipped back to around $223 from a high of $226 last week.

It remains to be seen what effect the iPad will have on iPod sales in coming months.