Where are the 2.6 millions lost iPads? April 20th, 2011
From October to December of 2010 Apple sold 7.33 millions iPads.
Between January and March 2011 they sold only 4.69 millions.
And this is supposed to be the hottest computer product on the market!
So what happened that could explain the lost of more than 2 1/2 million units?
Some analysts asked that question during today’s conference call announcing Apple’s second quarter results – The transition between iPad 1 and iPad 2 – This is the big reason given by Apple executives.
Ok a transition from one product to its replacement is not easy. The sales of the (soon to be) old product clearly slow down. I was the first to say that I did not bought an iPad for Christmas because I knew the replacement was coming. It’s also Apple’s best interest to clear the inventory as much as possible before the introduction of the new product.
I don’t buy it.
And I don’t buy it for a few reasons.
- Even after being officially discontinued the iPad 1 is selling like hot cakes. At least the little bit of inventory that is left of it. Apple clearly has no problem clearing up the inventory.
- Even if the demand slows down before a new product introduction, the bump in demand following the introduction more than make up for the lost sales. And nobody can deny that there has been a huge demand for the iPad 2.
- I cannot believe either that Apple was not able to anticipate that the demand for the iPad 2 would be huge. If they cannot forecast a trend like that they have some reasons to be worried. They may have been surprised by the reception of the original iPad, but that was a year ago.
So where are the 2.5 millions missing iPads?
The demand is there no doubts about that, the transition is not a valid excuse. The more I think about it, the only reason I can come up with is that some problem happened with the production. Apple just cannot make enough of those things.
Before the results were out I was wondering what kind of numbers we would see. Not a single analyst prediction was lower than 6 millions, still, there was a few hints at a problem.
- no numbers were announced after the launch week-end. None at all (as a matter of fact the tsunami in Japan happened right after and the world attention was elsewhere).
- nothing was done during the launch to deliver the products quickly like that was the case for the original iPad. Actually the rate of delivery appeared to be very slow from the beginning. No pre-order. No reservation. Delay that jumped to 4-5 weeks almost right away. It looked like Apple knew from the beginning that product availability would be low.
- Apple launched the iPad 2 in several countries like if there was no constraint on demand but the launch was clearly with a very limited number of unit. Can we really call that a launch when there are actually no products for sale. Well at least it allows the company to say that the product was actually launched.
During today’s conference call Tim Cook gave a few interesting additional information:
- the Japan crisis is not affecting Apple, has not and won’t as far as they can forecast. So there has not been a production disruption due to Japan.
- he also insisted several times that the production of the iPad was reaching a level that would allow Apple to deliver more products to consumers. To me, putting so much emphasis on future availability is the closest we will get to an acknowledgement of a past problem.
Why do I write about all that?
When a company doubles its revenues and profits, nobody cares about 2.5 millions lost iPads, the rest of the business makes up for the lost sales. For a company with a normal growth rate, those lost iPads would have been a really big problem.
